MITCHELL WAS ON HIS WAY WE
WILL BEGIN AS A COMMITTEE INTO
WE HAVE A QUORUM AND -- WILL
BEGIN AS A SUBCOMMITTEE --
THE WASTERS HERE AND -- WE'RE
READY TO GO AS A COMMITTEE SO
GOOD AFTERNOON PLEASE NOTE THE
FOLLOWING ASSEMBLY MEMBER MARC
BERMAN HAS BEEN APPOINTED TO
REPLACE ASSEMBLY MEMBER JESSE
GABRIEL FOR TODAY'S HEARING
UPGRADE WELCOME IS REMEMBER
BERMAN ADDITIONALLY PLEASE NOTE
THAT ARE GENERAL GUIDELINES FOR
BILLS HEARD IN THIS COMMITTEE
TO ALLOW TESTIMONY FROM TWO
WITNESSES FOR SUPPORT AND TWO
WITNESSES FOR OPPOSITION TO
STAKEHOLDER GROUPS AND ENTITIES
THAT ARE NEITHER IN SUPPORT NOR
IN OPPOSITION WILL BE ALLOWED
TO GIVE TESTIMONY FOR NO MORE
THAN TWO MINUTES WHEN I CALL
FOR TWEETERS THE MEASURE HAS
MORE THAN TWO ENTITIES IN
THE TWEENER CATEGORY ONLY TWO
WILL BE ALLOWED TO SPEAK FOR
TWO MINUTES EACH OF MISTER
BERMAN IF YOU ARE READY YOU
MAY BEGIN THANK YOU -- CHAIR
MEDINA AND I THE START OFF BY
THANKING YOU AND YOUR STAFF
-- FOR YOUR FLEXIBILITY --
IN IN LETTING ME PRESENT THIS
BILL AND SPECIAL -- HEARING
THIS AFTERNOON -- I'D LIKE
TO INTRODUCE AB SEVENTY A
BILL WHICH IS VERY SIMILAR IN
CONTENTS TO LEGISLATION THAT
I INTRODUCED LAST YEAR WHICH
WAS HEARD -- AND APPROVED
BY THIS COMMITTEE AB SEVENTY
WOULD PREVENT COVERT FOR PROFIT
COLLEGES FROM INVADING STATE
OVERSIGHT SPECIFICALLY IT WOULD
REQUIRE THE ATTORNEY GENERAL TO
VERIFY WHETHER AN INSTITUTION
THAT CLAIMS TO BE A NONPROFIT
COLLEGE IS ACTUALLY OPERATING
AS A NON PROFIT FOR THE PURPOSE
OF RECEIVING AN EXEMPTION
FROM STATE OVERSIGHT -- AS
YOU MAY RECALL THE DECLINE
IN ENFORCEMENT OF NONPROFIT
STATUS BY THE FEDERAL INTERNAL
REVENUE SERVICE IS ALLOWING
SOME FOR PROFIT COLLEGES TO
GET AWAY WITH USING COMPLICATED
FINANCIAL SCHEMES AND SHELL
CORPORATIONS TO LAY CLAIM TO
NONPROFIT STATUS AS A RESULT
SOME FOR PROFIT COLLEGES
ARE STARTING TO USE NON THE
NONPROFIT LABEL MISLEADING
STUDENTS WHILE AT THE SAME
TIME DODGING APPROPRIATE
STATE OVERSIGHT THIS EMERGING
PROBLEM IS ALREADY AFFECTING
CALIFORNIA STUDENTS -- AS WAS
DESCRIBED IN THE COMMITTEE
ANALYSIS THROUGH AB SEVENTY
CALIFORNIA WOULD STEP IN TO
PROTECT OUR STUDENTS AND ENSURE
THAT APPROPRIATE OVERSIGHT
REMAINS -- I RESPECTFULLY
ASK FOR AN AYE VOTE -- AND
WITH ME IS BOB SHERMAN FROM
THE CENTURY FOUNDATION -- WHO
CAN ANSWER ANY QUESTIONS THAT
THE FOLKS MIGHT HAVE THANK
YOU MISTER CHAIRMAN MEMBERS
OF THE COMMITTEE I HAVE SEEN
THIS -- THIS BILL LAST YEAR
-- AND REFINED -- SOMEWHAT
BUT PRETTY PRETTY MUCH THE
SAME GENERAL APPROACH TO MAKE
