BILL ANALYSIS Ó
SB 543
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Date of Hearing: August 17, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 543 (Price) - As Amended: August 15, 2011
Policy Committee: Business and
Professions Vote: 9 - 0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill extends the sunset date of a number of boards,
committees and commissions within the Department of Consumer
Affairs (DCA) and makes programmatic and administrative changes
to some of these entities. Specifically, this bill:
1)Authorizes the Department of Finance (DOF) to augment the
budgets of the boards that comprise DCA in order to fund
additional non-General Fund costs for the BreEZe automation
licensing project.
2)Adds the Board for Professional Engineers, Land Surveyors, and
Geologists (BPELSG) to the list of specified boards whose
licensing applicants must submit a full set of fingerprints
for the purposes of conducting criminal history record checks.
3)Exempts certified public accountants (CPAs) and enrolled
agents (EAs) from licensure under the Professional Fiduciaries
(PF) Act.
4)Extends the operation of BPELSG and related provisions until
January 1, 2016, and subjects BPELSG to review by the
appropriate policy committees of the Legislature.
5)Extends the sunset dates for the following boards:
a) California Architects Board (CAB)
b) Landscape Architects Technical Committee (LATC)
c) Professional Fiduciaries Bureau (PFB)
d) California Board of Accountancy (CBA)
e) Contractors' State License Board (CSLB)
f) State Board of Guide Dogs for the Blind (BGDB)
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g) State Athletic Commission (Commission)
FISCAL EFFECT
1)Providing DOF with the authority to augment the budgets of
various boards in order to fund early phases of the BreEZe
project will likely result in $2 to $4 million in funding for
the automation project in 2012. When completed, that project
is estimated to cost approximately $50 million (various
special funds).
2)Loss of licensing revenue in the range of $287,500 in the
first year and $157,500 on-going thereafter if a small
percentage of the existing EAs who operate as PFs are exempt
from the PF licensing requirements. Specifically:
a) Assuming 25 existing PF licensees meet the criteria of
being an exempted EA and therefore shift to the less costly
licensing fees assessed for EAs, the Professional
Fiduciaries Bureau (PFB) would lose $17,500 in licensing
revenue each year.
b) If four percent (or 200), of the existing 5,000 licensed
EAs operate as PFs and are now exempt from licensure
requirements, the PFB would not collect approximately
$270,000 in licensing revenue the first year and would
forgo $140,000 in licensing renewal fees thereafter.
3)One-time costs between $450,000 and $580,000 for the workload
associated with requiring current Board for Professional
Engineers, Land Surveyors, and Geologists licensees to submit
fingerprints for a criminal history record check.
(Professional Engineers', Land Surveyors', Geologists' and
Geophysicists' Fund).
4)On-going costs of approximately $150,000 per year for the
costs associated with requiring licensing applicants to submit
fingerprints for background checks. The costs are primarily
associated with investigating applicants who have a criminal
conviction. Costs for the BPELSG would be in excess of
$60,000 annual and costs for the Attorney General's Office of
Administrative Hearings could range from $50,000 to $100,000
per year. (Professional Engineers', Land Surveyors',
Geologists' and Geophysicists' Fund).
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COMMENTS
1)Rationale . Under current law, each of the boards, committees
and commissions in this bill will expire on January 1, 2012.
SB 543 makes necessary statutory changes to the Business and
Professions Code to extend the sunset date of these boards and
commissions. The author notes that this bill "will ensure
that consumers continue to be protected by oversight of the
professionals licensed by (these entities) while also
implementing changes to better promote the protection of the
public."
This bill exempts certain professionals from licensure under
the Personal Fiduciary License. Specifically, attorneys,
certified public accountants, and enrolled agents licensed by
the Internal Revenue Service would not be required to obtain a
personal fiduciary license before performing the duties of a
personal fiduciary.
In addition, the statutory authority that would allow DOF to
access funds for the initial phase of the BreEZe project was
inadvertently left out of the budget bill. This bill contains
that language.
