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THE BOARD OF CHIROPRACTIC EXAMINERS

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THE BOARD OF CHIROPRACTIC EXAMINERS Powered By Docstoc
					   BUREAU FOR PRIVATE POSTSECONDARY AND
       VOCATIONAL EDUCATION (BPPVE)


    JOINT LEGISLATIVE SUNSET REVIEW COMMITTEE
             2003 SUNSET REVIEW REPORT


Four Year Overview of the Board’s Regulatory Program, Background Paper for
 the 2002 Public Hearing, and Final Recommendations of the Joint Committee
                  and the Department of Consumer Affairs


                            Senator Liz Figueroa
                                     Chair

                 Senate Members               Assembly Members
                   Sam Aanestad                   Lou Correa
                  Edward Vincent                  Joe Nation
                                                Sharon Runner



                                     Staff:
                            Robin Hartley, Consultant

                          Staff Assistance Provided By:
                            Bill Gage, Chief Consultant
                    Senate Business and Professions Committee

                         Jay DeFuria, Principal Consultant
                    Senate Business and Professions Committee

                       Kristin Triepke, Principal Consultant
                    Senate Business and Professions Committee
                                    TABLE OF CONTENTS


PART 1. BACKGROUND INFORMATION AND FOUR YEAR OVERVIEW
        OF THE CURRENT REGULATORY PROGRAM ....................................1


PART 2. BACKGROUND PAPER FOR 2002 PUBLIC HEARING .......................27


PART 3. FINAL RECOMMENDATIONS OF THE JOINT LEGISLATIVE
        SUNSET REVIEW COMMITTEE AND THE DEPARTMENT OF
        CONSUMER AFFAIRS ................................................................................52




                                                         i
                                        PART 1.
BACKGROUND INFORMATION AND FOUR YEAR OVERVIEW
     OF THE CURRENT REGULATORY PROGRAM


      History and Function of the Bureau:
Pursuant to Chapter 78, Statutes of 1997 (AB 201), the Bureau for Private Postsecondary
and Vocational Education (Bureau) was established on January 1, 1998 for the purpose of
approving and regulating the following California private postsecondary educational
institutions:

      2,400 private vocational training schools;
      300 private degree-granting institutions;
      300 private institutions registered with the Bureau to provide short-term career/seminar
       training; continuing education; intensive English language programs; and license exam
       preparation courses; and
      Approval of various programs offered at 950 of California’s public and private
       postsecondary institutions for veterans utilizing their GI Bill educational benefits.

The Bureau operates under the authority of the Department of Consumer Affairs. Prior to
the Bureau’s establishment in 1998, the Council for Private Postsecondary and Vocational
Education was responsible for regulation of California’s private postsecondary and
vocational institutions from 1989 through 1997.

The goal of the Bureau (as required by Title 3, Division 10 of the California Education
Code (CEC)) is to provide for the protection, education and welfare of the citizens of
California, its private postsecondary institutions and students by ensuring minimum
standards of quality and prohibiting the granting of false or misleading educational
credentials.

Specifically, the statutory responsibilities of the Bureau are as follows:

   Protect consumers and students against fraud, misrepresentation or other practices at private
    postsecondary institutions that may lead to a loss of educational funds;

   Establish minimum standards for the quality of education, ethical and business practices,
    health/safety and fiscal responsibility of postsecondary educational institutions;

   Establish minimum standards for instructional quality and institutional stability for all
    students in all types of private postsecondary educational and vocational institutions which,
    in turn, provides students with equal opportunity for accomplishments and abilities;


                                               1
       Approve private and public postsecondary educational institutions in California that
        enroll veterans and other eligible dependents who receive educational assistance benefits
        administered by the United States Department of Veterans Affairs; and
       Enforce the Bureau’s laws and regulations for the protection and benefit of California’s
        students and private postsecondary institutions.


       Current Composition of the Bureau
For the 2002-03 Fiscal Year, the Bureau is appropriated $7.7 Million and 71 authorized positions
to carryout its statutory responsibilities. The Bureau’s 71 authorized positions are distributed to
the following programs:

   Enforcement/Complaints/Student Tuition Recovery/Closed Schools -- (19.0 positions);

   Vocational Institutions/Registered Schools/Certificates of Authorization -- (17.0 positions);

   Veterans Education Approval Program -- (12.0 positions);

   Information Technology / Regulations / Administrative Support -- (13.0 positions);

   Degree-Granting Unit -- (7.0 positions);

   Executive Unit -- (3.0 positions)

Refer to Exhibit A for a copy of the Bureau’s current organization chart.


       Major Changes

Since the Bureau’s inception in 1998, the primary focus has been to (1) establish the
organization’s programs and operational infrastructure; and (2) to address critical policy,
program and legal issues. Some of the major changes implemented by the Bureau are as follows:

    Backlog Reduction Plan --The Bureau has cleared up a backlog of school applications that
    started in 1998. The “Backlog Reduction Work Plan” was submitted to the Legislative
    Analyst’s Office on April 25, 2000. The Legislature adopted Supplemental Report Language
    during the 2000-01 Budget Enactment Process (i.e., Item 1111-002-0305) requiring the
    Bureau to report, on a quarterly basis, its progress in eliminating the backlog. As reported in
    the 2000-01 quarterly workload reports, the Bureau has eliminated most of the backlog and is
    continuing to process all current work in a timely manner. Refer to Exhibit C for a copy of
    the (1) April 25, 2000 “Backlog Reduction Work Plan”; and (2) the 2000-01 quarterly
    workload reports.




                                                 2
    Assembly Bill 201 (Chapter 621, Statutes of 2001) --– Effective January 1, 2002, Chapter
    621, Statutes of 2001 (AB 201), made the following changes to existing Bureau programs:

     1. Student Tuition Recovery Fund (STRF) – The STRF Program processes student claims
         for reimbursement of financial losses resulting from school closures. The STRF funds
         are collected from Bureau approved schools based on a quarterly assessment fee
         formula. AB 201 revised the fee formula for calculating the STRF quarterly assessment
         that results in an increase in STRF collections. AB 201 also required STRF paying
         schools to provide their students with information regarding the purpose, operation and
         eligibility requirements for STRF claim payments. AB 201 also required the Bureau and
         schools to account for STRF payments including a requirement for the Bureau to
         annually report to the Legislature on any special STRF assessment collections. The
         Bureau is processing the AB 201 regulations that are scheduled for completion by
         December 2002.

     2. Complaint and Enforcement Program – AB 201 also required the Bureau to adopt
        regulations that specify its procedures for complaint processing and disclosure. The
        Bureau is planning to meet and confer with its many stakeholders by November 2002 for
        the purposes of (1) soliciting input for the promulgating of the Complaint and
        Enforcement Program regulations and (2) for conducting the “Consumer Satisfaction
        Survey” as identified in Exhibit G. Refer to Exhibit B for a copy of AB 201.

    Annual Operational Reporting to the Legislature – Pursuant to CEC Section 94995, the
    Bureau annually reports to the Legislature on its prior year operations and compliance with its
    statutory responsibilities. Refer to Exhibit C for a copy of the Bureau’s 2000-01 Fiscal Year
    Annual Report to the Legislature.

    Promulgation of Bureau Regulations – Since the 2000-01 Fiscal Year, the Bureau has
    updated the general provisions, definitions and other technical sections of it regulations for
    various Bureau programs including the Vocational, STRF and Complaint/Enforcement
    Programs. As previously noted, the Bureau is currently promulgating regulations to
    implement the various provisions of AB 201.

   Strategic Plan – The Bureau annually prepares a Strategic Plan to identify its statutory
    mission and goals. Refer to Exhibit F for a copy of the Bureau’s 2002 Strategic Plan.

   Bureau of State Audits (BSA) – At the request of the Department of Consumer Affairs, the
    Bureau of State Audits conducted a review of the Bureau’s programs and operations in the
    2000-01 Fiscal Year to ensure compliance with statutory requirements. The scope of the
    BSA audit included a review of the Bureau’s (1) application processing procedures; (2)
    complaint processing; (3) central information systems; (4) administrative procedures; (5)
    cashiering procedures; (6) personnel procedures; (7) STRF Program; and (8) other
    operational activities. It should also be noted that the Bureau had independently conducted a
    similar internal operational audit and assessment during the 2000-01 Fiscal Year. The BSA
    audit independently reaffirmed the Bureau’s own review findings and recommendations.
    Specifically, the Bureau and BSA audit disclosed the need for a centralized database system


                                                 3
    to record and monitor the Bureau’s statutory duties (e.g., application processing, complaint
    processing, STRF transactions, etc.,). The Bureau responded by developing the School
    Automation Information Link system that currently has eighty-percent (80%) of the Bureau’s
    operations on-line and will be completed by the end of September 2002. The Bureau has also
    established the application, cashiering, STRF, personnel and administrative procedures
    recommended by the Bureau/BSA 2001-02 Fiscal Year audit findings.


      School Approval Statistical Information:
Based on the Bureau’s School Automated Information Link system and annual reporting
information, there are approximately 2,700 private postsecondary institutions approved by
the Bureau to operate in California. This includes 2,400 private vocational training schools
and 300 private degree-granting institutions.

The Bureau also registers approximately 300 private institutions offering short-term
career/seminar training; continuing education; intensive English language programs; and
license exam preparation courses.

Additionally, the Bureau’s Title 38 Veterans Education Unit approves various programs
offered at 950 of California’s public and private postsecondary institutions for veterans
utilizing their GI Bill educational benefits.

Statistical information regarding the Bureau’s approval activities from 1998-99 through 2001-02
fiscal years is as follows:




                                               4
  APPLICATION APPROVAL           FY 1998/99     FY 1999/00     FY 2000/01         FY 2001/02
          DATA
            ]




                                      **           1,808          1,746             1,380
       Total New
      Applications
       Received


                                      **           1,565          1,829             1,148
       Total New
      Applications
       Approved


 Total Reapproval Applications        **            263            842              1,470
            Issued




  Total Applications Denied***        **             35            35                31




** Data is unavailable.

*** Does not reflect applicants who voluntarily withdraw their applications for
approval from the Bureau.




                                           5
                         II. BUDGET AND STAFF

      Authorized Budgeted Resources to Meet the Bureau’s Goals
For the 2002-03 Fiscal Year, the Bureau is appropriated $7.7 Million and 71 authorized positions
to carryout its statutory responsibilities. Of the total $7.7 million, approximately $5.6 million or
72 percent of the Bureau’s funding is received from industry paid application and annual renewal
fees. Additionally, $1.1 million is paid to the Bureau from the federal government for the
administration of the Title 38 Veteran Education Program. The remaining funding is paid by
Bureau approved schools from the quarterly STRF assessments ($1 million) and $80,000 from
reimbursements for the sale of documents. Refer to Exhibit E for a copy of the Bureau’s 2002-
03 Governor’s Budget display.


      Staffing Levels
The Bureau’s 71 authorized positions are allocated to the following programs and operational
services:

   Enforcement/Complaints/Student Tuition Recovery/Closed Schools -- (19.0 positions);

   Vocational Institutions/Registered Schools/Certificates of Authorization -- (17.0 positions);

   Veterans Education Approval Program -- (12.0 positions);

   Information Technology / Regulations / Administrative Support -- (13.0 positions);

   Degree-Granting Unit -- (7.0 positions);

   Executive Unit -- (3.0 positions)


      Discussion of Bureau Fees and Funding
Industry Paid Fees -- Approximately $5.6 million or 72 percent of the Bureau’s total 2002-03
Fiscal Year funding is collected from industry paid application and annual renewal fees. Refer to
Exhibit D for a copy of the Bureau’s current fee schedule. From a historical perspective, the
Bureau’s fees were reduced by five-percent (5%) in January 1998 pursuant to Chapter 78,
Statutes of 1997.

Currently, the Bureau is concerned with and is taking action to ensure industry paid fees are
collected timely. For example, as of September 2002, approximately 300 schools had not yet
paid their calendar year 2000 annual fees that were originally due in July 2002. As a result, the


                                                 6
Bureau has issued delinquency notices and is in the process of preparing citation and fines to be
issued in October 2002 for those schools that are delinquent in their annual payments. NOTE:
The Bureau’s cite and fine authority is established in CEC Section 94957.

Federal Funding Participation –For the 2002-03 Fiscal Year, the federal government will pay
$1.1 million to the Bureau for the administration of the Title 38 Veteran Education Program.

Student Tuition Recovery Fund (STRF) –For the 2002-03 Fiscal Year, approximately $1.0
million will be paid by Bureau approved schools to the STRF from quarterly assessments. The
above noted $1.0 million STRF fee collection does not reflect the revenue impact from AB 201
as previously discussed on page 5 of this report (i.e., AB 201 legislation changes). AB 201
related STRF fee and collection increase are estimated to be $1.4 million in the 2002-03 Fiscal
Year and slightly less each year thereafter

Reimbursements – For the 2002-03 Fiscal Year, approximately $80,000 is estimated to be
collected from various Bureau administrative services (e.g., sale of documents, etc.,). Refer to
Exhibit E for a copy of the Bureau’s 2002-03 Governor’s Budget display.


               REVENUES FOR FISCAL YEAR 1998-99 THROUGH 2002-03.


                                        (Dollars in Thousands)
                                         ACTUAL                                             PROJECTED



  REVENUES
                           FY 98-99          FY 99-00          FY 00-01        FY 01-02         FY 02-03


  Industry Fees
   (Fund 305)              $4,427             $ 4,965          $4,791           $4,358              $5,269
    Federal
  Funds (Fund               1,098              1,018             990            1,061               1,130
     890)
  STRF (Fund
     960)                    766              1,648*           1,082 *          748 **              1,736

  Reimbursements
                              --                 --               6               6                  80


    TOTALS                 $6,291             $7,631           $6,863           $6,173              $8,215




                                               7
   * Represents one-time increased STRF revenues from special assessment per CEC
   Section 94945.
   ** Excludes impact of revenue increases authorized per Chapter 621, Statutes of 2001
   (AB 201)


Expenditures by Program
The Bureau’s program expenditures from Fiscal Year 1989-99 through 2001-02 are identified in
the chart below. Each program’s costs include (1) employee salaries, wages and related benefits;
(2) operating expenses and equipment; and (3) share of administrative costs and services (i.e.,
distributed overhead).

For fiscal years 1998-99 through 1999-00, the Bureau’s annual expenditures ranged from $8.6 to
$9.4 million, respectfully, and reflect the cost of funding approximately 140 positions (i.e., 80
permanent and 60 limited-term). The 60 limited-term positions expired on June 30, 2000.

For fiscal years 2000-01 and 2001-02, the Bureau’s annual expenditures are approximately $6.9
million for the support of 71 permanent ongoing positions.

CEC Section 94932 requires the Bureau to spend a minimum of fifty-percent (50%) its total
expenditures for enforcement related activities. This includes, but is not limited to, conducting
on-site school inspections and processing of complaints. As noted in the chart below, the Bureau
spends sixty-eight percent (68%) of its total annual expenditures for compliance and
enforcement. This is based on a program-by-program assessment of enforcement related
expenditures.




                                               8
                           EXPENDITURES BY PROGRAM

                                                                                               Percent of
                          FY 98-99           FY 99-00         FY 00-01         FY 01-02          Total
                                                                                              Expenditures

 Vocational School         $2,524            $2,261            $1,716          $1,889            27 %
       Unit

   Title 38-               1,903              1,739            1,537            1,663
   Veterans                                                                                      24 %
 Education Unit

  Complaint
 Compliance &              1,454              1,303             989             1,088            16 %
  Mediation

 Degree School
     Unit                  1,180              1,057             802              883             13 %

    Student
    Tuition                1,335              1,385            1,253             715             10 %
 Recovery Fund

 Administration
                           1,006               901              684              753             10 %
    TOTALS, ALL
     PROGRAMS              $9,402            $8,646            $6,981          $6,991           100 %

   (Enforcement/
 Compliance Related
    Expenditures           (6,297)           (5,809           (4,723)          (4,679)
    All Programs

 (Percent of Total         (67 %)            (67 %)            (68 %)          (68 %)
     Expenditures)




        Fund Condition Statements
Attached below are the fund condition statements for the Bureau industry paid fee fund (305
Fund) and STRF fund (960 Fund) and the Discussion of Fees and Funding for analysis of the
attached statements.




