Status Update & Next Steps on California AB 1160

If passed, California’s AB1160 – The Protecting Students from Creditor Colleges Act – would expand the current transcript withholding prohibition on students who owe a debt to include diplomas and certificates. It also requires institutions to allow students who owe a debt to the institution to register for classes to continue their education. This legislation also places significant limitations on colleges and universities using tax offsets.

Current Status

• The bill is currently working its way through the Senate after passing the Assembly. The bill passed the Senate Education Committee on May 29 by a 5-1 vote and was referred to the Judiciary Committee. The bill was recently passed out of the Judiciary Committee 8-0 and was referred to the Appropriations Committee.
  
  
• While being considered in Judiciary, the committee had a limited scope to review as the only piece under its jurisdiction was the relatively minor part of the bill prohibiting diploma withholding – a change that the committee Chair and members seemed incredibly skeptical of making. There was a discussion at the end of the Judiciary hearing clarifying that the diploma does not equal the degree.
  
  
• Even with limited jurisdiction, the Judiciary Committee made significant amendments. Here is an update on the latest policy provisions in the bill:
  • Latest Amendments:
    • Schools are now able to utilize the tax offset once again, but they have to wait 730 days (2 years) to do so.
    • Scales back the incredibly onerous and burdensome biannual reporting requirements. These no longer apply to Independent Colleges & Universities.
    • Clarifies that the one-time debt exemption still stands, but if a student accrues additional debt, they can be prevented from re-enrolling again.
    • Cleans up the language describing why the actual enrollment or registration hold is being initiated.
  • Policy Updates
    • Still cannot place with an outside debt collection agency for 180 days.
    • Still cannot report to credit bureaus for 180 days.
    • One-time exemption to allow students to register with a debt still stands.
    • Schools must still send a sendoff letter before placing it with an outside collection agency stating the agency’s name.
    • Prohibition on holding diplomas remains.
      
      
• The bill has now been referred to the Senate Appropriations Committee where it will be considered based on the fiscal impact to the state and state institutions. The bill is likely to have a significant “fiscal” (cost) based on the compounded issues of the lost revenue from the lack of collections to the added expenses of implementing new policies and reporting procedures.
  
  
• A hearing in the Appropriations Committee is scheduled for Monday, August 5 at 10am PST. There will be no vote at the conclusion of the hearing. The bill will likely be placed on the “Suspense” list meaning its cost will be over a certain amount – usually over $50,000 to the General Fund. Advocates expect the bill to be costly, especially with the costs on the Community College sector.
  
  
• The final deadline to move a bill out of Appropriations to the Senate floor is August 16 and, in all likelihood, the final vote on moving bills off the Suspense List is likely going to be August 15. If a bill is not moved off of the Suspense List, it is effectively dead for the remainder of this term and if reintroduced next year, will have to start the legislative process all over again.
  
  
• Therefore, the most important time to target our outreach and opposition to the bill are the first and second weeks of August, as the Appropriation Committee members make their final decisions.

Opposition Updates

• Both the California State University (CSU) System and the University of California (UC) System remain strongly opposed. The Association of Independent California Colleges and Universities, the California Association of Private Postsecondary Schools, and the Chief Executive Officers of the California Community Colleges Board are also opposed.
  
  
• CSU and the UC are strongly opposed and have particular concerns over the following issues:
  • Still strongly opposed to any limitations on the tax offset – 2 years is too long when it often takes nearly a year to get anything from an offset to begin with. (CSU Stats-collects $7 million of revenue for 2 years).
  • Opposed to the 180-day provision on collections but willing to accept 120 days, after initially offering 90 days.
  • Opposed to the diploma provision.
  • Want a sunset on the reporting requirements.
  • Lost revenue from changes to the collection and offset process.
    
    
• Additionally, for the Independents and Community Colleges they are also concerned with the how difficult the reporting requirements will be to implement and that the one-time exemption will be too hard to track for community colleges with open access to roll-in courses. They’re also concerned this could be an avenue for bad actors.
  
  
• CSU and UC are focused on killing the bill in the Appropriations Committee, particularly if their amendments are not accepted by Assemblywoman Pacheco. At this point, the conversations with the sponsor make it seem unlikely that she will accept any significant changes to the bill.
  
  
• If the bill is not held in Appropriations and gets to the full Senate, it is likely to pass – and then CSU, UC, and coalition partners will focus on getting Governor Newsom to veto it.

For questions or to get involved, please contact Bob Moran, COHEAO Executive Director at rmoran@bosepublicaffairs.com.