2)BreEZe Automation Project . The administration is currently
beginning work on a new, automated licensing system for the
Department of Consumer Affairs (DCA). That system should
provide a single point of entry for individuals interested in
all of the various licenses within DCA. Over the life of the
project, the BreEZe system is estimated to cost up to $50
million (various DCA licensing funds).
3)Personal Fiduciary Licenses . Created in 2006, the Professional
Fiduciary Bureau licenses and regulates non-family member
private fiduciaries, including conservators, guardians,
trustees and agents under durable powers of attorney. PFs
manage matters involving consumers' daily care, housing and
medical needs, and also offer financial management services
ranging from basic bill paying to estate and investment
management. PFs commonly manage services for vulnerable
seniors, disabled persons, and children. There are
approximately 340 licensed PFs in California.
To become a licensed PF, applicants are required to have a
baccalaureate degree of arts (B.A.) or sciences or an
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associate of arts or sciences degree, at least three years of
experience, and to annually complete continuing education
requirements, which includes two hours of ethics. In
addition, there is a four hundred dollars ($400) application
fee to take the licensing exam and an additional six hundred
dollars ($600) fee upon passage. The PF renewal license fee
is seven hundred dollars ($700).
4)Enrolled Agents Licenses . EAs are regulated by the Internal
Revenue Service (I.R.S.) and the U.S. Department of Treasury
(DOT). There are two ways to become a licensed EA: either by
practicing five consecutive years before the I.R.S. or by
passing a three-part examination. The EA exam tests an
applicant's knowledge on wills, trusts and estates, audits,
conflict of interests, financial advice, powers of attorney,
and insurance. EA responsibilities include familiarity with a
taxpayer's finances, assets, and properties. In addition, EAs
are required to complete CE requirements, including two hours
of ethics annually, and undergo a federal background check.
There are currently approximately 5,000 EAs licensed in
California.
5)Certified Public Accountants . CPAs are licensed by the
California Board of Accountancy (CBA). To become a CPA, an
individual must possess a B.A., pass an exam, meet educational
requirements, complete relevant experience, and pass an ethics
course. There are currently 76,000 CPAs licensed in
California.
6)Concern . Exempting EAs from the requirements of the PF laws
could create an incentive for individuals wishing to enter the
PF profession to circumvent the licensing requirements by
becoming licensed as an EA instead. The licensing process for
becoming an enrolled agent is significantly less costly than
becoming a professional fiduciary. Primarily, for EAs there
is no application fee, an initial licensure fee of $125 and a
$297 examination fee. Alternatively, for PF licensure there
is a $400 application fee, a $600 initial licensure fee, and a
$250 examination fee. This represents a difference of $828
between the EA and PF initial licensure cost. In addition, EAs
operating as PFs would be able to avoid regulation by the
state and federal government. The author and the committee may
wish to consider limiting this exemption to CPAs.
7)Opposition . The Professional Fiduciary Association of
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California argues that by exempting EAs from the PF licensing
requirements the state would lose important consumer
protections that were put in place in 2006. Particularly.
they note that personal fiduciaries work with elderly and
vulnerable clients and make daily decisions about their care,
under this exemption EAs operating as PFs without a license
would not be required the pass critical criminal background
and credit checks. In addition they would not be required to
meet the training and education requirements which help ensure
that they have knowledge of healthcare and end-of-life issues
for care management.
In addition, the association notes that without a PF license,
EAs would be operating without the state oversight and
enforcement tools that protect against fraud and abuse by
personal fiduciaries. None of the state enforcement tools
including license revocation for fraud, dishonesty,
corruption, and gross negligence would be in place for EAs
operating as a personal fiduciary.
8)Related Legislation . In 2009, AB 276 (Hiyashi) would have
exempted certified public accountants (CPAs) and enrolled
agents (EAs) from licensure under the Professional Fiduciaries
(PF) Act. That bill was held on this committee's suspense
file. Similar provisions are contained in SB 543.
SB 1550 (Figueroa), Statutes of 2006, established the
Professional Fiduciary Board within the Department of Consumer
Affairs for the purpose of licensing and regulating
professional fiduciaries.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081