                                               9
        FUND 305 –BPPVE INDUSTRY FEE SUPPORTED FUNDS *
                                              (Dollars in Thousands)

ANALYSIS OF                FY 00-01                FY 01-02       FY 02-03          FY 03-04          FY 04-05
   FUND                                            (Budget Yr)   (Projected)        (Projected)      (Projected)
 CONDITION

Total Reserves,                $2,648                 $2,507 *         $1,304           $922            $549
July 1
Total Rev. &                    4,791                   4,358          5,269            5,303           5,360
Transfers
Total                           7,439                   6,865          6,573            6,225           5,909
Resources
Total                           4,980                   5,561          5,651            5,676           5,676
Expenditures
Reserve, June                  $2,459                  $1,304          $922             $549            $233
30
MONTHS IN                        5.3                      2.8           1.9              1.2              0.5
RESERVE

    * Includes prior-year adjustment of $48,000.



              FUND 960 –STUDENT TUITION RECOVERY FUND
                                              (Dollars in Thousands)
ANALYSIS OF
   FUND                      FY 00-01                 FY 01-02     FY 02-03          FY 03-04        FY 04-05
 CONDITION                                                        (Projected ** )   (Projected **)   (Projected **)


Total Reserves,                 $579                     $656          $1,098          $1,229          $1,306
July 1
Total Rev. &                    1,082                    748           1,736            1,692           1,692
Transfers
Total                           1,661                   1,404          2,834            2,921           2,998
Resources
Total                           1,005                    306           1,605            1,615           1,615
Expenditures
Reserve, June                    656                    1,229          1,229            1,306           1,383
30
MONTHS IN                        8.7                      8.2           9.1              9.7             10.3
RESERVE

  ** Includes impact of revenue increases authorized per Chapter 621, Statutes of 2001
  (AB 201)


                                                         10
               III. APPROVAL REQUIREMENTS

     Overview
The Bureau’s authority to regulate and license California’s private postsecondary
educational and vocational institutions comes from Title 3, Division 10, Part 59,
Chapter 7, Articles 6, 7, 8, and 9 of the California Education Code (CEC). The
purpose is: (1) to protect students and consumers from fraud; (2) establish minimum
standards for the quality of education; and (3) approve courses and programs for
veterans seeking to use their GI Bill educational benefits.
The Bureau for Private Postsecondary and Vocational Education, which was established on
January 1, 1998, approves and regulates:
    2,400 private vocational training schools;
    300 private degree-granting institutions;
    300 private institutions registered to provide short-term career/seminar training; continuing
     education; intensive English language programs; and license exam preparation courses; and
    Various programs and courses offered at 950 public and private postsecondary California
     institutions for veterans utilizing their GI Bill educational benefits.


                 Approval Requirements

 Private postsecondary institutions that want to operate in California must
  submit an application (Section 94802 of the CEC) to the Bureau identifying
  specified educational/vocational, financial and student protection requirements.
  This includes, but is not limited to, school catalog; student enrollment
  agreements; identification of designated agents; annual reporting requirements;
  qualified faculty/staff; adequate physical facilities; and the institution’s most
  recent financial reports.




                                               11
There are additional application requirements based upon the type of institution
(i.e., vocational and/or degree-granting). CEC Section 94854 requires specified
vocational schools to meet additional performance standards regarding employment
placement (i.e., “Maxine Waters Schools). CEC Section 94900 requires degree-
granting institutions to demonstrate that (1) the program of study for which the
degree is granted provides the curriculum necessary to achieve its professed or
claimed academic objective for higher education; and (2) that the institution
requires a level of academic achievement appropriate to that degree.
Approximately 10-25 percent of the application approval process involves direct
compliance and enforcement activities.

A temporary approval is issued when all application approval requirements are met.
This allows an institution to enroll students and operate. Permanent approval is
achieved only after the Bureau conducts an on-site inspection of the institution to
verify its compliance with the law. CEC Section 94915 identifies the procedures
for site visit inspections conducted for vocational institutions. CEC Section 94901
identifies the on-site inspection conducted at degree-granting institutions. The
Bureau’s on-site inspections make up about fifty-percent (50%) of the entire
approval program work and are a key enforcement tool in the regulation of
institutions.

      Continuing Education and Competency Requirements
Individuals requesting to be certified as school agents and administrators are required to submit
“Certificate of Authorization for Service” applications pursuant to CEC Section 94720.
Continuing Education or other competency requirements are verified at the time of processing.
The certification process is part of the Bureau’s school approval process and requires annual
renewal.
               IV. ENFORCEMENT ACTIVITIES

      Overview
The Bureau has ongoing compliance and enforcement activities for every program and phase of
its private postsecondary regulation processes. Details are as follows:
1.     Application Approval Programs – The Bureau’s school approval programs (i.e.,
Vocational, Title 38 Veterans and Degree–Granting Units) provide direct enforcement activities
through their on-site inspections of institutions and review of applications to ensure schools
comply with all required school standards.
2.     Complaint Compliance and Mediation Program (CCMP) – The CCMP processes student
and school complaints regarding allegations of non-compliance with private postsecondary laws.



                                               12
The CCMP analyzes complaints to determine if a school or student is in compliance with the law
and then takes the necessary enforcement or mediation action. When necessary, the CCMP
works with the DCA Division of Investigation for those compliance actions that require peace
officer expertise.
3.      Student Tuition Recovery Fund (STRF) Program – The STRF Program protects student
rights and financial interests when a Bureau approved school closes. This includes representing
students at school bankruptcy proceedings to ensure schools comply with their fiscal
responsibilities to students. The STRF also enforces student rights and protections during closed
school proceedings.
4.     Enforcement of Unlicensed Activity –The Bureau’s Enforcement Program issues notices
to schools that may be operating without the necessary Bureau approvals. If a school requires
Bureau approval, they are required to submit an application for approval. If they are exempt or
outside the scope of the Bureau’s approval, that exception is noted for future reference and
student inquiries.


              Enforcement Related Expenditures
CEC Section 94932 requires the Bureau to expend a minimum of fifty-percent (50%) its total
expenditures for enforcement related activities. This includes, but not limited to, conducting on-
site school inspections and processing of complaints. The Bureau meets and exceeds this
statutory requirement by expending sixty-eight percent (68%) of its total annual expenditures for
compliance and enforcement through on site inspections and complaint compliance activities.


      Citation and Fine
Section 94957 of the CEC authorizes the Bureau to issue a citation to an institution for
committing any violation of the private postsecondary laws and regulation.

Enforcement – Complaint Mediation Statistics
During the 1999-00 and 2001-01 fiscal years, the Bureau annually received approximately 700
complaints from students and schools alleging violation of private postsecondary laws including,
but not limited to, (1) unlicensed school activities; (2) violation of student enrollment agreements
such as refund policy, standards of progress, and prior education credits; (3) misleading or
fraudulent advertisement; and (4) concerns regarding quality of education and instructor
qualifications.

The allegations are investigated to determine if a school or student is in violation of the law. The
study determines what enforcement or mediation action will be taken. When necessary, the
Complaint Unit works with the DCA Division of Investigation for actions requiring peace officer
expertise. The chart below, demonstrates the Bureaus compliance or action in resolving most of
the 700 annual complaints. This includes, but is not limited to, the issuance of student refunds.
For unlicensed activity, the Bureau notifies the unlicensed school of the private postsecondary



                                                13
approval requirements, sends an application for approval and requests a response. Unlicensed
schools typically submit an application for approval


             Complaint Disclosure Policy

     CEC Section 94779 requires the Bureau to provide complaint
    information to the public upon request. The Bureau processes
  complaint disclosure requests in accordance with statutory Public
   Records Act (PRA) procedures (Section 6253 of the Government
   Code). PRA procedures provide a determination of information
     that is authorized for release to the public without disclosing
 material that is confidential or exempt from public disclosure (e.g.,
       personal financial, social security numbers, etc.,). Section
94960(b)(2) of the CEC established per AB 201, requires the Bureau
 to develop regulations for complaint processing and disclosure. As
     noted in the AB 201 discussions, the regulation activities are
           scheduled for commencement in November 2002.




                                            14
   ENFORCEMENT COMPLAINT MEDIATION STATISTICS
ENFORCEMENT DATA                   FY              FY        FY 1999/00   FY 2000/01
                                  1997/98         1998/99

Total Complaints Received
(Source)                             -- **           -- **      704               692
       Public (students)             -- **           -- **        0                 0
       Licensee/Professional                                      0                 0
Groups
       Governmental Agencies
       Other
Total Complaints Filed (By
Type)                                -- **           -- **       14                13
       Competence/Negligence         -- **           -- **       24                26
       Unprofessional Conduct                                   126               114
       Violation of agreements,
fraud, or                                                         1                 2
          Misleading materials                                  205               160
       Health & Safety                                          118               152
       Unlicensed Activity

Total Compliance Actions             -- **           -- **      936               719
Taken, Closed, Mediated and
Resolved


Total Investigations                 -- **           -- **       2                     6
Commenced


Total Referred for Criminal          -- **           -- **       0                     0
Action


Referred to AG’s Office              -- **          -- **0
     Accusations Filed                                           2                     6
     Accusations Withdrawn
     Accusations Dismissed

Stipulated Settlements               -- **           -- **       0                     1




                                             15
 Total Disciplinary Actions
       Denials *                                   -- **            -- **        70                  70
       Revocation                                  -- **            -- **         1                   4
       Voluntary Surrender                                                        0                   0
       Suspension Only                                                            0                   0
       Conditional Approval                                                       0                   2
 * Includes Certificate of Authorization and
 school denials
 ** Data not collected or available.



     V. RESTITUTION PROVIDED TO STUDENTS
                AND CONSUMERS

 Student Tuition Recovery Fund (STRF)
The STRF Program provides financial reimbursement to students who incur pecuniary losses
resulting from the closure of Bureau approved schools. The STRF program also (2) negotiates
loan discharges on behalf of students; and (3) represents students at closed school meetings and
bankruptcy proceedings to ensure students rights and financial interests are protected and
enforced.

In the 2000-01 Fiscal Year, the Bureau successfully negotiated approximately $4.0 million in
student loan discharges on behalf of California students who suffered financial hardship as a
result of unforeseen private postsecondary school closures. The Bureau conducted these loan
discharge negotiations with representatives of the United States Department of Education and
various private student loan lenders.



                                               Student Tuition Recovery Fund
                                                           ($ In Thousands)

                                                FY 1997/98          FY 1998/99        FY 1999/00   FY 2000/01

       Student Claims Paid                         $890                 $900            $1,600       $1,005



         Student Tuition Recovery Fund (STRF) Program--Accountability
          Report




                                                             16
Pursuant to Chapter 621, Statutes of 2001 (AB 201), the Bureau is required to report to the
Legislature annually on the collection and expenditure of special assessment funds collected
pursuant to Section 94945 (a)(4) of the CEC.

To date, the only special assessment activities initiated by the Bureau were in response to a San
Francisco County Superior Court’s Writ of Mandate (Writ) in the case of Aguirre v. Hamilton
(Case No. 308354) dated March 1, 2000.

The Writ ordered the DCA/BPPVE to pay all timely filed STRF claims of former Career West
Academy students with a then-estimated cost of $2.0 Million. Given the fact that there were
insufficient funds in the STRF at that time to comply with the Writ, the Bureau initiated a special
assessment pursuant to Section 94945 of the CEC.

As a result of the aforementioned Writ, the Bureau collected a total of $1,231,145 during Fiscal
Years 1999-00 and 2000-01. During that same period the BPPVE paid $752,052 in STRF claims
to Career West Academy students in accordance with the Writ. As a result, there is a total
unexpended balance of $479,093 in the STRF special assessment account as of the date of this
report.

On September 15, 2000 the Sacramento Superior Court (the Court) issued an Order Granting
Stay of all special assessment proceedings pending hearing and decision by the Court in the case
of The California Association of Private Postsecondary Schools Vs Hamilton. As of the date of
this report the Court’s stay remains in effect.

 VI. CONSUMER OUTREACH, EDUCATION AND
          USE OF THE INTERNET
The Bureau is continually improving communication with students, industry, consumers and the
taxpayers it serves. The Bureau’s Internet site provides a critical “link” with its stakeholders.
The Bureau’s web site also provides its customers with important consumer information
including, but not limited to:


      Directory of All Bureau Approved Institutions in California;
      All applicable statute and regulations governing private postsecondary institutions;
      School closure alerts and information to assist students and industry;
      Tips on selecting a California private postsecondary school;
      Information on current regulatory activities and news bulletins; and
      Contact persons within the Bureau to assist with customer needs.


The Bureau’s Title 38 Veterans Education “Transition Assistance Program (TAP)”, provides
extensive and valuable outreach services to veterans who are concluding their active military
service and “transitioning” to vocational and degree-granting educational opportunities with the
use of their GI Bill education benefits. The TAP Program also coordinates with existing state,


                                                17
federal and other national organizations to maximize existing resources for the benefit of our
nation’s veterans.

Additionally, the Bureau plans to further expand its consumer outreach in the 2003 calendar year
through the use of workshops and educational seminars across the state for students, schools and
stakeholders.


          VII. FUTURE CONSIDERATIONS AND
                   IMPROVEMENTS

Since the 1999-00 Fiscal Year, the Bureau has implemented numerous regulatory, statutory
and procedural changes. Refer to page 5 of this report for a listing of key changes.

While the above noted changes have improved Bureau services its many and valued
stakeholders, action will be taken during the 2002-03 Fiscal Year to effectuate the
additional following changes:

      Advisory Board –Re-Establish Bureau’s advisory Board.
      Appeals Process – Simplify and streamline current appeal procedures to ensure fair
     and equitable resolution of appeals in a cost effective and timely manner;
      Approval Process – Amend the current cumbersome approval statute and regulation
     procedures to ensure comprehensive, efficient and effective approval procedures;
      Arbitration – Analyze the binding arbitration clauses in student enrollment
     agreements and propose regulations that would implement a Bureau-operated
     voluntary arbitration program.
      Enforcement – Amend current law to further improve the Bureau’s ability to quickly
     go after violators. This includes, but is not limited to, streamlining legal notification
     requirements when implementing enforcement actions and revoking or suspending
     approvals to operate or certificates of authorizations;
      Internet Regulation – Make the necessary statutory and regulatory changes to keep
     pace with the special challenges of Internet (on-line) education to ensure student
     protections and quality of services remain intact.
      Master Plan—The Legislature’s Joint Committee for the Creation of a Master Plan
     for Education has issued a draft report that includes a recommendation to transfer
     the regulatory responsibility for academic degree granting institutions from the
     Department of Consumer Affairs to the yet-to-be- created California Education
     Commission. The Joint Committee Chair, Senator Alpert, has committed to integrate
     her committee’s efforts with those of the Joint Legislative Sunset Review Committee
     to explore the staff’s recommendation.




                                              18
        VII. CALIFORNIA POSTSECONDARY
      EDUCATION COMMISSION INFORMATION
                    REQUEST

1.    What percentage of the Bureau’s operating budget is devoted to due diligence or
     related matters associated withdegree granting institutions?

     The Degree-Granting Program approves approximately 300 or ten-percent (10%) of
     the Bureau’s 3,000 approved institutions. In the 2001-02 Fiscal Year, $883,000 was
     expended to support the Bureau’s Degree-Granting Program. This includes the cost
     staff salaries/benefits, operating expenses and equipment. The Degree-Granting
     Program budget represents 13% of the Bureau’s total operating budget. Refer to the
     “Expenditures By Program” report contained in the Bureau’s FY 2002-03 Sunset
     Review Report.