SURE THE PUBLIC AND NONPROFIT
-- ENTITIES -- IN FACT ARE
OPERATING IN -- WITHOUT --
WITHOUT SH FUNNELING MONEY
IN THE WAY THAT -- FOR PROFIT
INSTITUTION IS ALLOWED TO DO
AND THAT THE -- BUREAU HAS THE
APPROPRIATE OVERSIGHT OF THOSE
INSTITUTIONS THAT ARE HERE
TO SUPPORT THE BILL THANK YOU
SEEN THAT WE -- NO HAVE A FOR A
MOMENT I HAVE THE -- SECRETARY
CALL THE ROLL MEDINA PRESIDENT
CHOI -- ARAMBULA BLOOM BERMAN
HERE IRWIN KILEY LEVINE
LOW PATTERSON SANTIAGO WEBER
WE HAVE A QUORUM -- OTHER
WITNESSES IN SUPPORT
GOOD AFTERNOON MISTER
CHAIRMAN I WOULD GET ON A
-- REPRESENTING THE CENTURY
FOUNDATION WHOSE REPRESENTED
HERE BUT ALSO ON BEHALF OF MY
COLLEAGUE -- THE CHILDREN'S
ADVOCACY INSTITUTE CENTER
FOR PUBLIC INTEREST LAW
BOTH STRONGLY SUPPORT AND --
THINK THE AUTHOR THANK YOU
GOOD AFTERNOON TURN MEMBERS
CATALINA SANCHEZ ON BEHALF
OF THE CALIFORNIA LOW INCOME
CONSUMER COALITION AND SUPPORT
CHAIR MEMBER SALLY HAD
OTHER DOWN WITH THE WIDENING
GROUP REPRESENTING NEXT
AND CALIFORNIANS SUPPORT
DANIEL GOOD HERE IS ON BEHALF
OF THE CONSUMER FEDERATION OF
CALIFORNIA IN SUPPORT THANK
YOU ANY WITNESSES IN OPPOSITION
ANY TWEETERS SAY NONE SECOND
SOUNDS LIKE A FIRE
OUR FIRST BIG MOVE MOVE
BY ARAMBULA AND SECOND BY
DOCTOR WHATEVER MISSIONS ARE
COMMENTS FROM THE COMMITTEE
US WOULD YOU LIKE A DOCTOR
CHOI THANK YOU ASSEMBLY MEMBER
-- IN THE BERMAN -- THIS IS
I THINK ALL RIGHT DIRECTION I
HAVE A QUESTION WE ARE TALKING
ABOUT THE OVERSIGHT SIR CAN
YOU ELABORATE THE HOW WE CAN BE
OVERSIGHT EIGHT I I I THOUGHT
THE FIVE ONE TWO THREE THUS A
MORE OF A FEW OF THE -- IRS SO
WITH THAT THE -- FUNCTIONING
AS A NONPROFIT ORGANIZATION
ARE YOU TALKING ABOUT THE
-- IS IS STATE TA I ARREST A
KERNEL FUNCTION OVERSIGHT --
MARGARET TRY AND THEN WHEN
I GET A WRONG BOB CAN CRACK
-- SO IT IS ACTUALLY THAT
THE ATTORNEY GENERAL I WOULD
DETERMINE WHETHER OR NONPROFIT
INSTITUTION THAT CONVERTED FROM
A FOR PROFIT INSTITUTION AFTER
ANYTIME AFTER JANUARY FIRST
TWENTY TEN MEETS THE DEFINITION
OF A NONPROFIT CORPORATION AND
SO THE SPECIFIC THINGS THAT
THE AGE YOU WOULD LOOK AT IS
THAT THE NONPROFIT INSTITUTION
ACQUIRED THE FOR PROFIT
INSTITUTIONS ASSETS FOR NO
MORE THAN THE FAIR VALUE OF THE
ASSETS SO THAT THEY DIDN'T PAY
MORE THAN THAN THE ASSETS ARE
ACTUALLY WORTH THE INSTITUTION
HAS NOT EXECUTED AGREEMENTS
FOR GOODS OR SERVICES EXCEEDING
THE FAIR VALUE OF THE GOODS
OR SERVICES -- THAT ALL CORE
FUNCTIONS OF THE INSTITUTION
ARE CONDUCTED BY OR UNDER THE
DIRECTION OF THE NONPROFIT
INSTITUTION IN THAT IT DOESN'T
