How California channeled money to for-profit schools — while they were under investigation

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When state education investigator Leslie Feist visited Dolphin Trucking School in 2021, a teacher gave her a warning: Don’t stand near the truck while it’s moving. A tire might explode.

In fact, most of the trucks on the training lot “did not appear to be roadworthy,” Feist also observed in her report . Over the next two years, investigators found that Dolphin hired instructors who lacked the experience necessary to teach and that the school didn’t give students enough instruction, leaving graduates unprepared for the state’s truck driving exam.

“Those who did not pass suffered significant financial loss while those who did pass pose a significant danger to the public,” wrote an administrative judge, who affirmed the state’s proposal to revoke the school’s license, effective today.

Yet for years, California’s Employment Development Department used taxpayer dollars to subsidize tuition for students who attended Dolphin Trucking School, transforming it into one of the largest recipients of federal job training money in the state. The department continued recommending the school after it was under investigation — a violation of department policy — and when state education officials had moved to revoke the school’s license.

In fact, the department removed Dolphin and three other schools from its list only after CalMatters asked why it was still recommending schools that were unlicensed or with a license under appeal, and schools that were under state or federal investigation.

About half of the students who use the tuition subsidies that the employment department oversees attend for-profit schools, according to its most recent data. (Most of the rest attend a public institution, such as a community college, where tuition is usually free.) A CalMatters review found that among the nearly 120 for-profits enrolling at least four subsidized students, 75 faced disciplinary actions — for violations ranging from unpaid state fees to falsifying records.

California relies on these for-profit trade schools to train thousands of students. It channels taxpayer dollars their way to cover tuition, sometimes up to $10,000 per student.

Yet it does so with unmistakable ambivalence.

The state attorney general’s website cautions students to “be careful and do your homework” before enrolling in a for-profit school, noting that they “have been accused of fraud, abuse, and predatory practices targeting the poor, veterans and minorities by offering expensive degrees that often fail to deliver promised skills and jobs.”

To receive public money, for-profit schools are supposed to meet strict federal and state requirements. Then, if the state employment department is satisfied that qualifying schools’ programs are appropriate for the job market, the department will place them on a recommended schools list so local agencies can refer students there.

California’s Bureau for Private Postsecondary Education is in charge of licensing, vetting, and inspecting the state’s for-profit institutions, and it logs every violation it finds. The employment department is supposed to keep abreast of the bureau’s findings and act accordingly.

While the employment department’s policy explicitly states that a training provider won’t be eligible for funding if it is under “any federal, state or local investigation,” department spokesperson Gareth Lacy said enforcement depends on the circumstances. If the investigation is for “egregious activity,” the department will stop recommending the school until it’s concluded, he said — but that’s not the consequence if a school makes administrative mistakes, such as incomplete reports or late fees.

If a school loses its license, or its owner is convicted of a crime related to the institution, Lacy said the department bars the school from receiving taxpayer dollars for at least two years.

Bureau chief Deborah Cochrane declined to comment on the employment department’s policies but warned that some administrative issues, such as a pattern of unpaid fines and fees, can “call into question the administrative capability of the institution.”

Lacy said that the employment department is “continually looking for ways to tighten the process” of recommending schools, and now plans to create a “formal working group” with the education bureau to improve communication.

‘They don’t understand the trucking industry’

The main facility of Dolphin Trucking School sits between the Los Angeles River and a topless sports bar, next to an on-ramp for the I-10 freeway. It’s a parking lot, about the size of a soccer field, where students practice driving trucks through orange cones.

On a sunny day in the lot earlier this year, Uriel Zaizar, 24, waited in line for his turn to practice. For him, and many others, the journey to this parking lot began with a search for a well-paying job.

Zaizar said he’s been in and out of jail since he was 18 and is on probation for a drug dealing conviction. In January, he went to a local job center, where career counselors provide advice, job placement, and sometimes financial assistance.

That financial assistance is the final step in the nation’s complicated workforce development system. Money comes via the federal Workforce Innovation and Opportunity Act, which is then allocated by California’s employment department through a network of 45 regional intermediaries, known as workforce development boards. The boards collectively manage the state’s nearly 180 job centers.

In south Los Angeles, a job center spent more than $6,000 of taxpayer dollars to cover Zaizar’s tuition for an eight-week commercial truck driving class at Dolphin. Though Zaizar didn’t know that his school was under investigation, he said he wasn’t surprised, given the school’s mixed reviews online. “I get it,” he said. “It’s not top notch. It’s the government-funded facility.”

Around him, about 20 students milled about. None knew about the investigation, and most didn’t care once they did. At any time, about half of the school’s students receive some form of public tuition subsidy, said owner Carla Galvez.

California’s Bureau for Private Postsecondary Education states in its reports that Dolphin committed 38 violations, including poor record-keeping, insufficient equipment for students, and under-qualified teachers. Many students told the bureau that they didn’t get enough class time to meet the state’s requirements for a truck driving license. Instead of learning, one student told the bureau that teachers often spent the first 45 minutes of class switching out batteries and checking equipment.

The operators of Dolphin Trucking denied the bureau’s allegations. Galvez said the trucks have complied with all required maintenance, and she cited inspections by the California Highway Patrol, which show the school’s trucks were “satisfactory” in 2020, 2022, and 2023. Many courses are similar, she said, and students often practice the same skill repeatedly, which is why the curriculum can appear disorganized. She said all the instructors have the relevant experience to teach.

“The thing about the bureau is, they don’t understand the trucking industry,” said Carla’s daughter, Alejandra Galvez, a school representative. “It’s pretty much whatever complaint they get, they come get the school right away.”