2. Does the Bureau collect, compile and share all data that it is required to do under existing
statutes?

     Pursuant to Section 94995 of Article 14 of the California Education Code (CEC), the
     Bureau annually submits operational and statistical information to the California State
     Legislature. This annual report includes, but is not limited to, (1) an overview of the
     Bureau’s statutory responsibilities; (2) summary of California’s private postsecondary
     and vocational institutions; (3) authorized budget resources to meet the Bureau’s goals;
     (4) statistical workload information; and (5) Student Tuition Recovery Fund
     accountability report pursuant to CEC Section 94995.3. The Bureau also provides
     California students, industry and all stakeholders with ongoing private postsecondary
     school information on its website, DCA annual statistical profile and annual operational
     report to the Legislature (Refer to Exhibit C).

3. What reports, guidelines and information pertaining to performance and outcomes have been
   done by the Bureau and disseminated to stakeholders, including the Governor, Legislature, the
   Department of Finance, the California Private postsecondary Education Commission, students
   and the public?

     Refer to response to question #2 above for detailed response to question #3.

4. How and by what measures are consumers informed regarding the quality, effectiveness or
   fiscal stability of programs offered institutions approved by the Bureau?

     Pursuant to Title 3, Division 10 of the CEC, the goal of the Bureau is to provide for the
     protection, education and welfare of the citizens of California, its private postsecondary
     institutions and students by ensuring minimum standards of quality and prohibiting the
     granting of false or misleading educational credentials.


                                                19
   Pursuant to Title 3, Division 10, Part 59, Chapter 7, Articles 6, 7, 8, and 9 of the
   CEC, the Bureau approves California’s private postsecondary educational and
   vocational institutions to (1) protect students and consumers from fraud; (2)
   establish minimum standards for the quality of education; and (3) approving
   courses and programs for veterans seeking to use their GI Bill educational
   benefits.

   Section 94802 of the CEC also requires each private postsecondary institutions
   desiring to operate in California to submit an application to the Bureau
   identifying specified educational/vocational, financial and student protection
   requirements. This includes, but is not limited to, school catalog; student
   enrollment agreements; identification of designated agents; annual reporting
   requirements; qualified faculty/staff; adequate physical facilities; and the
   institutions most recent financial reports.
   The Bureau ensures that all private postsecondary schools operating in California meet
   all the requirements. Refer to (1) “I. Background and Description of the Bureau”; (2)
   III. Approval Requirements; and (3) “IV. Enforcement Activities” for additional details
   of the Bureau’s measure by which consumers are informed of the quality of programs
   offered by private postsecondary.

5. Does the Bureau have the authority, staffing and fiscal resources necessary to ensure that all
   private postsecondary education institutions offering instruction in the State operate in
   compliance with the Reform Act?

   As described in “Part II Budget and Staff” section of the Bureau’s FY 2002-03 Sunset
   Report, the Bureau is currently utilizing all resources authorized by the Legislature and
   the Governor to carry out its statutory responsibilities and services to students,
   industry and taxpayers. The Bureau will undertake a comprehensive review of its
   regulatory program to assess what elements are essential to its fundamental
   consumer/student protection mission.

   As the Sunset Review process unfolds, the Bureau will offer for the Legislature’s
   consideration its recommendations for streamlining its inordinately complex statute
   and coming to grips with new or ongoing policy and programmatic issues. To cite a few
   possible examples: the need to address the regulatory challenges posed by the growing
   phenomenon of Internet–based distance learning programs and institutions; the need to
   specify terms and condition under which schools may utilize alternative dispute
   resolution mechanisms such as binding arbitration; the extent to which the category of
   “Registered Institutions” (created by the Legislature in 1997) has proved workable and
   effective; the need for revision of Student Tuition Recovery Fund (STRF) assessments
   to account for the greater risk and liability to the fund inherent in privately funded
   student aid.


                                               20
6. How does the Bureau assess the quality of the programs offered by the Degree and Non-
   Degree-Granting institutions it approves?

   Pursuant to Title 3, Division 10, Part 59, Chapter 7, Articles 6, 7, 8, and 9 of the
   CEC, the Bureau approves California’s private postsecondary educational and
   vocational institutions to (1) protect students and consumers from fraud; (2)
   establish minimum standards for the quality of education; and (3) approving
   courses and programs for veterans seeking to use their GI Bill educational
   benefits.

   Section 94802 of the CEC requires each private postsecondary institutions
   desiring to operate in California to submit an application to the Bureau
   identifying specified educational/vocational, financial and student protection
   requirements. This includes, but is not limited to, school catalog; student
   enrollment agreements; identification of designated agents; annual reporting
   requirements; qualified faculty/staff; adequate physical facilities; and the
   institution’s most recent financial reports.

   There are also additional compliance requirements based on the type of
   institution (i.e., vocational and/or degree-granting). CEC Section 94854 requires
   specified vocational schools to meet additional performance standards regarding
   employment placement (i.e., “Maxine Waters Schools). Similarly, CEC Section
   94900 requires degree-granting institutions to demonstrate that the program of
   study for which the degree is granted provides the curriculum necessary to
   achieve its professed or claimed academic objective for higher education and
   that institution requires a level of academic achievement appropriate to that
   degree. Based on the above facts, approximately 10-25 percent of the
   application approval process involves direct compliance and enforcement
   activities.

   Upon compliance with all prescribed application approval requirements, a
   temporary approval is issued to an institution authorizing it to enroll students
   and operate. Permanent approval, however, is achieved only after the Bureau
   conducts an on-site inspection of the institution to verify its compliance with the
   law. For example, pursuant to Section 94915, outlines the compliance
   procedures for site visit inspections conducted for vocational institutions.
   Similarly, CEC Section 94901 prescribes the qualitative review and assessment
   procedures for degree-granting institutions. The Bureau’s on-site inspections
   constitutes approximately fifty-percent (50%) of the entire approval program


                                          21
   work and are a key enforcement tool in the regulation of institutions.

   Refer to “Part III. Approval Requirements” and “Part IV. Enforcement Activities” of
   the Bureau’s 2002-03 Sunset Review Report for a comprehensive report of approval
   statute and approval procedures.

7. How does the Bureau assess and report the financial conditions of institutions it approves?

   Private postsecondary laws and regulations provide the specific measures and criteria
   required of institutions to ensure fiscal integrity and protections to students. Refer to
   “Part III. Approval Requirements” in the Bureau’s 2003-03 Sunset Review Report for
   specific financial requirements.

8. Are applied degree programs required to comply with academic degree program
   requirements? If not, please provide the rationale for different standards by the Bureau?

   Yes, applied degree programs (as defined in CEC Section 94736) are required to
   comply with the requisite statutory approval requirements as stated in “Part III.
   Approval Requirements” within the Bureau’s 2003-03 Sunset Review Report.

9. How does the Bureau provide consumer protection for students who enroll in programs
   electronically offered by institutions located outside the state’s boundaries?

   Regulation (or gaps therein) of distance education providers poses a unique and
   growing challenge for California and the other states that regulate private
   postsecondary education institutions. Distance education providers located in
   California are subject to the regulatory authority of the Bureau. Absent clarification
   and amplification of the Bureau’s authority, postsecondary education providers,
   including distance education providers, located outside California are not subject to the
   Bureau’s regulatory ambit. As noted above, the challenge of distance education is one
   the Bureau intends to raise in Sunset Review for the Legislature’s consideration.

   While the Bureau’s current enabling statute establishes clear regulatory authority only
   for private postsecondary institutions within California, the Bureau’s website contains
   general guidelines and information that students can use to assess services being offered
   by private postsecondary institutions, including those being provided by Internet
   providers. For example, the Bureau’s website informs students of their rights and
   protections that they should expect from schools including, but not limited to, (1)
   refund policies; (2) support services; (3) evidence of approval from school accreditation
   or other public agencies; and (4) federal trade and commerce reports regarding
   interstate commerce activities via the internet.

10. Does the Bureau review all institutions before they are allowed to operate in the State? What
    is the average length of time it takes for an institution to be approved?




                                               22
   The Bureau reviews and determines eligibility for approval for all applications
   received. The Bureau also provides continuous review and enforcement of institutions
   that are operating without the necessary Bureau approvals.

   With respect to the average length of time it takes for an institutions to be approved,
   please refer to the Bureau’s FY 2000-01 Annual Report of Operations that includes
   quarterly workload statistical information (included in the Bureau’s FY 2002-03 Sunset
   Review Report).

11. How does the Bureau verify the accuracy of an institution’s self-reported completion and job
    placement statistics?

   Verification of self-reported information is conducted during the Bureau’s reapproval
   application process, complaint investigations and enforcement program activates. The
   Bureau also annually reviews and compares placement statistics when schools annually
   submit the information pursuant to CEC Section 94808.

12. Does the Bureau review WASC-accredited institutions that have an excessive federal cohort
    default rate? If not, would the Bureau regard this as a valid and valuable use of its resources?

   Under current law, WASC accredited institutions are exempt from Bureau regulation
   and oversight. Thus, any reallocation of existing Bureau resources for purposes other
   than those authorized under current law is not permissible and would require
   expressed approval by the Legislature and Governor. If such a proposal were to
   emanate from the Legislature and/or Administration, the Bureau would conduct the
   necessary cost/benefit analysis and report its findings to the Legislature/Governor for
   their consideration.

13. Does the Bureau believe that existing regulations regarding degree programs involving
    religious teachings and beliefs are sufficient to protect consumers? If not, how could the
    Bureau change its practices?

   Current law delineates a distinction between those institutions and programs that are
   strictly religious in nature, exempting such programs from regulation, and institutions
   that may offer secular as well as religious degrees, requiring such institutions to be
   subject to bureau regulation. The distinction is difficult to define and enforce in
   practice. The law provides an imperfect standard that degrees associated with religious
   programs must be designated as such in the course title. Moreover, religious-exempt
   programs are subject to periodic reevaluation, which affords the Bureau the
   opportunity to call upon any institution to affirm its religious-exempt status.

   In Fiscal Year 1999-2000, the Bureau commenced a continuous review of all of its
   existing statute and regulatory authorities including those regarding Degree Granting
   school oversight to determine if they are responsive and provide the necessary
   protections to students and consumers. To date, the Degree Granting Program has



                                                23
   deemed current regulations and laws adequate to regulate all their schools including
   those providing religious curriculum.

14. How does the Bureau ensure that review teams charged with site review of institutions are
    sufficiently trained in the academic disciplines of education program offered by the
    institutions?

   Current Bureau law and regulations specify the requirements and qualification for on-
   site visit staff or review committees. Bureau staff, in turn, ensures that review staff
   meets the requisite requirements to ensure complete compliance with the site-visit
   laws/regulations. The law also provides the subject institution the opportunity to
   challenge the credentials of visiting team members to ensure not only professionalism
   but also compatibility. Refer to the “Part III. Approval Requirements” Section of the
   Bureau’s 2002-03 Sunset Review Report for details.

15. Are students ever polled about the quality of instruction they received? Are employees
    surveyed?

   Student and employee surveys are an important part of the Bureau’s on-site reviews
   that are used by all of the Bureau’s approval programs (i.e., Vocational, Title 38-
   Veterans and Degree-Granting Unit). Refer to the “III. Approval Requirements”
   Section of the Bureau’s 2002-03 Sunset Review Report for details.

16. Does the Bureau have formal guidelines (standard questions and expectations) that its staff
    follow when conducting an evaluation of a school seeking Bureau approval? What are the
    educational components of the guidelines?

   All Bureau school approval work is conducted in accordance with established statute
   and regulations, which, in turn, form the basis for the Bureau staff’s process and
   procedures. Refer to the “III. Approval Requirements” Section of the Bureau’s 2002-
   03 Sunset Review Report for details.

17. What processes does the Bureau employ to hold institutions accountable if their practices
    should deviate from statutory requirements and Bureau guidelines?

   The Bureau enforces school compliance with statutory requirements through its various
   enforcement activities identified in the “Enforcement Activities” Section of the Bureau’s
   2002-03 Sunset Review Report. Please refer to page 13 of the Bureau’s 2002-03 Sunset
   Review Report for details.

18. Does the Bureau staff return telephone calls in a timely manner?

   Generally, yes. Bureau staff is required to serve its stakeholders and customers in a
   courteous and professional manner including providing timely responses to telephone calls.
   This is evidenced in Goal #3 of the Bureau’s 2002 Strategic Plan that states “building
   relationships and maintaining effect communication with all stakeholders in the deliver of


                                               24
   private postsecondary education in California”. There may, however, be those instances
   when the Bureau’s response is not made in a timely manner. In such instances, the Bureau
   makes every effort to rectify the situation and avert similar situations in the future (continual
   monitoring and improvement of customer communications).

19. How does the Bureau ensure that, in the event of closure of an institution, student records
    will be safeguarded?

   Unanticipated school closures are an extremely vexing problem for the Bureau and for
   the affected students. Due to the devastating impact of unanticipated closures, the
   Bureau has developed a triage team approach whereby we visit the site as soon as we
   learn about the closure in order to accomplish two things: advising students of their
   rights and options, and ensuring preservation of and access to student records. The
   relative success of this initial effort largely determines the extent to which we can assist
   students in exercising their options and rights.

   CEC Section 94829 requires instructional institutions to maintain current records for a
   period of not less than five years at its principal place of business in California, that are
   immediately available during normal business hours for inspection and copying by the
   Bureau. In the event of closure, an institution remains responsible for maintaining
   student records.

   Thus, one of the Bureau’s primary missions is to ensure institutions remain accountable
   to their statutory student record responsibilities. In those instances where the
   institution has abandoned and/or been remiss in their student record responsibilities,
   the Bureau has taken steps to secure the student records (when no other recourse is
   available). Additionally, the Bureau has shared this responsibility with the California
   Student Aid Commission (CSAC) and the United States Department of Education
   (USDE), which also require the student records for purposes of loan discharge and
   assessment purposes. The Bureau has worked diligently to reconstruct a functional
   relationship with USDE, resulting in unprecedented cooperation that has produced
   approximately $5 million in student loan discharges as well as considerable assistance
   in managing school closures.

20. What steps does the Bureau take to inform students of their rights and recourse when an in-
    state or out-of-state Bureau regulated entity ceases operations? What is the timeframe for the
    actions takens?

   Pursuant to CEC Section 94994(h), whenever the Bureau is advised of a pending or
   actual school closure, the Bureau’s Closed School Unit staff is immediately disbursed to
   the school to inform students and schools of their rights and responsibilities. For
   example, students are advised, in writing, of “Options for Students Faced with a School
   Closure” which provides step-by-step direction and analysis of student rights and
   options available during school closures. This includes student options to (1) transfer to
   another schools; (2) teach-outs at the school; (3) school refunds for any pre-paid tuition



                                                25
   for which services have not been rendered; (4) as a last resort, reimbursement for
   tuition losses through the Bureau’s Student Tuition Recovery Fund.

   Moreover, pursuant to CEC Section 94945(d), in the event of a school closure, the
   Bureau makes every effort to recover and unpaid assessments owed by the institution to
   the Bureau including, but not limited to, STRF payments (to reimburse students for
   tuition loss as a result of school closure).
   The above noted procedures are available to all students and taxpayer on the Bureau’s
   website (“http://www.bppve.ca.gov “). Also, please refer to the discussion of closed
   schools and student records in Question 19.

21. What statutory changes should be enacted to enable the Bureau to be more effective and
    efficient in its oversight of private postsecondary and vocational education programs?

   Refer to the “VII. Future Consideration and Improvements” Section of the Bureau’s
   2002-03 Sunset Review Report for a comprehensive discussion of changes to improve
   the effectiveness and efficiency of the Bureau’s oversight of private postsecondary
   educational institutions.