FLOW THROUGH FROM A FOR PROFIT
CORPORATION TO A NONPROFIT TO
THE STUDENTS -- AND THAT THE
NONPROFIT INSTITUTION HAS NOT
ENTERED INTO ANY CONTRACTS
LOANS OR LEASES WITH THE TERM
OF NO LONGER THAN EIGHTEEN
MONTHS WITH THE FORMER FOR
PROFIT INSTITUTIONS OWNERS OR
MANAGERS ON THAT SO IT'S KIND
OF WHAT WE'RE ASKING IS THE
ATTORNEY GENERAL TO JUST DO A
LITTLE CHECKING UP TO MAKE SURE
THAT THINGS ARE KOSHER THAT THE
THE FOR PROFIT COMPANY THAT IS
NOW A NONPROFIT -- IS REALLY
ACTING AS A NONPROFIT AND ISN'T
ESSENTIALLY A SUBSIDIARY OF THE
THE FOR PROFIT IN I'LL JUST ADD
THAT THAT THE STATE ATTORNEY
GENERAL DOES HAVE OVERSIGHT OF
NONPROFIT CORPORATIONS WHICH
ARE CHARTERED UNDER STATE LAW
THE IRS -- IS THE IRS HANDLES
THE QUESTION OF WHETHER THEY
ARE TAX EXEMPT FOR FEDERAL
TAX PURPOSES SO THE ACT SO
GETS THE IRS FREQUENTLY IS
INVOLVED IN THESE KINDS OF
CASES BUT THE CORPORATIONS ARE
STATE CHARTERED AND GENERALLY
ATTORNEYS GENERAL AT THE STATE
LEVEL -- IN FORCE NONPROFIT
STATUS IRAN READING YOUR
APPEARANCE HERE IS SO NEW TO
BEAT UP CONFUSING TO ME --
BECAUSE -- CHIU NONPROFIT THE
HIGHER EDUCATION ARE SHALL BE
-- EXAM FROM OVERSIGHT TO YES
AND THAT THEY DON'T NEED TO
BE OVER CITED A BY A -- BE PP
BUREAU UP A PROP ITS ACT -- OF
IT THE POST SECONDARY EDUCATION
RIGHT OKAY BUT THE YOU ARE
NOUN CHANGING THAT LAW ALL WHAT
WE'RE SAYING IS IS THE IN OTHER
WORDS BECAUSE THE THE ATTORNEY
GENERAL HAS TO LOOK INTO -- T.
AT THE ACTIVITIES SO THE FUNDS
-- I THROUGH THE PROPER COM SO
MOST LIKELY I READ THE -- --
THE TWO DIFFERENT CASES -- ONE
YOU SAYS THE SAME CO I I AM THE
CEO OF A CORPORATION AND THE
DBA A ONE FOUR FOUR PROP PROFIT
THAT MEANS THE UNIVERSITY OF
THE OTHER ONES -- X.
Y. Z. -- NONPROFIT ORGANIZATION
NONPROFIT AND UP ON FULL
PROPERTY PROFIT RIGHT A
MOBILIZATION RIGHT AND THE
FOR PROFIT THAT DOESN'T MAKE
MONEY THAN FROM NONPROFIT
ORGANIZATION WITH NORTH
OVERSIGHT TO INCOME CAN BE
DILUTED IN ALL THAT KIND OF
ALL THE ACTIVITY WOULD REQUIRE
-- TIGHTER CONTROL AND -- EVEN
INVESTIGATION AND WHOSE ROLE
IS THAT THAT IS IT GONNA BE
ATTORNEY GENERAL ALL IRS WHAT
ARE YOU IN ARE YOU SUGGESTING
SEPARATE ENTITY TO TO BE
CREATED YES OF IT FOR THIS BILL
IT'S A GREAT QUESTION -- THIS
IS FOR IF THERE IS A FOR PROFIT
INSTITUTION IN THAT OFFICE
AND SAYS WAIT WE ACTUALLY
WANT TO CHANGE WE DON'T WANNA
BE A FOR PROFIT INSTITUTION
ANYMORE WE WANT TO BECOME A
NOT A NONPROFIT COLLEGE -- THEN
THE ATTORNEY GENERAL WOULD BE
THE ONE TO COME IN AND DO THE
INVESTIGATION AND -- TO MAKE