Just as Zaizar was preparing to enroll, Dolphin Trucking School was disputing the bureau’s findings in an administrative court. The bureau makes a final decision but typically asks an administrative judge to weigh in first. After hearings in January, April and June, a judge agreed that the bureau should revoke its license.

When schools lose their licenses

In 2019, the education bureau found that the Computer Institute of Technology in Los Angeles provided “false and misleading information” to its state inspectors. The bureau sought to revoke the school’s license, but after bringing the investigation to an administrative judge, the bureau decided to put it on probation instead, allowing the school to operate as long as the owner agreed to certain tasks, such as providing quarterly reports and a financial audit. The owner also agreed to provide students with a copy of the bureau’s complaints and information about the school’s probation.

In 2021, the bureau investigated it again, this time in response to students who complained to the state that the school had stolen tuition money, both before and after probation began.

Meanwhile, the state employment department continued to recommend the school — even after the department released its policy in 2021, which prohibited supporting schools under investigation. Lacy, the department spokesperson, confirmed that the last student receiving a subsidy to attend the Computer Institute of Technology graduated in June 2022. A few months later, the Los Angeles District Attorney charged the school’s owner with using the Computer Institute of Technology to conduct fraud, forgery, and grand theft . The owner was convicted of conspiracy to commit a crime and of obtaining money through false pretenses. Prosecutors dropped the other charges, and as part of the plea deal, the owner served probation instead of jail time.

The bureau was still processing its own investigation. In March 2023, more than six months after the owner’s arrest, and over a year after launching the latest investigation, the bureau revoked the school’s license .

In general, the bureau is slow, taking over a year to process many routine licensing decisions. For-profit trade schools typically need to renew their licenses with the state every five years, but applications that are going to get denied or are otherwise “problematic” take longer, said Cochrane, the bureau chief. Dolphin Trucking School applied to renew its license in October 2022, the same month that its license expired. While the bureau deliberates on a licensing decision, it treats the school as though it’s still licensed, said Cochrane. In March of this year, the employment department stopped sending students to Dolphin after receiving questions about it from CalMatters. Today, nearly three years after Feist was warned about exploding tires and other problems, the bureau revoked the school’s license, effectively shutting the school down for any other student who wants to enroll.

“There is almost certainly room for improvement,” Cochrane acknowledged, but added that some delays are inevitable. The licensing process is lengthy and rigorous, and, she said, schools commonly submit incomplete applications, forcing the bureau to spend months filling in the gaps.

One potential solution would be to clamp down on job training schools that submit incomplete applications. Another would be to require schools to apply long before their licenses expire. Cochrane said the bureau is considering both.

In two cases, the state employment department continued recommending schools even after the bureau rescinded their licenses. In June 2023, the bureau denied a license renewal request from the Micro-Easy Vocational Institute in Contra Costa County, citing multiple financial and administrative violations. Nine months later, CalMatters asked the department why it still included the school on its recommended list. The department then removed it.

Crescent College in Huntington Park lost its license in September 2023 but appealed the decision in November. This May, the bureau published a statement defending its decision and asking an administrative judge to weigh in.

CalMatters asked the employment department why the school was still recommended after it first lost its license and what the policy is for schools who have licenses under appeal. The department then stopped recommending it.

How the law helped for-profit job training schools

Research shows that job seekers who return to school are more likely to earn a higher wage in the long term. But many job centers send adults directly into the workforce.

As a result, state legislators passed a law in 2011 that requires California’s workforce development boards to spend at least 20% of their money on education, such as tuition subsidies. Because the law regulates the amount of money spent — instead of the number of people trained — workforce boards and job centers are under pressure to spend those dollars, said Bob Lanter, the former director of the California Workforce Association. For years, he advocated on behalf of the regional workforce development boards, which directly oversee job centers.

After the law was passed, Lanter said that many for-profit schools raised tuition, knowing boards and job centers needed to spend more money.

“Let’s not be so focused on how much money is spent,” he said. “Let’s be focused on how many people are receiving services, and maybe, the type of services they’re receiving.”

In April, the U.S. House of Representatives passed a bipartisan bill , sponsored by North Carolina Republican Virginia Foxx, that would require workforce development boards to spend at least 50% of the money earmarked for low-income and unemployed adults on tuition subsidies or other forms of job training. It won’t just lead to more spending, though, said a spokesperson for Foxx, AnnMarie Graham-Barnes. She said the idea that workforce boards would spend more money, without training more people, “rests on a cynical view.”

This bill calls for more collaboration between community colleges and job centers, and it would create new requirements meant to weed out programs that charge a high tuition but lead to low-paying jobs.

Javier Romero, deputy director of workforce services at California’s employment department, said the state is also encouraging students to attend cheaper institutions, such as community colleges. Instead of putting money toward tuition at for-profit schools, job centers can use those dollars to help cover other student expenses, such as bus fare or rent. In total, the state’s job centers gave students just shy of $870,000 for personal expenses for the year ending in June 2023, according to Lacy, the department spokesperson.

Uriel Zaizar was one of the last students to attend Dolphin Trucking School using job training tuition money from the employment department. Earlier this year, as he was wrapping up the course, he said that, in retrospect, he would have been better off sticking with a community college. Before the pandemic he was in a two-year program at a community college, Los Angeles Trade-Technical College, to become a contractor. But he dropped out after one semester, opting for something that seemed to promise a quicker job. “Here is only two months,” he said, referring to the trucking program.

On many days after class ended, Zaizar would linger in the parking lot for another hour, waiting for his girlfriend to pick him up because they share a car.

A trucking license, he said, would be his best shot at making money, fast.

Check to see if a for-profit job training school faces state violations with this lookup tool.

Adam Echelman covers California’s community colleges in partnership with Open Campus, a nonprofit newsroom focused on higher education.

Financial support for this story was provided by the Smidt Foundation and The James Irvine Foundation.