                                           26
                                         PART 2
     BACKGROUND PAPER FOR 2002 HEARING
            IDENTIFIED ISSUES, QUESTIONS FOR THE BOARD,
               AND BACKGROUND CONCERNING ISSUES


FIRST SUNSET REVIEW: The Bureau for Private Postsecondary and Vocational
Education (BPPVE or Bureau) was established on January 1, 1998, pursuant to the enactment of
AB 71 (Wright), Chapter 78, Statutes of 1997, for the purpose of approving and regulating
private postsecondary and vocational educational institutions located in California. AB 71 also
provided that the Bureau be subject to the sunset review process conducted by the Joint
Legislative Sunset Review Committee (JLSRC) pursuant to Business and Professions Code
Section 473.1 (b) and Education Code Section 94990. AB 1720 (Assembly Committee on
Higher Education), Chapter 399, Statutes of 2001, amended Business and Professions Code
Section 473.3 to provide that:

           (b)…in 2002, and every four years thereafter, the JLSRC in cooperation with
           the California Postsecondary Education Commission (CPEC) shall hold a
           public hearing to receive testimony from the Director of Consumer Affairs,
           the Bureau, private postsecondary educational institutions regulated by the
           Bureau, and students of those institutions. In those hearings the Bureau shall
           have the burden of demonstrating a compelling public need for the continued
           existence of the Bureau and its regulatory program, and that its function is
           the least restrictive regulation consistent with public health, safety and
           welfare.

(c) The committee, in cooperation with the California Postsecondary Education
Commission, shall evaluate and review the effectiveness and efficiency of the Bureau
for Private Postsecondary and Vocational Education, based on the factors and
minimum standards of performance that are specified in Section 473.4. The committee
shall reports its findings and recommendations as specified in Section 473.5. The
Bureau shall prepare an analysis and submit a report to the committee as specified in
Section 473.2.

Therefore, this is the initial sunset review of the Bureau pursuant to those provisions. In the
Sunset Report submitted by the Bureau to the JLSRC, the Bureau responded to a list of questions
that had been prepared by staff of the CPEC as being of key interest in the sunset review and
evaluation of the state’s regulation of private postsecondary schools and the operation of the
Bureau. In addition, in preparing this Background Paper and the Issues and Questions contained


                                               27
therein, the JLSRC staff met with the staff of CPEC to ascertain and discuss those issues,
questions, and concerns that were believed to be relevant to a proper evaluation of the state’s
regulation of the private postsecondary and vocational education institutions and the
administration of that regulation by the Bureau. The results of those discussions have been
incorporated into this Background Paper.

Historical Background. Prior to 1990, the Superintendent of Public Instruction, in consultation
with a 14-member Advisory Council for Private Postsecondary Educational Institutions, was
vested with the responsibility for the administration of the state’s regulation of private
postsecondary and vocational educational institutions under the Private Postsecondary Education
Act of 1977. There were six categories of degree-granting institutions and four categories of
nondegree-granting institutions. That law allowed accreditation by national accrediting
associations recognized by the U.S. Department of Education in lieu of state review and
oversight for licensure purposes. The regulatory duties under that law were performed by the
Private Postsecondary Education Division of the State Department of Education (Division) and
included a procedure for institutions to secure authorization from the state to issue diplomas and
degrees. The Division delegated approval of vocational institutions to independent accrediting
agencies and did not establish any compliance requirements. However, in the 1980’s California
earned the reputation as a haven for so-called “diploma mills” – with many degrees and diplomas
awarded by California’s private postsecondary and vocational institutions being of questionable
integrity and value. Further, there was significant financial aid abuse in private schools and
colleges.

Because of serious concern about the integrity of the degrees and diplomas from schools with
widely varying standards, the lack of enforcement provisions, and the exemptions from state
oversight granted in the law, in 1989 the CPEC sponsored SB 190 (Morgan), Chapter 1307,
Statutes of 1989, to enact the Private Postsecondary and Vocational Education Reform Act of
1989 (Reform Act). That legislation became effective on January 1, 1990 and established a
single, independent agency known as the Council for Private Postsecondary and Vocational
Education (Council). The Council was composed of 20 members representing private
postsecondary schools, the public, state agencies, and appointees from the Governor and the
Legislature - to which the responsibilities of regulation were transferred from the Department of
Education following a one year transitional period. The Reform Act also established a single
approval process for all private schools, colleges and universities except institutions accredited
by the Western Association of Schools and Colleges (WASC).

Also in 1989, AB 1420 (M. Waters) enacted the Maxine Waters School Reform and Student
Protection Act of 1989 (Maxine Waters Act) whose provisions were applicable to institutions
other than WASC accredited nonprofit institutions that regularly confer degrees after at least two
years of study. Two provisions strengthened and expanded minimum standards for the financial
condition of an institution, course passage rates and postgraduate employment rates, student
protections including refund policies and enrollment agreements, enforcement procedures and
penalties. The provisions of the Maxine Waters Act were merged with, and became a part of the
Reform Act enacted by SB 190.




                                                28
In 1995, pursuant to provisions of the Reform Act, CPEC conducted an evaluation of the
effectiveness of the Reform Act and submitted its report to the Legislature. CPEC concluded
that the Council’s administration of the Reform Act had provided significant protection to
consumers, had effectively protected the integrity of degrees and diplomas offered by
postsecondary institutions, that student and institutional protections represented a balanced view,
and that the Council and the Reform Act should be continued by repealing the June 30, 1997,
sunset date in the Act.

However, at the end of the 1996 Legislative Session, the Governor vetoed AB 2960 (Firestone
and Campbell) that would have extended the sunset date for the Act and the Council. The
Governor’s veto message raised the following concerns: (1) the level of fees required for
compliance and the ability of small schools to stay in business – that larger, more capitalized
schools did not have the same problem as smaller schools that operate on a much smaller margin,
and (2) the manner in which the staff of the Council carried out their responsibilities – including
reports from schools alleging a pattern of reprisals and vindictiveness, and the need for an
administrative appeal process short of litigation.

In response to the Governor’s veto, two urgency bills were enacted the following year (1997) to
extend the Reform Act and the Council’s sunset to January 1, 1998. Thereafter, AB 71 was
enacted to extend the January 1, 1998 sunset date to January 1, 2005, create the Bureau in the
Department of Consumer Affairs (DCA), transfer the administration of the Reform Act from the
Council to the Bureau, and make a number of changes to the Reform Act. One notable change
was the addition of regulation over a new “registration” category for certain types of programs
including intensive English language programs, short-term seminars, employment related
programs that cost less than $2000 and are less than 250 hours in duration, and state occupational
or profession licensing exam preparation courses. Registration involves a lesser standard of
review than the usual full-scale school review and “approval.”

Current Regulatory System. Since January 1, 1998, the Bureau has been responsible for
administering the state’s regulation of private postsecondary and vocational education
institutions pursuant to the provisions of the Private Postsecondary and Vocational Reform Act
of 1989, as amended up to the present. Those statutory provisions are located in the California
Education Code (Title 3, Division 10, Part 59, Chapter 7) Sections 94700 through 94999 (164
separate sections in all.) In addition, the Bureau operates under the authority of the Director of
the DCA and, as a result, its operation is also regulated by a number of sections in the Business
and Professions Code. The relevant Bureau administrative regulations are located in Title 5
California Code of Regulations, Sections 70000 – 76210.

The intent of the Reform Act was to promote integration of private postsecondary education into
all aspects of California’s educational system and to foster and improve the educational
programs and services of those institutions while protecting the citizens of California from
fraudulent or substandard operations. Specifically, the Reform Act’s Legislative Intent provides
the following purposes:




                                                29
   Ensuring minimum standards of instructional quality and institutional stability, thereby
    encouraging the recognition by public and private institutions of completed coursework and
    degrees and diplomas issued by private institutions.
   Establishing minimum standards concerning the quality of education, ethical business
    practices, health and safety, and fiscal responsibility to provide protection against
    substandard, transient, unethical, deceptive, or fraudulent institutions and practices.
   Prohibiting the granting of false or misleading educational credentials.
   Prohibiting misleading literature, advertising, solicitation, or representations by private
    institutions or their agents.
   Protecting the consumer and students against fraud, misrepresentation, or other practices that
    may lead to an improper loss of funds paid for educational costs, whether financed through
    personal resources or state and federal student financial aid.
   Recognizing and encouraging quality nongovernmental accreditation, while not ceding the
    responsibility for state oversight for purposes of approval, if the accreditation process fails to
    either protect minimum standards of quality or to acknowledge legitimate innovative
    methods in postsecondary education.
   Establishing an administrative agency staffed by individuals who are knowledgeable about
    private academic and vocational education and charges with the responsibility of developing
    policies and procedures for the oversight and approval of private postsecondary and
    vocational education – including the responsibility for managing a broadly construed policy
    and planning process that seeks to improve the state accountability for those institutions as
    well as to improve the articulation of private postsecondary and vocational education with
    the public and independent postsecondary educational community. The administrative
    agency should provide the leadership and planning needed to maintain and develop a strong
    private sector in the postsecondary and vocational educational community.

The Bureau regulates, and approves or registers, approximately 3000 private postsecondary or
vocational education institutions. This includes approval of approximately 2400 private
vocational training institutions with an estimated enrollment of 325,000 students, 300 private
postsecondary degree-granting institutions with an estimated student enrollment of 88,000
students, and registration of 300 private institutions that provide short career/seminar training,
continuing education, intensive English language programs, and license exam preparation
courses. In addition, the Bureau is designated as the State Approving Agency for the
administration and approval of resident veterans’ educational programs. This includes approval
of courses offered to veterans and related eligible persons using GI educational benefits by 950
public and private postsecondary degree-granting and vocational institutions with an estimated
enrollment of 25,000 veterans using their GI Bill educational benefits. Bureau approval or
registration is required before a school may legally operate to offer courses to students or
veterans in order for them to be eligible for federal financial aid.

All private nondegree-granting postsecondary or vocational education institutions are required to
comply with a common set of standards and requirements. The Bureau conducts an assessment
of institutions’ operations to determine if the quality and content of each course or program of
instruction, training or study may reasonably be expected to achieve the objective for which it is
offered. The operational areas assessed by the Bureau include space and equipment
requirements, faculty qualifications, disclosure of information about the course and the


                                                 30
occupations to which the course leads, student performance records, health and safety standards,
and financial responsibility and stability.

Approval of private degree-granting institutions also requires compliance with a common set of
standards and requirements. The Bureau reviews each degree program offered by an institution
and performs a qualitative assessment of the following: curricula, instruction, faculty, physical
facilities, administrative personnel, admission standards, financial resources, governance,
institutional purpose and mission, degrees offered, graduation requirements, financial aid
policies and practices, and financial stability. All private degree-granting institutions are subject
to this regulation except: 1) WASC-accredited institutions that are either incorporated as a
nonprofit public benefit corporation or exclusively confer degree upon completion of a course of
study of two or more years; 2) religious institutions whose degrees pertain to its religious beliefs;
or 3) institutions that comply with certain criteria and are approved by an accrediting agency
recognized by the U.S. Department of Education (USDE).

The Bureau also administers the Student Tuition Recovery Fund (STRF) established in 1978 and
funded by assessments on regulated schools and their students based on the cost of the course for
each student. The purpose of the STRF is to relieve or mitigate enrollment fee losses incurred by
students enrolled in private postsecondary institutions that close prior to the student’s completion
of his or her education, that breach the enrollment agreement made with the student, or that
violate provisions of the Reform Act regarding making tuition refunds.

The Bureau is administered by a Bureau Chief, appointed by the Governor and confirmed by the
Senate, to whom the Director of Consumer Affairs has delegated the duties granted the Director
by the Reform Act. The Director of Consumer Affairs is required to appoint an advisory
committee consisting of representatives of educational institutions, student advocates, and
employers who hire students, among other parties. The advisory committee is to advise the
Bureau concerning the Bureau’s administration, licensing, and enforcement functions. (Note:
Currently, there is no advisory committee. The Bureau recently submitted candidates to the
Director and it is anticipated that appointments will be made to create the advisory committee to
assist the Bureau in its future regulatory efforts.)

The Bureau has 71 authorized staff positions and operates on a budget of $7.7 million (FY 2002-
2003), derived from various approval fees assessed from the regulated institutions and $1.1
million provided by the federal government for the Bureau’s approval of programs for veterans’
benefits. Prior to granting an institution approval, the Bureau first reviews the very extensive
application paperwork submitted by institutions. Thereafter, within a specified time period, the
Bureau is required to conducts site visits to the institutions’ actual physical plant using site
visitation teams made up with members whose educational level is at least equal to that of the
programs they are evaluating.

Bureau’s Projections for Future Considerations and Improvements. The Bureau’s Sunset
Report states that the Bureau will be taking action during the current 2002/2003 fiscal year to
effect the following changes in its operation:




                                                 31
   Advisory Board – At the time of this writing, appointments (made by the DCA Director)
    are in the works to re-establish Bureau’s advisory Board.
   Appeals Process – Simplify and streamline current appeal procedures to ensure fair and
    equitable resolution of appeals in a cost effective and timely manner.
   Approval Process – Amend the current cumbersome approval statute and regulation
    procedures to ensure comprehensive, efficient and effective approval procedures.
   Arbitration – Develop and propose regulations that would implement a Bureau-operated
    voluntary arbitration program as required in statute.
   Enforcement – Amend current law to further improve the Bureau’s ability to quickly go
    after violators. This includes, but is not limited to, streamlining legal notification
    requirements when implementing enforcement actions and revoking or suspending approvals
    to operate or certificates of authorizations.
   Processes and Procedures – A Bureau of State Audits (BSA) report, and a recently
    completed DCA internal audit, noted considerable deficiencies in the Bureau’s procedures
    and documentation (or lack thereof) relative to its application processing, cashiering,
    complaint handling, and other activities. The Bureau notes that it is committed to rectifying
    the noted deficiencies, most of which are related to data collection and management and will
    be mitigated with the implementation of the Bureau’s new data management (SAIL) system.
   Internet Regulation – Make the necessary statutory and regulatory changes to keep pace
    with the special challenges of Internet (on-line) education to ensure student protections and
    quality of services remain intact.


                    CURRENT SUNSET REVIEW ISSUES
The following are pertinent current issues or areas of concern for the JLSRC pertaining to the
state’s regulation of private postsecondary and vocational institutions and the administration of
this regulation by the Bureau, along with background information concerning the particular
issue. There are also questions staff has asked concerning the particular issue that are believed to
be relevant in evaluating the effectiveness of that regulation and where changes may need to be
made. The Bureau was provided with these issues and questions and was asked to be prepared to
address each one if necessary.


                        BUREAU ADMINISTRATION ISSUES


ISSUE #1: Should the administration of California’s laws regulating private
postsecondary and vocational schools continue to be administered by the Bureau, or should
some or all of its various programs be administered by a different governmental agency?

Questions for Issue #1: How effective has the Bureau been since its inception in accomplishing
the purposes of the Private Postsecondary and Vocational Reform Act of 1989 and the Maxine
Waters Student Protection Act? What criteria does the Bureau use to measure the effectiveness
of its performance? What problems does the Bureau recognize in its current administration of
the laws and does it have the necessary structure and resources to resolve them?


                                                32
Background: In 1997, when AB 71 proposed to create the Bureau and transfer administrative
responsibility for the Reform Act to it at the Governor’s insistence, concerns were raised that the
DCA had little experience in conducting qualitative reviews of institutions that grant academic
degrees and serving as the primary advocate and spokesperson for the private postsecondary and
vocational education sector. It was noted at that time that no other state in the nation had placed
oversight of the private postsecondary and vocational education sector with a consumer affairs
agency whose primary function is to license and regulate businesses.

The predecessor to the Bureau, the Council, had earned a reputation for having done much to rid
California of its “diploma mill” disrepute. CPEC, in its 1995 evaluation report of the
effectiveness of the California’s oversight of the private postsecondary and vocational education
sector, concluded that California had one of the most rigorous regulatory agencies in the
country. CPEC also concluded that the Council and its staff had made significant headway in
fulfilling the mission of the Reform Act, and that the Reform Act had improved both the quality
and integrity of degrees and diplomas and student consumer protections.

