BILL ANALYSIS Ó SB 969 Page 1 Date of Hearing: August 8, 2012 ASSEMBLY COMMITTEE ON APPROPRIATIONS Mike Gatto, Chair SB 969 (Vargas) - As Amended: June 20, 2012 Policy Committee: Business and Professions Vote: 5-4 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill establishes a non-governmental Pet Grooming Council (Council) to manage a voluntary certificate programs for pet groomers, pet bathers, and pet brushers. Specifically, this bill: 1)Establishes the Council as a non-profit organization with a sunset of January 1, 2017. 2)Establishes the membership of the Council, including animal right advocates, pet industry representatives, animal law attorneys, and other members. 3)Requires the Council to issue a pet groomer certificate to applicants who are at least 18 years of age; have completed a Council-approved pet grooming curriculum; have 900 hours in pet grooming experience; and have paid a certification fee not to exceed $40. 4)Requires the Council to issue a pet bather and brusher certificate to applicants who are at least 18 years of age; have completed a Council-approved pet bathing and brushing curriculum; and have trained under the supervision of a certified dog groomer or certified pet bather and brusher for at least 300 hours. 5)Grandfathers existing pet groomers, bathers, and brushers by requiring the Council to issue a certificate to any person who applies on or after January 1, 2013, with documentation demonstrating that the person applying for certification has already performed at least 900 hours of pet grooming services. SB 969 Page 2 6)Requires the Council to issue a pet grooming certificate to an out-of-state applicants who meets the qualifications of this bill and holds a current registration, certification, or license from any other state whose requirements meet or exceed California's. 7)Allows for denial, suspension, or revocation of a certificate due to violation of Section 597 of the Penal Code; a finding by the Council of gross negligence on the part of a certificate holder; "unprofessional conduct"; or commission of "any fraudulent, dishonest, or corrupt act substantially related to the qualifications or duties of a certificate holder." 8)Establishes that it is an unfair business practice to advertise oneself as certified without meeting the requirements of this bill, and authorizes anyone to petition for injunctive relief against a pet groomer violating this provision through the Superior Court. 9)Requires the Council to establish a board of review to review charges of gross negligence asserted again certificate holders. 10)Requires the Council to establish an online registry of certificate holders. FISCAL EFFECT Negligible. The Pet Grooming Council is a non-governmental entity and thus state government bears no expense for its creation or maintenance. Estimates of costs and revenues, however, suggest that the Pet Grooming Council will raise only a small portion of the funds needed to operate each year. COMMENTS 1)Background and Purpose. The author's office argues that professionalization of pet groomers, pet bathers, and pet brushers will contribute to greater pet safety. This bill creates a non-governmental non-profit council to provide voluntary certifications to those in the pet grooming SB 969 Page 3 industry. Similar certifications are already available from private entities within the pet grooming industry. 2)Support . The Executive Director (ED) of Animal Samaritans SPCA, Inc., states, "As the ED of an Animal Welfare and Veterinary Medical Center, I have seen dogs with various injuries suffer at the hands of untrained groomers. In one case, a dog came in with nipples cut off in a grooming incident, leaving it with serious injuries. In other cases, dogs and cats had grooming injuries that included burns Ýand] lacerations?. Many pet groomers have years of experience and are diligent in their work and care for animals in their charge. They do wonderful work. However, there are groomers that are untrained and do not understand the basics of pet handling?. This bill would require training for groomers and licensing that would confirm the groomer's professional qualifications." 3)Opposition. This bill is opposed by the pet grooming and retailer industry. The industry objects to the provision that allows the Council to investigate claims of gross negligence against groomers and revoke certification upon an affirmative finding. The Industry argues that gross negligence is overly broad and may create spurious claims. The Industry also argues that Council investigations into gross negligence complaints will create paper trails that may give rise to lawsuits by pet owners who, because of the Council's findings, see a likelihood of success in civil court. 4)The Impact on Small Business . SB 969 creates new training, education, and paperwork requirements that impose new costs on pet groomers. Those costs are likely insubstantial for major pet stores that employ in-house groomers, many of whom have already declared they will not seek certifications from the new Council created by SB 969. However, small-scale groomers may encounter potentially significant new barriers when starting or expanding small businesses. 