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Senate committee reviews fund shift to keep Bureau for Private Postsecondary Education solvent
Summary
The subcommittee heard a proposal to transfer student-facing operations and claims administration from the Bureau for Private Postsecondary Education's administrative fund to the Student Tuition Recovery Fund (STRF) to avoid an impending insolvency and buy time for a longer-term fee structure.
The Senate Budget Subcommittee No. 1 on Education heard testimony Wednesday on a Department of Finance and Bureau for Private Postsecondary Education proposal to shift about $2.7 million per year of student-facing activity from the Bureau’s administrative fund to the Student Tuition Recovery Fund (STRF).
The change is aimed at preventing the bureau’s administrative fund from becoming insolvent in fiscal year 2026–27. “The Bureau for Private Postsecondary Education oversees nearly 900 private colleges operating within California and more than 100 colleges enrolling California students via distance education,” Deborah Cochran, bureau chief, told the committee. She said the bureau’s administrative fund “has operated with a structural deficit since 2017–18” and that a one‑time $24 million infusion from the general fund in 2022–23 concluded this year.
The proposal would move expenditure authority for the Office of Student Assistance and Relief (OSAR) and administration of STRF claims into STRF itself, which Cochran said currently holds roughly $35 million. The Bureau and the Department of Finance presented the shift as a short‑term measure that would keep the bureau solvent through the 2026 sunset review while fee and structural options are considered in the coming budget cycle.
Lisa King of the Legislative Analyst’s Office told the committee the office found the proposal “reasonable,” but warned that STRF’s balance currently reflects halted student assessments and that shifting additional costs onto STRF could cause the assessments to resume sooner or at a higher rate. Department of Finance staff confirmed the bureau’s administrative fund would be insolvent without the shift during 2026–27.
Committee members pressed for clarity about next steps. Cochran and finance staff said the bureau contracted with the Foundation for California Community Colleges and issued a report in February 2024 listing several alternatives, including adjusting licensee fees. The May revision action would be temporary, they said, giving the Legislature and bureau time to consider fee changes under the regular sunset review process.
The subcommittee took no formal action and moved on to other budget items.
Ending: The committee signaled support for a short‑term transfer but requested updates on the bureau’s fee work and the sunset review as negotiations continue in the budget process.
