AB48 – BPPE – The Hidden Costs

I read your article regarding the $5,000 application fee for the BPPE – are you aware of the audit cost as well? We’ve had an estimate of $50,000. Here is my letter to them – just want to share and vent with someone who feels the same way.
Editor’s Note: The “one size fits all” mentality of the state legislature affects all small businesses, including of course, flight schools. Please take the time to read this letter to BPPE from the RN Director of Nursing Professional Medical Careers Institute to understand what this ill advised legislation really costs.The question needs to be asked – Does California really need BPPE – or is this a typical method the legislature uses to keep lucrative paying state jobs?

Dear Gentlepersons:
I’d like to express our concern over the application requirements for the Board of Private Postsecondary Education. The audit that is required as part of the admission package is now extremely expensive and will place an extreme burden on our very small school and on other small businesses like ours.

Due to new congressional regulations for audits, as a result of fraud in multi-billion dollar industries like Enron and the banking industry, these audits are now very expensive, long and time-consuming. They now require peer review – which costs another $5,000. For our small school we have had estimates as high as $50,000 for the audit that is required by this Board as a part of the application process – with an estimate of $5,000 for the peer review.

Our school does not even bring in that much net profit in a year’s time! These are very difficult times for everyone financially. We are trying to keep our costs low due to the poor economy. While this board was out of operation our school provided a nursing education for 22 new vocational nurses, 150 certified nurse assistants and 10 home health aids. This audit is so expensive – we just can’t afford $50,000 for this state requirement.

In addition to the extreme cost, it is also difficult to find a person qualified to do an audit. CPA’s who do audits must now have special continuing education and also carry expensive mal-practice insurance. We have been told that the cost is high because of the risk involved. Many CPA’s have quit doing these types of financial audit due to the high cost of mal-practice insurance as a result of the Sarbaines legislation that took effect a few years ago. Surely there must be some type of compromise for small schools.

This audit is so far out of our budget I honestly don’t know how we are going to come up with $50,000 for an audit and another $5,000 for a peer review that is required under the guidelines that are listed on the Boards application. We were not prepared for that type of expense for approval by this Board of Private Post-secondary Education.. We were actually shocked at the expense for the audit.

Were the legislators aware that this type of audit that is required as part of the application process for the Board of Private Post Secondary Education would place this extreme burden on schools? National Accreditation costs are upwards of $10,000 – which is also required.

To place this extreme burden on small businesses in these perilous economic times is simply outrageous and unfair to small schools like ours. Something needs to be done to reduce this extreme burden during these depressed economic times. We are bending over backwards to keep our costs down so students can better their lives by becoming nurses. I honestly can not justify this extreme expenditure to my students.

How can the state do this to small businesses right now – during an extremely depressed economy? With so many small businesses going out of business due in part to heavy taxation’s and state regulations – something really needs to be done to help small businesses. Currently our school employs 12 people and we have about 50 students. We need to make payroll, pay our instructors and buy books for our students. This money will come out of their tuition’s – aren’t they the people you are trying to protect?

We can not see any type of justification for this outrageous and burdensome state expense and costly requirement. I’m sure we are not alone here. These fees are just way to high for a new school. We have 50 students right now to educate and their education must come before these fees. The $5,000 fee for the application alone was a great burden – then when we found out that we’d have to pay $30,000 to $50,000 we could not believe it.

We were caught completely unprepared for something like this. It’s way over the top. Please – will you give us some relief here? This is way to burdensome for our business. Is there anything else we can do to show that we have the financial means to run the school and refund students? We’ve been doing this for 2 years now.

We were approved when this board sun-setted. These new requirements and fees are not fair to the new schools who were caught un-prepared for such exorbitant and burdensome state fees and requirements that cost nearly $50,000. This is just another reason why businesses are failing – too many state regulations and fees. With double-digit unemployment in this state – something really needs to be done to help keep businesses like our alive instead of killing them off in their infancy.

Having a $5,000 across the board non-refundable application fee and then an audit requirement that costs upwards of $50,000 is just outrageous – it truly is. Please let us know if there is anything else we can do to satisfy the financial statement requirement. An audit of this magnitude is just way too expensive for a small school – but that’s what it costs – $30,000 – $50,000 with an another fee of $5,000 for a peer audit.

We have sent in our application and would be happy to share financial information with the board to show that we have the means to educate our students. Spending $50,000 – $55,000 for the audit this board requires is something we can not do – we just can’t do it and stay in business. We need to provide a nursing education to our students with this money.

We have a fiduciary responsibility to our students to give them the education they paid for – not waste their money on an expensive audit required by this state agency. Please do something to relieve this burden on private vocational schools.

Thank you,

Helen Taylor
RN Director of Nursing Professional Medical Careers Institute 

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