Complaints about the impact of excessive fees on small schools and vindictiveness on the part of
Council staff toward schools seeking approval led Governor Wilson to veto the continuation of
the Council in favor of having the administration of the Reform Act performed by a new agency,
the Bureau, within the Administration. At its inception, the Bureau inherited inadequate,
outmoded data collection processes from the Council, and was plagued by serious backlogs
relating to school approvals and the handling of student complaints, and inadequate funding in
the STRF. The Legislature adopted a requirement for Supplemental Report Language in the
2000 Budget Bill – requiring the Bureau to report on a quarterly basis its progress in eliminating
the backlog. In response, the Bureau developed a backlog reduction plan and subsequently
reported in the 2000-2001 quarterly workload reports that it had eliminated most of the backlog
and is continuing to process all current work in a timely manner.

To correct the serious deficiencies in its outmoded data collection methods (Microsoft Excel
spreadsheets and a Private Postsecondary Data System - PPDS) which made it incapable of
reporting the status of its operations with any reasonable accuracy, the Bureau staff-developed,
in-house, a new, comprehensive management information system to replace the outmoded
systems. The Bureau reports that the new system – the BPPVE School Automation Information
Link (SAIL) system – is now operational on a pilot project basis. That system is designed to
meet the needs of schools, students, Bureau managers, and other interested parties and is capable
of migrating to a larger Department of Consumer Affairs system if and when the latter system is
developed. The Bureau reports that the Excel and PPDS data has been updated and corrected (in
large part via an exhaustive review of the original source documents in school files) before it is
loaded into the new SAIL system.

As a result of the closing of Career West Academy, students of the school made an estimated
$2.0 million in claims against the STRF. The STRF had insufficient funds to pay those claims
and in the case of Aguirre v. Hamilton, the judge of the San Francisco Superior Court ordered
the DCA/Bureau to pay all timely claims of those students. The Bureau through its statutory
authority to make “special assessments” to schools to the STRF, adopted emergency regulations



                                                33
to do so. The Bureau collected additional STRF funds and began paying STRF claims to Career
West Academy Students. However, in September of 2000, the Sacramento Superior Court, in
the case of California Association of Private Postsecondary Schools v. Hamilton issued an order
granting a stay of all special assessment proceedings pending a hearing and decision. A
settlement of that case is now pending.

Because of the problems with the STRF, AB 201 (Wright, Chapter 621, Statutes of 2001)
revised the fee formula for calculating the STRF quarterly assessments that resulted in an
increase in STRF collections to make the fund solvent and capable of paying anticipated claims.
AB 201 also required STRF schools to report certain information to their students regarding the
STRF, and required the Bureau to account for STRF payments including a requirement to
annually report to the Legislature on any special STRF assessment revenue. The Bureau reports
that regulations to implement the provisions of AB 201. AB 201 also required the Bureau to
adopt regulations for its procedures for complaint processing and disclosure – and the Bureau
reports that after undertaking a comprehensive review of its complaint process, that it is now in
the process of promulgating the required regulations.

The Bureau inherited a number of problems at its inception, some of which it has, or is in the
process of addressing such as the reduction in school approval backlogs, the solvency of the
STRF, and the development of a comprehensive and accurate data collection and reporting
system. However, the Bureau continues to have problems to address in achieving the purpose of
the Reform Act. Complaints persist that the Bureau is not responsive, timely, or consistent in
performing its licensing (approval) of schools and its protection of students. The goal of
integrating the California private postsecondary educational sector into the overall State
educational policy and planning that includes the public and independent postsecondary
education sectors is still absent.


ISSUE #2: The Bureau appears to operate in isolation from the State’s regulation of
other educational programs – being located in the Department of Consumer Affairs whose
constituent licensing regulation is focused on the conduct of businesses and occupations,
and not educational endeavors.

Questions for Issue # 2: How does the Bureau obtain input from the public, the institutions it
regulates, employers, consumer representatives and students attending the regulated
institutions? Has the Bureau established an advisory body as specified in the law? Does the
Bureau have any formal, regular interaction or exchange of information and views with the
California Postsecondary Education Commission or other governmental agencies involved in
education issues? What options are there for increasing the interaction and communication
between the Bureau, CPEC, and other entities involved in educational policy planning and
implementation? Would having representation of the Bureau on CPEC and of CPEC on the
Bureau’s advisory board be helpful in this regard? Would establishing one or more specific task
forces made up of representatives of each and other interested parties be a reasonable way to
assist the Bureau in accomplishing some specific projects such as drafting revisions to the
Bureau’s statutes?



                                               34
What problems, if any, would be associated with separating regulation of some of the Bureau’s
programs from the rest? In particular, separating oversight and regulation of the degree-
granting schools (academic, applied/occupational, or both) from the remainder of the Bureau’s
programs and moving it to some other agency whose primary focus is education?

Background: Prior to the establishment of the Bureau as the agency responsible for
administering the Reform Act, regulation and oversight of private postsecondary and vocational
education institutions was performed by state governmental agencies whose primary focus was
education, namely – the Department of Education and the Council for Private Postsecondary
and Vocational Education. Both of these agencies had advisory or governing membership
representing educational governmental representatives, the public, students, regulated
educational institutions and the Legislature.

The recently issued California Masterplan for Education contains the recommendation to
transfer all oversight of state-approved private colleges and universities that offer academic
degrees at the associate of arts level or higher to the California Postsecondary Education
Commission (CPEC), to ensure the quality and integrity of degrees awarded. Concerns are
expressed in the Masterplan about difficulties the Bureau has encountered in its efforts to
implement the complex, and occasionally conflicting provisions of AB 71, and about the
existence of separate governance structures for each sector (public, independent, and private) of
postsecondary education. While making no recommendation for moving regulation of
unaccredited postsecondary vocational schools, the Masterplan also notes that the Governor has
proposed that vocational and workforce preparation programs should be consolidated to achieve
greater coordination and common standards for assessing performance. Further, the Masterplan
recommends designating CPEC as the state approval agency for veterans’ institutions and
courses – transferring the approval of such institutions and programs, together with the related
$1.1 million in federal funding to operate that program, from the Bureau to CPEC.

It should be noted that historically, the last two times responsibility for regulating the private
postsecondary and vocational institutions was transferred from one state agency to another
(Department of Education to the Council, the Council to the Bureau), there has been a serious
gap in administration of the law’s provisions during the transition period. Consequently, it is not
unreasonable to expect that an administrative transitional gap might occur again if some or all of
the current regulatory oversight is transferred from the Bureau to another agency or agencies.


ISSUE #3: Two audits of the BPPVE have revealed shortcomings in the agency’s
operations.

Questions for Issue #3: What action has the Bureau taken to respond to the State Auditor’s
audit in 2000? What is the BPPVE’s current status regarding resolving the issues raised in that
audit? Are there remaining items that still need to be completed? If so, what is the Bureau’s
plan for completion? What is the Bureau’s understanding of what the findings are from the
recently completed audit by the Department of Consumer Affairs? Will the Bureau be making a
formal public response to that audit as it did to the earlier audit? If so, when and how will it
respond? If not, how will the Bureau represent its reaction, criticisms, or agreement with that


                                                35
audit’s findings – and present any proposed actions to resolve identified problems? What are
the anticipated timelines and outcomes?

Background: The BSA conducted a review of the Bureau’s programs and operations in FY
2000-01 to ensure compliance with statutory requirements. The scope of the BSA audit
included a review of the Bureau’s (1) application processing procedures; (2) complaint
processing; (3) central information systems; (4) administrative procedures; (5) cashiering
procedures; (6) personnel procedures; (7) STRF Program; and (8) other operational activities.
The BSA audit confirmed findings from the Bureau’s own internal operational audit and
reported the need for a centralized database system to record and monitor the Bureau’s statutory
duties (e.g., application processing, complaint processing, STRF transactions, etc.,). The Bureau
responded by developing the School Automation Information Link (SAIL) pilot system that the
Bureau reports that as of September 2002 has eighty-percent (80%) of the Bureau’s operations
on-line and will be completed by the end of calendar year 2002. The Bureau reports that it has
also undertaken development of the application, cashiering, STRF, personnel and administrative
procedures recommended by the Bureau/BSA 2001-02 Fiscal Year audit findings. The JLSRC
will want the Bureau to provide it with the status regarding the implementation of its actions
regarding the specific recommendations of the BSA audit.

Also, the DCA, as a part of its overall effort to audit each of the licensing programs housed
within it, has just concluded its own internal audit of the Bureau. At the time of the writing of
this Background Paper for the JLSRC hearing in November, the results of that audit, its
recommendations, and the Bureau’s response were not available. It is expected that they will,
however, be available by the time of the hearing and that the Bureau will be able to provide
testimony regarding them.


                      BUREAU POWERS AND DUTIES ISSUES


ISSUE #4: The current statutes under which the Bureau operates appear to be
inordinately complex, vague, and contradictory.

Questions for Issue #4: What problems has the Bureau had with the clarity or complexity of the
various provisions of the Private Postsecondary and Vocational Education Reform Act of 1989?
Are there contradictory or vague provisions that are difficult or impossible to administer? If so,
what are they? If there are problems with the statutes, what steps can be taken to rectify them
while preserving the protections they were intended to provide? Is there a reasonable likelihood
that there can be a consensus by all of the Bureau’s stakeholders (schools, students, consumer
advocates, and employers) as to what changes may need to be made? What would be a
reasonable time frame for developing such consensus and enacting needed changes?

Background: There has been almost universal agreement that the statutes under which the
Bureau operates are extremely complex and difficult to administer – with some provisions being
vague, confusing or contradictory with other provisions. The original Reform Act of 1989 was



                                                36
major rewrite of the law, and included the consolidation of the provisions of two different
legislative bills – SB 190 (Morgan) and AB 1402 (Waters.)

CPEC in its 1995 evaluation report on the law and the predecessor Council’s administration
noted that, for example provisions related to non-degree vocational education programs are
scattered throughout the Reform Act and interspersed with provisions relating to degree
programs. Also, that provisions about certain requirements, such as the contents of an
institution’s catalog are scattered throughout the Reform Act. CPEC recommended that
legislation be developed to restructure the Act with the limited objective of clarifying the law.
In addition, CPEC made other recommendations in its report for changes in the law that if still
warranted today would require amendments to the Reform Act. To complicate matters further,
the legislation creating the Bureau and transferring administration of the Reform Act to it also
added additional complexity and confusion with the addition of regulation of the category or
“registered” institutions offering specified types of educational programs. This additional
regulation contains yet different definitions and requirements than are applicable to the other
institutions the Bureau regulates.


ISSUE #5: State laws regulating private postsecondary and vocational institutions that
are administered by the Bureau to protect students and the public against fraud and
inadequate education do not regulate institutions that are out-of-state and are offering
educational programs and degrees or diplomas via the Internet to California students.

Questions for Issue # 5: How significant is the situation of out-of state schools offering
postsecondary and vocational programs and degrees over the Internet? Is this situation leading
to a recurrence of “diploma mills” that defraud students and the public? How? What volume of
complaints has the Bureau received as a result of this situation? Is there a need to regulate
these enterprises with similar requirements that exist in the Bureaus’ governing statutes? Does
the Bureau have any authority to regulate these enterprises? What can or should be done to
bring any needed protections to this area of education?

Background: Increasingly postsecondary and vocational education programs and diplomas and
degrees are being offered from schools located outside of California to California students
through correspondence courses and electronic media – especially the Internet. The current
Reform Act does not provide the Bureau with the legal authority to regulate these institutions
and assure the quality and integrity of their programs and degrees, and the protection of their
California students. Given the interstate nature of these enterprises, and the lack of a physical
location, it is doubtful that California alone can either legally or effectively regulate these
institutions and their educational programs despite the significant impact they may have on
Californians. There has been some work on this being done by groups at the national level. The
Bureau indicates that it has not received many complaints regarding these educational
institutions or programs from students. This area seems to represent a serious and apparently
increasing gap in the regulatory protection intended by the enactment of the Reform Act – and
efforts should be made to address it before it creates a recurrence of the “diploma mill” and
student fraud and misrepresentation problems California experienced in the 1980’s.



                                                37
ISSUE #6: Data collection and dissemination from the private postsecondary and
vocational education sector that is similar to the data available from the public
postsecondary sector appears inadequate.

Questions for Issue #6: What types of data systems has the Bureau had to capture relevant data
about the sector it regulates and its own performance in administering its governing laws? What
type of information does the Bureau’s data systems collect? How old is the information provided
to the Bureau? If not reasonably current, what can be done to make it so? How accessible is
that information and through what means can the Bureau access such information? How does
the Bureau make such information available? What response does the Bureau have to criticisms
that its information systems, data collection and dissemination are woefully inadequate? What
improvements has or can the Bureau make and over what timelines?

Background: As noted previously, the state of the data collection at the inception of the
Bureau’s administration was deplorable. The Bureau inherited outmoded Microsoft Excel
spreadsheets and a Private Postsecondary Data System which were not capable of providing
accurate and meaningful data needed to properly administer the regulatory program. The
Bureau reports that it has established a new computer data management system in house (SAIL)
that will capture and be capable of reporting on the kind of data it, the schools, students and the
public want and need. According to the Bureau, that system had to be developed in-house by its
own staff rather than being developed in conjunction with the DCA which has been working for
several years on development of a new department-wide data system. As such, there are
concerns about the viability of the Bureau’s new system, its ability to eventually be integrated
with a new system developed by the DCA, and the types of information it can collect and
produce.

The institutions regulated by the Bureau produce volumes of information for their approval
process, as does the Bureau. In addition, the institutions are required by statute to submit annual
reports containing specified information and to file financial audit reports with the Bureau. The
Bureau reports that there have been problems with obtaining compliance with these report
requirements – so the completeness of the information it has received is still a problem. Also,
the timing of the requirement for institutions to submit annual reports appears to be a problem,
with the information being reported being as much as a year or two old. Finally, CPEC receives
a significant amount of information from public and independent postsecondary schools as a
result of requirements they must meet to participate in federal student aid programs. However,
similar information which CPEC needs and would use to incorporate the private postsecondary
and vocational sector of education in its planning and policy development has not apparently
been available from the Bureau and its data systems. Whether the current Bureau system can
provide the kind of information that CPEC gets from the public and independent sectors is
unknown. This sharing and consolidation of information is important if the private sector that
educates a large portion of the student population is to be integrated with the public and
independent sectors of private and vocational postsecondary education.


                                   BUDGETARY ISSUES


                                                38
ISSUE #7: The Bureau’s report shows a declining fund reserve from 5.3 months at the
end of FY 00-01 to 0.5 months at the end of FY 04-05.

Questions for Issue #7: Does the Bureau has sufficient revenues to ensure appropriate
oversight of the educational institutions and programs under its purview? How does the Bureau
plan to rectify its declining fund balance? How are the Bureau’s fees determined? When did the
5% reduction in fees occur that was provided for in the legislation that transferred regulation of
the private postsecondary and vocational schools to the Bureau in 1998? What effect did that
5% reduction in fees have on the Bureau’s administration of the law?

Background: The Bureau’s Sunset Report contains a 5-year report of its fund condition. That
fund condition shows the Bureau’s reserves at the end of FY 2000-2001 were 2,459,000 or 5.3
months of its annual operating budget. The report shows that reserve had dropped to $1,304,000
or 2.8 months at the end of the following fiscal year (2001-2002) and is projected to decline to
1.9 months, 1.2 months, and 0.5 months in the next three fiscal years ending with FY 2004-
2005. As of September of 2002, the Bureau reports that approximately 300 schools (about 10%
of the total regulated) had not yet paid their calendar year 2000 annual dues that were due in July
2002. While the number of schools constitutes a relative small, and according to the Bureau
decreasing percentage of the total number of regulated schools, there appears to be an excessive
time disparity between the time period for which the annual fee is assessed (2000) and the
deadline date by which that assessment is to be paid (July 2002) – as much as least 18 months
after the close of the assessed year. The Bureau indicates that it has issued deficiency notices
and is in the process of preparing citations and fines to be issued in November 2002 for those
schools that remain delinquent.

The Bureau states it anticipates additional revenue to accrue as a result of improved collection
and efficiency brought about through the implementation of its new SAIL data collection system
and enhanced internal controls and tracking. The Bureau believes that this additional revenue
will improve the Bureau’s fund condition and provide a higher reserve balance than reflected in
its current projects. Whether this will be the case remains to be seen. If the situation doesn’t
improve as anticipated, steps will need to be taken to either augment the Bureau’s revenues or
decrease its expenditures.


