SACRAMENTO — State oversight of for-profit trade schools, which enroll 400,000 Californians a year, was set to vanish Monday, leaving students whose schools go out of business without access to state-arranged tuition refunds.
Republicans in the Assembly rejected a measure Monday afternoon that would have replaced a law that expired at midnight. Disagreements among lawmakers, the schools and consumer advocates have led to a stalemate in the Capitol on this issue for more than three years.
The industry, which includes large chains such as the University of Phoenix and Corinthian Colleges, offers job-oriented education and training. But consumer advocates say some schools misrepresent the value and quality of their programs, leaving students deep in debt and unable to find work.
"I went to school for nine months for nothing," said Kathryn Leask, an aspiring nurse from San Carlos, Calif., who attended a school in San Jose. She said few of her fellow students had found jobs.
Santa Ana-based Corinthian, which operates schools under the names Everest Colleges and WyoTech, agreed to pay $6.5 million to settle a lawsuit that charged it exaggerated its record of placing graduates in good jobs.
The schools have long complained that California's rules are convoluted and difficult to understand. Even advocates of aggressive policing conceded the old system was poorly designed.
This year, Senate President Pro Tem Don Perata (D-Oakland) proposed a new set of rules. Under the Democratic bill, SB 823, new students with grievances would lose their right to sue a school, and the schools would no longer be required to place 70% of their graduates in jobs, as previously required.
Betsy Imholz, an advocate for Consumers Union, said the measure was "not by a long shot what the prior law had been." She said the group supported Perata's measure because it still would require schools to disclose their placement rates and would allow the state to continue a reimbursement fund, underwritten by student fees, that would bail out those whose schools suddenly folded.
But lawmakers needed a two-thirds majority of the 80-member Assembly to pass the measure, and got only 41 votes.
"Certainly we need to protect students, but we also have to be mindful of the viability of the institutions," said Assemblyman Roger Niello (R-Fair Oaks).
Robert Johnson, executive director of the California Assn. of Private Postsecondary Schools, said the bill established so many requirements that it would have been crippling to smaller trade schools that are not part of national chains. The bill, he said, "was 112 pages of punishment."
Russ Heimerich, a spokesman for the state Department of Consumer Affairs, which has overseen the schools, said that since July, the state had doled out $4.7 million in reimbursements to 435 students The fund is all but depleted, he said, because the state hasn't been able to collect new fees since July.
Perata's bill will probably reemerge later this year in a form that will require only majority votes to pass, a likely outcome since Democrats control both the Assembly and Senate. Gov. Arnold Schwarzenegger, who has not taken a stance on the bill, could veto it; Schwarzenegger's Consumer Affairs Department opposes it.
Even if it were to pass, the earliest it could take effect would be January, leaving the schools without state oversight for six months.
In other business, the Assembly passed a bill aimed at ensuring that U.S. presidents are elected based on the popular vote. The bill, SB 37, by Sen. Carole Migden (D-San Francisco), would have California join a compact of states that have agreed to award their electoral votes to the candidate who wins the most votes nationwide. Those votes now go to the popular-vote winner in each state. Schwarzenegger vetoed a similar bill in 2006.
Times staff writer Nancy Vogel contributed to this report.