BILL ANALYSIS                                                                                                                                                                                                    

                                                                  SB 543
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          Date of Hearing:   August 17, 2011

                                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:              

           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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           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 

            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 

           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 

           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)