ISSUE #8: It is unclear if the Bureau’s fees and sources of revenues are related to and
commensurate with the costs and expenditures of the Bureau’s different programs or if
there is cross-subsidization.

Question #8: Is an institution’s annual gross revenue an appropriate standard for determining
the Bureau’s fees? Does that standard relate to the amount of work required of the Bureau to
regulate the various institutions? Why is there so little difference between the fees charged to
institutions whose annual gross revenues are greater than $1 million per year versus smaller
schools with significantly lower revenues? Why is there such a disparity between the fees
charged to the degree-granting institutions versus the vocational institutions? Do the fees


                                                39
adequately cover the costs incurred by the Bureau to administer each of its programs? Are any
revenues generated in one program area used to subsidize the Bureau’s efforts in other program
areas? Are there any improvements that can be made regarding the generation of revenue
necessary to properly administer the laws? What effect will the Bureau’s loss of three staff
positions have on its ability to administer the Act?

Background: The Bureau’s authority to collect fees is currently provided for in the Education
Code Section 94932. That provision states the Legislature’s intent that the fee schedule adopted
by the Bureau shall reflect the size of a regulated institution relative to its student enrollment
numbers, and that the fees charged shall be in an amount not to exceed the actual costs of
approving or renewing approval of the regulated private institutions. The Bureau is authorized
to adopt a fee schedule containing a maximum amount and showing the amount of the fees to be
charged within that amount. The Bureau must annually present its proposed budget and fee
schedule to the Department of Finance and the Joint Legislative Budget Committee for their
review and approval as part of the annual budget process. The fees charged may be increased
annually by the Bureau up to the maximum allowable level through the adoption of regulations.
Increases in fees above the maximum level must be changed through legislation.

The Bureau’s current fee schedule (in effect since 1998) breaks down the regulated institutions
into three categories for purposes of fee assessments, based on the institutions’ annual gross
revenues. The three categories are those with annual gross revenues that are: $1 million or
more (large), $100,000 to $1 million (mid-size), and under $100,000 (small). For degree-
granting institutions the approval application fees are: $4,275 (large), $4,050 (mid-size), and
$3,825 (small), respectively. For non-degree granting institutions the approval application fees
are: $950, $900, and $850, respectively. And for registered short course institutions the
application fees are: $665, $630, and $595, respectively.

The range of the other fees institutions pay for various Bureau services are comparable in the
narrow range in which they fall from large to small institutions. Given the fairly large disparity
in size from the largest to the smallest – the range of fees seems pretty narrow – with small
institutions paying nearly as much as large ones.


ISSUE #9: The Student Tuition Recovery Fund (STRF) has historically been
underfunded and there have been problems with obtaining the STRF assessments from at
least some regulated schools.

Questions for Issue #9: What is the current fund status of the STRF? What are the projections
for the fund balance in the future? What is the amount of any outstanding claims on the STRF?
What is the range of age of pending claims? How are the assessments to support the STRF
determined? Is this basis actuarially based on potential exposure to STRF liability for claims?
If not, why not? Should a different formula be considered – particularly given recent legislation
affecting the STRF assessments?
What is the current level of schools’ compliance with their STRF assessment obligations? What
is the timing for collection of STRF assessments and when are they determined to be delinquent?



                                                40
Are their penalties for late payment of STRF assessments, and are they adequate to obtain
reasonable compliance with statutory obligations and the needs of the Fund?

Background: The Bureau’s Sunset Report contains a chart showing the condition of the STRF
for FYs 2000/2001 to 2004/2005 (projected.) The chart shows the STRF reserves for FY
2000/2001 as $656,000 or 8.7 months, going to $1,229,000 but only being 8.2 months in reserve,
staying the same amount for FY 2002/2003 but reflected as 9.1 months in reserve, rising to
$1,306,00 (9.7 months reserve) in FY 2003/2004, and rising again to $1,383,000 (10.3 months)
for FY 2004/2005. The relationship of the amounts to months in reserve is unclear.

The Bureau’s STRF chart reflects the impact of revenue increases from the special assessment
the Bureau made in 2001, and those resulting from the enactment of AB 201 in 2001 which
increased the amount of the assessment each regulated institution pays (based on a prescribed
amount per dollar of the cost of a student’s educational program.) That bill just took effect this
year. In 2000 the Bureau was confronted with over $2 million in student claims against the
STRF resulting from the closure of Career West Academy and the resulting lawsuit of Aguirre v.
Hamilton. The STRF contained insufficient monies to pay all of those claims leading the
Bureau to impose a special assessment in 2001. However, collection and expenditure from the
revenues of that special assessment were halted in September 2001 as a result of a court order in
the case of California Association of Postsecondary Schools v. Hamilton.

The STRF is the fund of last resort for students who have lost their tuition from school closures
without having received the education or degree for which they paid it. The Bureau does seek to
help students obtain forgiveness of the student loans they take out to pay their tuition, but absent
that being granted, generally the student’s only recourse would be a claim for reimbursement
from the STRF. The Bureau reports that during FY 2000/2001, it successfully negotiated
approximately $4 million in student loan discharges on behalf of California students.
Nonetheless, the STRF is one of the most critical student protections provided students under
state law and was enacted in 1978. Consequently, its solvency and ability to pay off on
anticipated (or unanticipated) student claims is important. One item of information that was
lacking in the Bureau’s report was the number and percentage of institutions that are not current
in payment of their quarterly STRF assessments – and the Bureau has been asked to provide that
information to the Committee to review.


                                    LICENSURE ISSUES


ISSUE #10: The time period for a school to obtain final approval from the Bureau is
often extremely long.

Questions for Issue #10: Is there currently a backlog of schools waiting for approval or
reapproval? How do you define “backlog?” If a backlog still exists, what is the plan to
eliminate it and by when? What are the statistics regarding how many schools the BPPVE has
approved, in what time periods, for which programs? How long does the school approval
process take from shortest to longest, average, and by program? Has the Bureau been in


                                                41
compliance with statutorily prescribed time limits? Is it now? Can the different stages in the
Bureau’s approval process be broken into steps? If so, how long does it take or it has taken to
complete each step? Specifically, how long is the time period between a Bureau’s visiting
committee’s onsite inspection and the issuance of its report? How long thereafter does it take
the Bureau to render a decision on a school’s application for approval?

Background: The Bureau reported to the Legislature in April 2000 that it was processing its
workload in a timely manner and within prescribed statutory timeframes – including its Degree-
Granting, Enforcement & Complaints, and Registered Institutions Programs, its Veterans Title
38 Program, and its Student Tuition Recovery and Closed Schools Units. However, it also
reported that application processing and site visit backlogs existed within its Vocational
Institutions Program. The Bureau prepared a Backlog Reduction Workplan to eliminate that
backlog within an eighteen-month period, from July 1, 2000 through December 31, 2001.

The Legislature adopted Supplemental Report Language in the 2000 Budget Bill requiring the
Bureau to report on a quarterly basis, its progress in eliminating the backlog as well as other
operational and program information. The Bureau did so and reported in its Sunset Review
report that it had eliminated most of the backlog, while continuing to process all current work in
a timely manner. It is unclear how much, if any, backlog still remains at this time. A chart
contained in the Bureau’s Sunset Report shows that the Bureau received 1,380 applications for
approval of postsecondary and vocational (degree-granting and nondegree-granting) institutions
during FY 2001/02, approved 1,148 approval applications, approved 1,470 reapproval
applications, and denied 31 applications (excluding applications that were withdrawn by
applicants).

However, as noted below under Issue #12, there can be a considerable period of time between
the Bureau’s receipt of a written application for a school’s approval and the conduct of the actual
site visit that is required before an institution can be granted final approval to operate. The
Bureau states that it can relatively quickly make the necessary determination based on the
application paperwork to give an institution a “temporary” approval that will let it operate while
awaiting the site visit and eventual final approval decision. That time period can exceed a year
though it still falls within the current statutory requirements relative to required timeframes. It
should be noted that there appears to be no prescribed time frame for how long after a site visit
the site visit team has to produce its report and recommendation to the Bureau for its decision on
final approval. Given the lengthy time for even timely (within the statutory time limits) work
processing – the experience of institutions waiting for a Bureau decision could be as if the
Bureau still had a backlog. It may be worthwhile for the Bureau to look at whether it can
readjust its personnel to effectuate quicker responses in the application processing.


ISSUE #11: Is there duplication of effort in the Bureau’s licensure of degree-granting
and vocational schools versus its approval of academic programs that will qualify for the
use of veterans’ benefits that are offered at California’s public and private postsecondary
institutions?




                                                42
Questions for Issue #11: How many approved veterans’ programs are offered by private
postsecondary institutions and how many are offered at public postsecondary institutions? Are
all of the private institutions subject to the requirement to be approved by the Bureau apart from
the approval required for offering veterans’ programs? If not, how many are? What is entailed
in the Bureau’s approval of the school versus what is entailed in the Bureau’s approval of
veterans’ programs offered by that approved school? Is there duplication of effort, or can
greater efficiencies be obtained by combining both approval processes in some manner?

Background: The Bureau approves approximately 3000 private postsecondary degree-granting
and nondegree-granting institutions unless exempted, to operate in California. Concurrently, the
Bureau also approves educational programs offered by approximately 950 postsecondary
institutions, including public institutions, for veterans utilizing their GI Bill educational benefits.
Both approvals can occur at the same institution – leading to the question of whether the two
functions duplicate each other in some ways and whether the two approvals could be combined
for increased efficiency and cost savings to the Bureau. Payment for the general institutional
approval is made by the institutions, while payment for the veteran’s approval is derived from an
annual grant amounting to $1.1 million.


ISSUE #12: It seems that the law’s protections may be undermined by the Bureau’s
issuance of “temporary approvals” just based on an institution’s submittal of the required
application paperwork and what can be a long time period before the Bureau conducts the
required site visit necessary for it to issue a final approval.

Questions for Issue #12: How often does the Bureau use temporary or conditional approvals?
On what basis are they granted? How long thereafter does it take for the Bureau to conduct a
site visit to the school facility, and thereafter make a final approval decision? What percentage
and number of schools that have been granted temporary approval have thereafter failed to
obtain a final approval from the Bureau? What effect does such final approval denial have on a
school’s students?

Background: The approval process employed by the Bureau, as specified in state law, involves
the Bureau’s approval of the extensive written application package submitted by each institution
seeking approval to operate, or to offer new educational programs. If an institution appears,
based on its written application, to comply with all of the statutory requirements then the Bureau
issues a “temporary” approval to the school to operate. Sometime thereafter, between 90 to as
much as 360 days, the Bureau is required to conduct an onsite inspection of the institution’s
physical facilities. This onsite inspection is done by a team of persons with expertise in
evaluating the quality of educational offerings as well as the financial condition and other
requirements necessary to comply with the law. Sometime thereafter, though how long is
unclear, the site team completes a site visit report on its findings and makes a recommendation
to the Bureau regarding the granting of approval. If the site visit reveals that the school is in
compliance then the Bureau will issue it a “final” approval for the school to operate.

While the temporary approval process legally allows an institution to operate, it does not carry
the same appearance of assurance of integrity and financial stability that a final approval confers.


                                                  43
The long time period that can and does occur between the initial temporary approval and the
onsite visit and subsequent approval decision by the Bureau generates concerns by both the
institutions who want to gain final approval as quickly as possible, and by students and others
who want the assurance that what has been provided to the Bureau on paper is actually present at
the educational site of the temporarily approved institution. It is not known by Committee staff
the number or percentage of schools that fail to obtain final approval after having been granted
temporary approval – or the effect the denial of final approval has on the viability of the
educational courses taken by students during that time. The range of the time periods for
completion of each step in the approval process from receipt of an application for approval
through the granting of final approval would seem to be important in determining if the Bureau
has a “backlog” of approvals and what completion of approvals in a “timely” manner means in
actuality.


ISSUE #13: Current state law imposes different requirements on schools depending on
whether they offer a degree or not; and current law also exempts some schools and
programs from regulation.

Questions related to Issue #13: What is the rationale for imposing different requirements on
the different types of schools and programs? Would it be reasonable reduce the differences in
requirements for different types of schools or use a different criteria for imposing the current
requirements? What has been the Bureau’s experience with the new category of registered
schools with still different requirements that was added to state law with the establishment of the
Bureau? Should this category be retained or changed, and if so, why? What is the rationale for
the various exemptions in the law? Are these exemptions sufficiently clear so as to be readily
understood and enforced? Should any of the exemptions be eliminated, and if so, why? Could
use of the existence of not only WASC but other recognized regional or national accrediting
bodies be used to substitute for some of the duties currently required of the Bureau – while still
preserving at least the current level of protection afforded by state law?

Background: The Reform Act contains different requirements for its approval of institutions.
All institutions subject to the Act must comply with a common set of requirements related to its
financial integrity and stability, student protections relating to school catalog, student enrollment
agreements, identification of designated agents, annual reporting, qualifications of faculty and
staff, and physical facilities. Beyond these there are additional requirements based upon the type
of institution – degree-granting and/or vocational. Vocational institutions must comply with
requirements of the Maxine Waters Act portion of the Reform Act that contains additional
student protections including meeting certain performance standards regarding the rate of course
completion by an institution’s students and the level of employment of graduates of the
institution’s programs. Degree-granting institutions must meet a different set of standards that
require the institution to demonstrate that: (1) the program of study for which the academic
degree is granted provides the curriculum necessary to achieve it professed or claimed academic
objective for higher education, and (2) the institution requires an appropriate level of academic
achievement for that degree.




                                                 44
In administering the provisions of the Reform Act, the Bureau is required to assess whether an
institution or educational program is exempt from all or some of the Act’s many requirements.
This involves first determining whether or not an institution falls within the statutory criteria of
the definition of a “private postsecondary educational institution” that is subject to regulation.
Excluded from that definition are nonprofit religious institutions that offers a degree limited to its
religious principles, WASC-accredited institutions operating either as nonprofit public benefit
corporations or that exclusively confer degrees upon completion of a course of study of two or
more years, or an institution that complies with specified criteria and is accredited by a national
accrediting agency recognized by the USDE.

Beyond that, there are several different exemption sections located in separate places in the
Reform Act that contain limitations based on various criteria. These can lead to an institution
being exempt from some but not all of the various provisions of the Reform Act. Concerns have
been raised in the past that the exemptions are not sufficiently clear so as to be readily or
consistently understood and applied. Also, accredited institutions that have generated a high
student loan default rate have raised the issue of whether accreditation alone sufficiently
provides the level of protection that is intended to be provided by the Reform Act. In the past
CPEC has made recommendations that for this reason, some of the exemptions should be limited
or narrowed – bring such institutions under the regulation of the Reform Act.

The theory behind exemption of WASC-accredited institutions is that the criteria that must be
met to gain accreditation cover most of the same things as those used in obtaining approval under
the Reform Act. Thus it was felt at the time the exemption was enacted that accreditation
provided sufficient assurance of the integrity of an institution’s educational programs and
degrees, and its financial stability. However, there are several other regional accrediting
agencies in addition to WASC that are recognized by the USDE and that have accreditation
criteria that are very similar to those used by WASC. Perhaps such accreditation should also
serve as the basis for exemption from some or all of the provisions of the Reform Act if such
accreditation is determined to assure the same protections as intended to be provided through the
Reform Act.


ISSUE #14: The Bureau staff is responsible for making subjective and qualitative
assessments of a school and its programs, including the quality of its curriculum.

Questions for Issue #14: What expertise does the Bureau use in performing the various types of
assessments necessary to make a decision on a school’s application for approval? Does the
Bureau’s staff have such expertise or must the Bureau rely on personnel outside the agency?
The Bureau employs Education Specialists on its staff to review applications for approval – what
background in education or experience do these staff have to be qualified to assess a school and
its programs? What training, procedure manuals, etc., does the Bureau provide to staff to assist
them with making proper assessments? Is there an appeal process for schools that are
dissatisfied with decisions made by Bureau staff, and with the Bureau’s overall final approval
decision? What is the time frame for any appeal process?




