Analysis of the 2007-08 Budget Bill: General Government

Department of Consumer Affairs (1110-1111)

The Department of Consumer Affairs (DCA) is responsible for promoting consumer protection while supporting a fair and competitive marketplace. The department includes 27 semiautonomous regulatory boards, commissions, and committees that regulate various professions. These boards are comprised of appointed consumer and industry representatives. In addition, the department has 13 bureaus and programs that regulate additional professions which are statutorily under its direct control.

Expenditures for the support of the department and its constituent boards are proposed to total $447 million in 2007-08, an increase of $32 million, or 8 percent, compared to the current year. Several proposals contribute to this overall increase, the largest being $12 million to incorporate a “visible smoke test” into the Smog Check program pursuant to Chapter 761, Statutes of 2006 (AB 1870, Lieber). The activities of DCA are fully supported by fees collected from the various regulated professions that fall under its jurisdiction.

Reform of the Bureau of Private Postsecondary and Vocational Education

The Governor’s budget requests funding and positions to reauthorize and restructure the Bureau of Private Postsecondary and Vocational Education. We withhold recommendation on the request pending receipt and review of the proposed legislation.

Background. The Bureau of Private Postsecondary and Vocational Education (BPPVE) is responsible for enforcing the Private Postsecondary and Vocational Education Reform Act, which regulates the state’s private colleges and universities. The act is scheduled to sunset on July 1, 2007. Unless legislation is enacted to extend the act, the bureau will cease to exist on that date.

The bureau and its predecessor agencies have been subject to considerable criticism over the past decade. Various studies of the BPPVE have been carried out by private consulting firms, the Bureau of State Audits, the California Postsecondary Education Commission, and others. These studies have identified numerous problems with enforcement of the act, including inadequate oversight, large backlogs of licensing applications, underfunding of student tuition reimbursements, lack of responsiveness to student complaints, mismanagement, and others.

Last session, a bill (AB 2810, Liu) was introduced to (1) extend the sunset date for one year, and (2) establish a working group to review the reform act itself, as well as the various audits and performance reviews of BPPVE, and develop a legislative proposal to improve state oversight and promote quality private postsecondary education in California. The bill was passed by the Legislature and vetoed by the Governor.

Subsequent to the veto, a working group of legislative staff has been working to develop a new approach for regulation of the private postsecondary sector. In January 2007, the group developed a rough outline of features for a new California Private Postsecondary Act which, among other things, would create a new 7-member board within DCA as a successor to BPPVE.

Budget Request. The administration proposes to reauthorize BPPVE through legislation that also would make various changes to existing provisions. To that end, the Governor’s budget requests $11.4 million and 75 positions to continue, as well as expand, the operations of BPPVE. This represents an increase of $3 million (36 percent), and 20 positions (37 percent) over the current-year levels. The additional revenue presumably would come from increased fees charged to regulated institutions.

Withhold Pending Receipt and Review of Additional Information. The department did not provide a workload analysis or other information to justify the requested positions. Moreover, at the time this analysis was prepared, the administration had not provided a complete legislative proposal. (In late January, it did provide a two-page conceptual summary of its proposal.) At this point, the Legislature does not have enough information to evaluate the proposed levels of funding and positions. Consequently, we withhold recommendation on the request, pending receipt and review of the proposed legislation, and associated workload analysis.

We would also note that, depending on the timing of the enactment of legislation to reauthorize the program, there may be as much as a six-month lapse in the operations of the bureau. However, the budget proposes full-year funding. Should the Legislature reauthorize the act, it may be necessary to adjust the funding to reflect the actual period of operation.

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