SURE THAT THEY'RE OPERATING
AS A AS A REAL NONPROFIT AND
NOT ESSENTIALLY USING -- --
SHELL GAME A KIND OF FAKE --
IT KIND OF CORPORATE STRUCK
RESTRUCTURING ON TO ALL OF
A SUDDEN GET THE BENEFITS OF
A NONPROFIT WHEN THEY'RE NOT
ACTUALLY OPERATING AS AS A
NONPROFIT MAY BE YOUR BILL
CAN GO ONE STEP FURTHER AND
NOT ALLOWING ONE ENTITY CO
ONLY BECAUSE -- WOULD BECOME
THE HEAD OFF OF A DIFFERENT
PROFIT AND NONPROFIT YEAH
THAT'S A CONFLICT OF INTEREST
RIGHT THERE YEAH DOES IT IT
DEFINITELY INTERESTING IDEA
THAT I'M HAPPY TO LOOK INTO
YEAH YEAH IF YOU CAN NON REFINE
AS IT MOVES ALONG AND I DON'T
SUPPORT YEAH WELL THANK YOU
THANK YOU FOR THE IDEA I CAN'T
PROMISE I TRYING TO PROMISE
ANYTHING ON THE SPOT WITHOUT
TALKING TO FOLKS -- BUT BUT
HAPPY TO LOOK INTO THAT IDEA
BECAUSE WE DO THAT'S EXACTLY
WHAT WE WANT TO AVOID -- IS IS
ONE PERSON YOU KNOW ESSENTIALLY
RUNNING BOTH INSTITUTIONS
WITH THE FOR PROFIT INTERESTS
AT HEART FOR THE -- THE WAY
IS THAT THE NONPROFIT -- --
EDUCATION HIGHER EDUCATION
-- SHALL BE OR SO EXAMINE
THE OFFICES -- -- OR WILL
BE OVERSEEING BY -- ATTORNEY
GENERAL OR P. P. P.
OKAY BECAUSE A SUPPORTER
NOT OVERSIGHT THAT THAT IS
SO I THINK OF COST IN THE
TROUBLE YEAH UNDERSTOOD
BECAUSE OF THAT OKAY
MY BACKGROUND
THANK YOU WOULD YOU LIKE TO
CLOSE -- TO APPRECIATE THE
CONVERSATION THE SUGGESTIONS
-- AND RESPECT THAT'S WHEN
I WROTE I WANT TO THANK THE
AUTHOR BRING IN A BEATS OF
AB SEVENTEEN BEFORE IS TODAY
AND AS YOU STATED COVERT FOR
PROFITS ACT BEHIND THE FACADE
OF THEIR NONPROFIT DESIGNATION
THE GREAT OPPORTUNITIES FOR
BAD ACTORS TO AVOID OVERSIGHT
AND ACCOUNTABILITY I AM VERY
HAPPY TO SUPPORT YOUR BILL
TODAY AND WOULD LIKE TO BE
ADDED AS A CO AUTHOR WHEN
POSSIBLE HONORED THANK YOU SIR
THANK YOU AND MADAM SECRETARY
OUR NEXT THANK YOU DOCTOR JOIN
BRIGITTE BRIDGET THAT SO THE
MOTION BEFORE AS DO PASSED TO
THE APPROPRIATIONS COMMITTEE
SECRETARY OF THE PLEASE CALL
THE ROLL MEDINA AYE MEDINA
AYE CHOI AYE CHOI AYE ARAMBULA
ARAMBULA I BLOOM BLOOM I
BERMAN HI BERMAN I IRWIN --
WHEN I KILEY KILEY AYE LEVINE
LEVINE I LOW LOW I PATTERSON
SANTIAGO WEBER WEBER II
TENS YOUR YOUR BILL IS OUT
WE'LL KEEP THE ROLE OPEN FOR --
ABSENT MEMBERS THANK YOU MISTER
CHAIR THANK YOU THANK YOU SIR
WE SAID AT THE CURRENT TIME
GIVEN OKAY I NEED TO NOT
I'M GONNA LEAVE THE ROLE
OPEN FOR FIVE MINUTES
YEAH THERE IS REALLY
ON POINT THE FRONT OF
I SAW HIM STANDING NEXT TO MAKE
AB AB SEVENTY PATTERSON
SANTIAGO SANTIAGO I
ELEVEN ZERO AB SEVENTY IS OUT
AND WE'RE JUST