                                                 45
Background: For institutions that are subject to regulation and approval by the Bureau, the
Bureau must evaluate not only an institution’s financial situation and compliance with various
student protection requirements, but must also perform an assessment of the quality of any
educational courses and degrees the institution offers. As part of its process for granting a final
approval, the Bureau must perform a site inspection using site visit teams that are staffed by
persons meeting specified statutory requirements relative to their expertise and education (e.g.,
that a reviewer have a degree of at least the level of the educational program being reviewed.)
The law permits an institution to challenge the credentials of site visit team members to ensure
the requisite level of professionalism and compatibility.

However, the internal staff of the Bureau does not appear to have to meet the same level of
expertise as the site inspection staff, either as to academic degree levels or as to their experience
of working within an academic or institutional setting. The Bureau’s approval process involves
more than just the evaluation and report of the site visit team. There also appear to be numerous
decisions that fall to the Bureau’s staff regarding an institution’s compliance with not just the
clear, more objective requirements of the Reform Act, but also determinations regarding its
compliance with more subjective requirements that call for a quality assessment of the
educational courses, faculty qualification, among other things.

For example, for issuing a temporary approval to an institution to operate prior to the Bureau’s
onsite inspection and final approval determination, the Bureau must evaluate whether the
institution appears to comply with all of the requirements of the Reform Act. These include
often subjective criteria regarding the quality of the institution’s courses, and perhaps whether
the program of study for which a degree is granted provides the necessary curriculum to achieve
the professed or claimed academic objective, and whether the institution requires a level of
academic achievement from the student appropriate to the degree. Having the relevant
professional or academic background would seem to be important in making such an evaluation
and reaching an approval decision. Anecdotally, concerns have been raised that contradictory
determinations occur depending upon which particular staff person an institution may contact.
This concern relates to the level of training and guidance that is provided to the Bureau’s staff to
enable them to perform their work in a consistent manner.


                                 ENFORCEMENT ISSUES


ISSUE #15: The Act requires that the Bureau expend at least 50% of its expenditures on
enforcement related activities. The Bureau reports that it has been expending at least 67%
of its budget on those activities.

Questions for Issue #15: How does the Bureau define “enforcement related activities,” i.e.,
what specific actions or functions does the Bureau include in defining what is “enforcement?”
How did the Bureau determine what portion of its various resources are actually spent on
enforcement related activities? What portion of the Bureau’s personnel are performing its
enforcement activities?



                                                 46
Background: The Reform Act, as amended by AB 71 in 1997, requires the Bureau on and after
January 1, 1998, to use a minimum of 50% of the funds appropriated to it to cover the costs of
enforcing all of the following: (1) enforcing the Reform Act and related regulations, (2)
ensuring that independent onsite evaluations and random and targeted inspections and audits are
conducted, and that students have easy access to information concerning their rights to contract
cancellation, withdrawal, and remedies, and (3) mediating student complaints to achieve
balanced outcomes for students and institutions.

The Bureau’s report covering the time period from FY 1998-99 through FY 2001-2002 shows
that the Bureau has expended between 67% to 68% of its total annual expenditures for
compliance and enforcement. The Bureau’s report notes that this figure was arrived at based on
a program-by-program assessment of enforcement related expenditures. Exactly what activities
the Bureau considers to be “enforcement-related” is unclear – though it appears to involve
apportionment of the time spent by various of the Bureau’s staff on a range of activities beyond
just site-inspections and complaint handling.


ISSUE #16: The Bureau’s process for handling complaints has been criticized for being
unresponsive and extremely slow.

Questions for Issue #16: Describe in detail the Bureau’s process for handling complaints,
including what the various steps are in the process, and the types and number of personnel
involved therein. Is there currently a backlog of complaints? What is the number of complaints
received by the Bureau annually – broken out by related program? What are the timeframes for
the various steps in the process, and how long has it taken or does it take to bring those
complaint cases to a final resolution? Can you break out what those resolutions have been
related to the number of complaints? Has the Bureau established the arbitration program
required by Education Code Section 94778? If not, why not, and what are the Bureau’s plans
for doing so? What problems does the Bureau have in resolving the complaints it receives and
doing so in a timely manner? What can be done to improve the Bureau’s enforcement program?

Background: The Bureau’s report states that it annually receives approximately 700 complaints
from students alleging violation of private postsecondary laws including violation of various
provisions o their student enrollment agreements such as refund policy, misleading
advertisement, quality of education and instructor qualifications, and unlicensed school
activities. One of the provisions of AB 201 enacted in 2001 requires the Bureau to develop
regulations for its procedures for complaint processing and complaint disclosure. The Bureau
reports that development of those complaint regulations is underway – though no timetable for
anticipated adoption was noted in the Bureau’s report.

A chart in the Bureau’s report showing its activity related to enforcement complaint mediation
statistics has no figures for the first year and a half of its operation – FY 1997/1998 (1/2), and
FY 1998/1999. That chart also shows that for FY 1999/2000 and FY 2000/2001 a significant
disparity in the number of complaints “received” versus complaints “filed” – the significance of
which is unclear. The “case aging” time frames from receipt of complaints to their eventual
resolution or closure are not reflected in the Bureau’s report. In order to see how responsive the


                                                47
Bureau is in handling the complaints it receives, the Bureau has been asked to provide the
Committee with detailed information regarding its complaint handling process, timelines, and
performance. The Bureau’s website – www.bppve.ca.gov – provides consumers with a copy of
its complaint form. It appears that the form must be downloaded to be sent back by mail, as it
requires the complainant’s signature.


ISSUE #17: A number of private institutions subject to regulation by the Bureau have
not submitted the required annual reports, student completion and job placement reports,
and licensing fees and STRF assessments.

Questions for Issue #17: How many institutions subject to regulation by the Bureau are
currently out of compliance with the law’s requirements? What is the specific breakdown as to
which requirements each of these institutions are not in compliance? What enforcement options
does the Bureau have to enforce compliance with these requirements? What actions has the
Bureau taken to increase compliance with these requirements? How successful have these
efforts been? Are there additional steps the Bureau will employ or recommend to ensure timely
compliance with all of the law’s requirements?

Background: Institutions subject to the Bureau’s regulation are required by law to submit
annual reports containing information regarding a specified list of items including: the number
of enrolled students, the number and type of degrees awarded, program completion rates, the
tuition schedule and fees, financial information, a statement regarding the status of the
institution with respect to its payments to the STRF, etc.

The Bureau reports that school data regarding the program completion rate of its students and
the data regarding the employment rate for its graduates is available to the extent that the schools
have made that data available via their submission of the required annual reports. However, the
Bureau states that submission of annual reports (as well as fees noted elsewhere in this
Background Paper) by institutions has been problematic and compliance with reporting the
required data had been sporadic. The Bureau states that it has undertaken enforcement steps to
increase compliance and enhance the provision of completion and employment placement data
by schools, to enable it to improve its own subsequent reporting of that data. Compliance with
the Reform Act’s reporting requirements is the starting point in any effort to have the data that
accurately reflects what the circumstances are in the private postsecondary and vocational
education sector. Such data is necessary if efforts are ever to be successful in integrating the
private with the public and independent sectors of postsecondary educational policy and
planning.


ISSUE #18: Concerns have been raised in the past that there are a large number of
schools subject to the Act that are operating illegally without the required Bureau
approval.

Questions related to Issue #18: Is illegal school operation a large problem? How many
schools are believed to be operating illegally? How does the Bureau become aware of such


                                                48
schools? What does the Bureau do when they find these situations? Does the Bureau need
additional enforcement authority against these operations?

Background: According to the Bureau, it receives complaints about unlicensed schools
operating illegally from students. The Bureau’s Enforcement Program issues notices to schools
that may be operating without the necessary Bureau approvals. If a school requires Bureau
approval, they are required to submit an application for approval. On a case-by-case basis, the
Bureau assesses the potential impact on students and school if the unapproved school were to be
required to close and/or make refunds to students. If the Bureau determines a school is exempt
or outside the scope of the Bureau’s approval, that exemption is noted for future reference and
student inquiries. A chart in the Bureau’s report notes that for FYs 1999/2000 and 2000/2001,
there were 118 and 153, respectively, complaints “filed” regarding unlicensed activity.
However, this figure was noted as also including Certificate of Authorization and school denials
– so the actual number of unlicensed, illegally operating schools is unclear. The Bureau
indicates that unlicensed schools that the Bureau contacts typically submit an application for
approval to operate. The Bureau does not report what it does when an unlicensed school fails to
get into compliance with the law, or fails to obtain approval.


ISSUE #19: How effective has the Bureau been in dealing with the problem of school
closures and obtaining student loan discharges?

Questions for Issue #19: What are the statistics, chronologically, for the number of regulated
schools that have closed? How many of these closures were “anticipated” vs. those that were
not? What is the Bureau required to do when a school closes? What does the Bureau
specifically do when a school is going to close (anticipated) or when it finds out that a school
has closed? What are the timeframes related to the Bureau’s actions? What has the Bureau
been able to do to help the students of the closed schools? What are the statistics regarding loan
discharges for students in these situations? Have loan discharges actually been granted? What
changes could be made to improve the Bureau’s ability to assist in these situations?

Background: The Bureau reports that school closures are an extremely vexing problem for the
Bureau and for the affected students. The Bureau has developed a “triage” team approach to the
problem of school closures whereby staff (sometimes accompanied by local deputy district
attorneys) visit the site as soon as it learns about the closure in order to advise students of their
rights and options, and ensure the preservation of and access to student records. The Bureau
states the relative success of this initial triage effort largely determines the extent to which it can
assist students in exercising their options and rights. The Bureau reports that it has worked to
reconstruct a functional working relationship with the USDE which requires student records for
purposes of approving the discharge of financial aid loans.

In FY 2000-01, the Bureau reports it successfully negotiated approximately $4.0 million in
student loan discharges on behalf of California students who suffered financial hardship as a
result of unforeseen private postsecondary school closures. The Bureau conducted these loan
discharge negotiations with representatives of the USDE and various private student loan
lenders. The Bureau’s report indicates that there is general agreement between BPPVE, USDE,


                                                  49
and the lenders that the loans in question are subject to discharge. While some loans have
already been discharged, the remainder are still in process of a case by case review involving
loan histories that are reported to be often over a decade old. At the time the Bureau wrote its
Sunset Report, the USDE had been unable to provide the Bureau with information on how many
loans had been discharged and how many were still being processed.

The Bureau also states that its School Closure Unit staff who are sent immediately to a school
closure site provide students with the Bureau’s “Options for Students Faced with a School
Closure” brochure that provides step-by-step direction and analysis of student rights and options
including: the students; option to transfer to another school or to participate in “teach-outs”
(where another school takes over the closed schools responsibility for providing courses),
obtaining school refunds for any pre-paid tuition for services not yet rendered, and claims to the
STRF for reimbursement for tuition losses. The Bureau reports that this information is also
made available on its website.

The Bureau states that discussion of the timeframe for its actions regarding closed schools is
virtually meaningless because there is so much variance in the circumstances – so that each must
be viewed on a case-by-case basis depending on what those circumstances (bankruptcy filing)
are. Still it would be helpful to know how many school closures have occurred during the
Bureau’s tenure, the number of students affected, and what actions and how quickly the Bureau
took action in those cases. It may be useful if the Bureau was to survey the affected students to
ascertain the effectiveness, and perceived effectiveness of the Bureau’s efforts.


  CONSUMER, LICENSEE, AND EDUCATION COMMUNITY OUTREACH
                           ISSUE


ISSUE #20: How much has the Bureau implemented use of electronic format rather than
hard-copy paper to reduce the paperwork burden on the Bureau and the regulated
institutions?

Questions for Issue #20: What action has the Bureau taken to move its operation from
requiring hard copy information to electronic and computerized processes? Are their plans to
computerize additional things in the future that would reduce the administrative burdens and
increase the Bureau’s efficiency?

Background: The Bureau’s application package for its institution approvals is very lengthy and
extensive. This is still provided to institutions in hard copy form – and results in voluminous
hard copy documents once the institution completes it along with attachments and sends it back
for processing. The Bureau’s website contains a substantial amount of information including
guidance for persons choosing a postsecondary school, a directory of degree, non-degree, and
registered postsecondary programs, the Bureau’s complaint form, an information sheet providing
guidance and options for students confronting a school closure, the Bureau’s institution fee
schedule, extensive information on the methodology and criteria for determining if and how an
institution falls within the Bureau’s regulatory oversight, information on Veteran’s educational


                                                50
benefits, notices of regulatory hearings, etc. Despite this, the Bureau still has to receive and
handle consumer complaint in hard copy, and as noted still processes school applications in hard
copy form as well. Given the burden of handling all this paperwork, any ability to reduce the
paperwork by use of electronic media would appear to be one way the Bureau could free up its
limited resources for other duties.




                                               51
                                         PART 3.
             FINAL RECOMMENDATIONS OF THE
       JOINT LEGISLATIVE SUNSET REVIEW COMMITTEE
        AND THE DEPARTMENT OF CONSUMER AFFAIRS



ISSUE #1: (CONTINUE REGULATION OF THE PROFESSION BY THE BUREAU?)
Should the licensing and regulation of private postsecondary and vocational institutions by
the Bureau for Private Postsecondary and Vocational Education of the Department of
Consumer Affairs be continued?

Recommendation #1a: The Joint Committee and the Department recommend that the
Bureau be retained within the Department of Consumer Affairs for two years, to allow for
consideration of Master Plan recommendations.

Recommendation #1b: The Joint Committee and the Department further recommend that the
JLSRC review the Bureau and the results of Master Plan proposals again in two years, and at
that time address the issue of potential consolidation of some higher education programs.

Comments: Throughout discussions with other agencies and the Legislature, the Department
has stressed the importance of maintaining – and continuing to clarify and strengthen –
regulation of the business and student protection practices at all postsecondary education
institutions. While the Department has indicated its openness to consideration of consolidation
proposals that may be considered by the Legislature in the coming months, it has also indicated
that it would not serve California’s postsecondary education students or schools well to relocate
the Bureau at this time.


ISSUE #2: (NEED TO REGULATE OUT-OF-STATE INSTITUTIONS OFFERING
EDUCATIONAL PROGRAMS AND DEGREES OR DIPLOMAS.) State laws regulating
private postsecondary and vocational institutions that are administered by the Bureau to
protect students and the public against fraud and inadequate education do not regulate
institutions that are out-of-state and are offering educational programs and degrees or
diplomas via the Internet to California students.

Recommendation #2: The Joint Committee and the Department recommend that the working
group initiated by the JLSRC Chair, Senator Figueroa, that is developing an improved statute
also examine the need to regulate out-of-state postsecondary institutions that offer educational
programs to California students via the Internet.


                                               52
Comments: Increasingly postsecondary and vocational education programs and diplomas and
degrees are being offered from schools located outside of California to California students
through correspondence courses and electronic media – especially the Internet. The current
Reform Act does not provide the Bureau with the legal authority to regulate these institutions
and assure the quality and integrity of their programs and degrees, and the protection of their
California students. Given the interstate nature of these enterprises, and the lack of a physical
location, it is doubtful that California alone can either legally or effectively regulate these
institutions and their educational programs despite the significant impact they may have on
Californians. There has been some work on this being done by groups at the national level. The
Bureau indicates that it has not received many complaints regarding these educational
institutions or programs from students. This area seems to represent a serious and apparently
increasing gap in the regulatory protection intended by the enactment of the Reform Act – and
efforts should be made to address it before it creates a recurrence of the “diploma mill” and
student fraud and misrepresentation problems California experienced in the 1980’s.


ISSUE #3: (ARE THERE ADEQUATE REVENUES AND ARE THEY
COMMENSURATE WITH BUREAU’S VARIOUS COSTS AND EXPENDITURES?) It
is unclear if the Bureau’s fees and sources of revenues are related to and commensurate
with the costs and expenditures of the Bureau’s different programs or if there is cross-
subsidization.

Recommendation #3: The Joint Committee and the Department recommend a review of the
Bureau’s fee structure.

Comments: The Department recommends that the Bureau’s fee structure be reviewed and
modified, if appropriate. This review should focus on penalties for late filing of annual reports,
for non-payment of annual fees, and for non-payment of STRF payments. Additionally, the
Department has directed the Bureau to ensure attention to the collection of renewal fees.


ISSUE #4: (NEED FOR IMPROVED AND TIMELY DATA COLLECTION AND
DISSEMINATION?) Data collection and dissemination from the private postsecondary
and vocational education sector that is similar to the data available from the public
postsecondary sector appears inadequate.

Recommendation#4: The Joint Committee and the Department recommend improvements
and modifications to the Bureau’s information and data systems.

Comments: In an effort to remedy antiquated and non-integrated information and data systems
brought to the Bureau by the former Council for Private Postsecondary and Vocational
Education, the Bureau initiated the development of a new automated system. This new system is
expected to provide improved monitoring of reports, initial and renewal applications, complaint
and enforcement records, and collection of fees.




                                                53
The Department concurs with the JLSRC that additional improvement is needed and is
committed to working with the Bureau to complete the institution of a system that will serve the
Bureau’s wide-ranging data management needs effectively.


ISSUE #5: (CONCERNS AND CRITICISM THAT THE BUREAU IS FAILING TO
ADMINISTER THE VARIOUS PROVISIONS OF THE REFORM ACT
EFFECTIVELY.) There has been widespread criticism that the Bureau has failed to
administer the various provisions of the Reform Act - including those governing
institutional approvals, operation of the STRF, handling of student complaints, protection
of students against violations of the act by institutions and school closures, collection of
information and fees.

Recommendation #5: The Joint Committee and the Department recommend the appointment
of an Operations Monitor.

Comments: The Department recommends that an external operations and administrative
monitor be retained by the Department, and paid for by the Bureau, to further assess the Bureau’s
school approval, applicant review, revenue collection, and complaint and enforcement processes
and procedures.

The Department has previously utilized external monitors to evaluate programs at the
Contractors State License Board, the Dental Board and the Medical Board, and has found this
approach to be enormously helpful.


ISSUE #6: (EXPAND BUREAU OUTREACH TO POTENTIAL PRIVATE
POSTSECONDARY STUDENTS?) Concerns have been raised that the information
regarding private postsecondary and vocational educational institutions is inadequate and
does not reach students prior to the time they must make a decision regarding their higher
educational plans.

Recommendation #6: The Joint Committee and the Department recommend that the Bureau
establish an expanded outreach program for students.

Comments: Because California’s high school students have many options when making their
postsecondary plans, it is important that they are provided with information on how best to select
postsecondary or vocational schools, how to enter into contracts and student enrollment
agreements, how to protect themselves in this marketplace, and how to contact the Bureau for
assistance should problems arise. The Department recommends that the Bureau develop a plan
to reach high school students before while they are still in school.


ISSUE #7: (BUREAU ISOLATED FROM ITS STAKEHOLDERS AND OTHER STATE
EDUCATIONAL OVERSIGHT AND REGULATION?) The Bureau appears to operate
in isolation from the State’s regulation of other educational programs – being located in the


                                               54
Department of Consumer Affairs whose constituent licensing regulation is focused on the
conduct of businesses and occupations, and not educational endeavors.

Recommendation #7: The Joint Committee recommends that the Bureau should establish its
statutorily-required advisory committee, including representation from its various
stakeholders, and include a representative of the California Postsecondary Education
Commission (CPEC.) A representative of the Bureau should be included on CPEC – in at
least an ex-officio position – to participate in the latter’s deliberations.

Comments: The Bureau is in the process of establishing its Advisory Committee and will
include a representative of the California Postsecondary Education Commission. The Bureau
advises the Department that it has identified potential advisory committee members and intends
to complete establishment of the committee shortly.

Prior to the establishment of the Bureau as the agency responsible for administering the Reform
Act, regulation and oversight of private postsecondary and vocational education institutions was
performed by state governmental agencies whose primary focus was education, namely – the
Department of Education and the Council for Private Postsecondary and Vocational Education.
Both of these agencies had advisory or governing membership representing educational
governmental representatives, the public, students, regulated educational institutions and the
Legislature.


ISSUE #8: (ADDRESS DEFICIENCIES IDENTIFIED IN AUDITS OF THE BUREAU?)
Two audits of the BPPVE have revealed shortcomings in the agency’s operations.

Recommendation #8: The Joint Committee recommends that the Bureau should address and
resolve the deficiencies found in the audit performed by the DCA Internal Audit Office, as well
as any outstanding findings and recommendations from the 2000 Bureau of State Audits
audit.

Comments: The Bureau is addressing deficiencies identified in the Department’s internal audit,
including a focus on reduction of school approval backlog. In response to the Department’s
Internal Audit Office findings, the Department immediately triaged an administrative team to
develop and direct implementation of a plan to address the audit recommendations. As part of
that plan, the Bureau has revised its Strategic Plan to include action plans, timelines and
deliverables that are directly responsive to the Department’s audit. The Department has directed
the Bureau to continue its focus on reduction of the school approval backlog. The Department
and its Internal Audit Office have required the Bureau to submit 60, 180 and 360 day specific
corrective action reports to ensure full response to the audit recommendations.

The Department’s November 2002 Internal Audit made the following Findings and
Recommendations, and the Bureau’s Responses are as follows:

1. Finding: The Bureau needs to modify its current Strategic Plan to include important
   elements necessary to assist management in measuring the success of its operations.



                                               55
     Recommendations: The Bureau should work with the eGovernment and Special Programs
     Division [of the Department] to develop action plans that address strategies, ownership
     responsibilities, deliverables and targeted dates. Internal and external stakeholders should
     have the opportunity for input during this process.
     Bureau Response: The Bureau agreed with the finding and has proposed specific corrective
     action.
2.   Finding: Improvements are needed to address deficiencies in the Bureau’s institution
     approval process.
     Recommendations: The Bureau should consistently use written policies and procedures to
     ensure that staff perform consistent and adequate institution approvals and retain sufficient
     evidence in the files to support compliance with the applicable laws and regulations. In
     addition, staff should be adequately trained to reinforce the Bureau’s institution approval
     policies, procedures, laws and regulations. Further, the Bureau needs to implement a process
     to periodically monitor workload to ensure that appropriate statutory and regulatory
     processing times are met. As part of this process, a quality control review should be
     established. The quality control reviews should include an adequate review of the completed
     institution files.
     Bureau Response: The Bureau agreed with the finding and has proposed specific corrective
     action.
3.   Finding: The Bureau is not collecting all the required fees and assessments.
     Recommendations: The Bureau should continue with its reconciliation process for all
     institutions. The Bureau should set up a collection process to ensure that fees and
     assessments are collected and take disciplinary action against non-paying institutions. Also,
     internal procedures should be established for billing and collection processes. Finally, the
     Bureau should continue with the development of the revenue-tracking module for its new
     SAIL information management system.
     Bureau Response: The Bureau agreed with the finding and has proposed specific corrective
     action.
4.   Finding: The Bureau’s STRF payment process is operational, but several factors have
     prevented the Bureau from making timely payments to students.
     Recommendations: The Bureau should continue with the adoption of the proposed STRF
     regulations. After regulations become effective, the Bureau needs to ensure that it collects all
     outstanding STRF funds that have not been paid. The Bureau should also take steps to
     ensure payment of STRF claims in accordance with the statutory laws. Furthermore, the
     Bureau should reestablish its STRF verification process to ensure that all institutions are
     properly calculating and paying their STRF assessments.
     Bureau Response: The Bureau agreed with the finding and has proposed specific corrective
     action.
5.   Finding: Complain medication has improved; however, further progress is needed to ensure
     adequate consumer protection.
     Recommendations: The Bureau should develop its complaint handling procedures. As part
     of this process, the Bureau should develop time processing goals to reduce its pending
     complaints. Procedures should also be developed for timely complainant communication,
     proper disciplinary actions, retaining adequate case file documentation and an adequate
     quality control review.




                                                 56
   Bureau Response: The Bureau agreed with the finding and has proposed specific corrective
   action.
6. Finding: The Bureau has not ensured that all approved institutions comply with the annual
   reporting requirements but has made progress in recent years.
   Recommendations: The Bureau should continue its effort to obtain the required annual
   reports. The Bureau should also take appropriate disciplinary actions for institutions not
   complying with the statutory law. The Bureau also needs to develop procedures for
   reviewing the financial and educational program information as required by the applicable
   laws.
   Bureau Response: The Bureau agreed with the finding and as proposed specific corrective
   action.
7. Finding: The SAIL [Bureau’s new information management system] addresses several of the
   Bureau’s current information system inadequacies but does not comply with the State IT
   project requirements.
   Recommendation: The Bureau should take action to ensure that the SAIL system conforms
   to State IT requirements. In addition, the Bureau needs to develop the required system
   documentation. The Bureau should also develop a backup plan in the event the IT staff
   developing and programming the system separates from the Bureau.
   Bureau Response: The Bureau agreed with the finding and has proposed specific corrective
   action.
8. Finding: The Bureau generally enforced eligibility requirements prior to issuing agent
   permits and certificates of authorization for service but needs to address deficiencies in its
   processes.
   Recommendation: The Bureau should improve its existing policies and procedures and
   provide adequate oversight. In addition, the SAIL system should include a module for
   tracking agent permit applications. The module should be able to monitor compliance with
   the processing times. The Bureau also needs to ensure that it complies with the Department’s
   CORI (Criminal Offender Record Information) procedures, as well as the DOJ requirements.
   Bureau Response: The Bureau agreed with the finding and has proposed specific corrective
   action.



ISSUE #9: (REVISE THE PRIVATE POSTSECONDARY AND VOCATIONAL
EDUCATION REFORM ACT OF 1989?) The current statutes under which the Bureau
operates appear to be inordinately complex, vague, and contradictory.

Recommendation #9: The Joint Committee recommends that the Private Postsecondary and
Vocational Reform Act of 1989 should be revised and rewritten to clarify its provisions,
eliminate contradictions, redundancies, ambiguities and unnecessary provisions, and
streamline it. Beyond that, the Act should be evaluated to determine what other changes are
advisable to improve the effectiveness of the State’s regulation – for example, the timeliness of
the information such as annual reports, that are required to be given the Bureau.

Comments: The Department reports that it has been pleased to join the JLSRC staff and others
in undertaking a much needed redraft of the Bureau’s enabling legislation. The Department



                                               57
states that it is its hope that a thorough redraft will provide the Bureau, schools and students with
a streamlined, workable, clear regulatory design.


ISSUE #10: (NEEDED IMPROVEMENTS TO THE STUDENT TUITION RECOVERY
FUND AND THE BUREAU’S COMPLAINT HANDLING PROCESS?) The Bureau’s
process for handling complaints has been criticized for being unresponsive and extremely
slow.

Recommendation #10: The Joint Committee recommends that the Bureau continue to
implement the provisions of AB 201 (Wright – 2001) and AB 2967 (Wright – 2002) – in
particular their requirements that the Bureau adopt regulations for operation of the STRF,
and for specifying procedures for its disclosure and handling of complaints.

Comments: Assembly Bill 201 (Wright), Chapter 621, Statues of 2001, made a number of
statutory changes to the Student Tuition Recovery Fund (STRF) that is administered by the
Bureau. To implement AB 201, the Bureau was required to promulgate regulations that specify
its procedures for complaint handling and complaint disclosure and regulations to implement the
statutory changes to the STRF. The Bureau has advised the Department that the STRF
regulations are pending at the Office of Administrative Law and are expected to be approved in
Mid-April. The regulations to implement the complaint handling and disclosure provisions of
AB 201 were modified to reflect changes to the statute that were effective January 1, 2003 as the
result of AB 2967 (Wright), Chapter 581, Statutes of 2002. The Bureau has advised the
Department that its legal counsel is currently drafting those regulations and expects to solicit
public comment the end of April.




ISSUE #11: (ELIMINATE INSTITUTION, PROGRAM, AND INSTRUCTOR
APPROVAL BACKLOG?) The time period for a school to obtain final approval from the
Bureau is often extremely long.

Recommendation #11: The Joint Committee recommends that the Bureau eliminate the
remaining backlog in its degree-granting institution-related approvals and approval
renewals. The Bureau should respond to the deficiencies in its approval process that have
been found in the Department of Consumer Affairs Internal Audit - including the actions
proposed by the Bureau in its response to that audit. Further, consideration should be
given to having accreditation by United States Department of Education-approved regional
accrediting bodies replace some of the Bureau’s approval of degree-granting institutions,
educational programs, and instructor requirements – while having the remainder of the
Reform Act’s requirements (including STRF assessments, student-related protections,
information reporting) administered by the Bureau remain applicable to those institutions.

Comments: The Bureau reported to the Legislature in April 2000 that it was processing its
workload in a timely manner and within prescribed statutory timeframes – including its Degree-


                                                 58
Granting, Enforcement & Complaints, and Registered Institutions Programs, its Veterans Title
38 Program, and its Student Tuition Recovery and Closed Schools Units. However, it also
reported that application processing and site visit backlogs existed within its Vocational
Institutions Program. The Bureau prepared a Backlog Reduction Workplan to eliminate that
backlog within an eighteen-month period, from July 1, 2000 through December 31, 2001.

The Legislature adopted Supplemental Report Language in the 2000 Budget Bill requiring the
Bureau to report on a quarterly basis, its progress in eliminating the backlog as well as other
operational and program information. The Bureau did so and reported in its Sunset Review
report that it had eliminated most of the backlog, while continuing to process all current work in
a timely manner. It is unclear how much, if any, backlog still remains at this time. A chart
contained in the Bureau’s Sunset Report shows that the Bureau received 1,380 applications for
approval of postsecondary and vocational (degree-granting and nondegree-granting) institutions
during FY 2001/02, approved 1,148 approval applications, approved 1,470 reapproval
applications, and denied 31 applications (excluding applications that were withdrawn by
applicants).

However, there can be a considerable period of time between the Bureau’s receipt of a written
application for a school’s approval and the conduct of the actual site visit that is required before
an institution can be granted final approval to operate. The Bureau states that it can relatively
quickly make the necessary determination based on the application paperwork to give an
institution a “temporary” approval that will let it operate while awaiting the site visit and
eventual final approval decision. That time period can exceed a year though it still falls within
the current statutory requirements relative to required timeframes. It should be noted that there
appears to be no prescribed time frame for how long after a site visit the site visit team has to
produce its report and recommendation to the Bureau for its decision on final approval. Given
the lengthy time for even timely (within the statutory time limits) work processing – the
experience of institutions waiting for a Bureau decision could be as if the Bureau still had a
backlog. It may be worthwhile for the Bureau to look at whether it can readjust its personnel to
effectuate quicker responses in the application processing.


ISSUE #12: (NEED FOR OVERSIGHT FOLLOW-UP ON BUREAU’S PROGRESS?)
The current JLSRC review has found a number of problems and deficiencies, as have two
audits of the Bureau, and specific corrective actions have been proposed to resolve them.

Recommendation #12: The Joint Committee recommends that the Bureau report back to the
JLSRC staff on a periodic basis during 2003 on its progress in implementing the actions that
have been proposed to resolve the various problems and deficiencies found during the
JLSRC’s review. The Bureau should provide the JLSRC with a summary report on its
progress in correcting these problems and deficiencies at the JLSRC’s Fall 2003 sunset
review hearing.

Comments: While the average sunset review cycle is every four years, the JLSRC in the past
has required agencies to report back to it sooner on what specific actions have occurred on
ongoing problems or issues. Given the numerous issues remaining to be resolved in the State’s



                                                 59
regulation of private postsecondary and vocational education and the Bureau’s administration of
that regulation, it seems wise to have the Bureau present “progress report” to the JLSRC later
this year to maintain the momentum of its current oversight efforts and to be able to determine
what additional recommendations or actions need to be accomplished to ensure that this
regulation is accomplished in an effective manner.




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