5)Insufficient funds for operation of the Council. It is unlikely the Pet Grooming Council will be able to raise sufficient funds to make the Council operable. The pet grooming industry estimates that there are 11,000 pet groomers in California. Roughly 3,000 are employed by major pet retailers like PetSmart and Petco, which state that their SB 969 Page 4 groomers are already rigorously trained and will opt out of the voluntary certification provided by the Council. Of the 8,000 groomers that operate independently and as small businesses, an estimated 1,000 are already certified or licensed by a pet industry authority. Estimating revenues. Assuming all 8,000 small-scale and independent groomers seek certification from the Council in the first year of its operation, and assuming the Council charges the largest allowable first-time fee ($40), the Council will raise $320,000 with which to operate itself for the two years until groomers need to seek recertification. Assuming the Council charges the largest allowable recertification fee ($20), the Council will then have $160,000 to operate for every two-year period after that. In all likelihood, however, not every small-scale and independent groomer will seek certification. Assuming one-quarter of them do so, and assuming again that the Council charges the largest allowable fees, the Council will raise $80,000 to fund its first two years, and $40,000 to operate for every two-year period after that. This low-end estimate may understate slightly the ongoing revenues available to the Council. If the Council is successful, groomers who are initially reluctant to seek a certification may do so in later years. We adjust the numbers below to reflect this fact. In both the high-end and low-end scenarios, the Council will have slightly larger ongoing revenues if the economy grows and the pet grooming industry expands. Estimating costs. When estimating the annual costs of the Pet Grooming Council, two entities serve as reasonable comparisons. The Cemetery and Funeral Bureau, which serves slightly fewer than 11,000 licensees, requires an annual operating budget of $4 million. The Cemetery and Funeral Bureau regulates a more complex field with a greater number of legal concerns, and has disciplinary powers that the Council would not. This suggests the Pet Grooming Council will be at least somewhat less expensive than $4 million. Supporters of SB 969 point to the Massage Therapy Council as an example of a non-governmental, non-profit regulatory entity SB 969 Page 5 that provides voluntary certifications to an industry filled with small businesses. However, the Massage Therapy Council has much more access to revenue than the Pet Grooming Council would. The Massage Therapy Council has issued 35,000 certifications since 2011, at a price of $150 for two years. It reports it has annual expenses and annual revenues of $2.8 million. A rough estimate of the Pet Grooming Council's annual operating costs, assuming a high number of groomers seek certification, is $1.5 million to $2.5 million. A rough estimate assuming a low number of groomers seek certification is $700,000 to $1 million. A budget of $700,000 would be sufficient to cover: office space of 1000 square feet, office supplies and equipment, and a staff composed of one Executive Director, one IT Director, one staff attorney, two trainers to lead pet grooming workshops, and one support staff. In no scenario do the revenues generated by the Council cover even these minimum operating costs. ----------------------------------------------------------------- | Estimated Annual Costs and Revenues (For Years 1 and 2), Pet | | Grooming Council, SB 969 | ----------------------------------------------------------------- |--------------------------+--------------------+------------------| | |Cost |Revenue | |--------------------------+--------------------+------------------| |High Estimate (8,000 |$1.5-2.5 million |$160,000 | |certificate seekers) | | | |--------------------------+--------------------+------------------| |Low Estimate (2,000 |$700,000-$1 million |$40,000 | |certificate seekers) | | | ------------------------------------------------------------------ ----------------------------------------------------------------- | | |-----------------------------------------------------------------| | Estimated Annual Costs and Revenues (All Years Subsequent), Pet | | Grooming Council, SB 969 | ----------------------------------------------------------------- ------------------------------------------------------------------ | |Cost |Revenue | ------------------------------------------------------------------ |High Estimate (8,000 |$1.5-2.5 million |$80,000 | |certificate seekers) | | | SB 969 Page 6 |--------------------------+--------------------+------------------| |Low Estimate (2,000 |$700,000-$1 million |$35,000 | |certificate seekers) | | | ------------------------------------------------------------------ 6)Start-Up Costs. The financial difficulties faced by the Council may be even greater than portrayed here. A significant portion of the Council's expenses will come in the form of start-up costs, incurred before the first groomers step forward to seek certification. SB 969 contains no explanation of where start-up funds will come from. The Massage Therapy Council was loaned start-up money by professional organizations in the massage field, and massage professionals worked pro bono in the Massage Therapy Council's early stages. However, the massage industry supported the Massage Therapy Council and wanted it to succeed, for a variety of economic reasons internal to the massage industry. The pet grooming industry opposes the Pet Grooming Council and could not be counted upon to support it in its early stages. 7)Suggested Amendment. The author may wish to amend SB 969 in light of the difficulty the Council may face in raising adequate funding. One such amendment would permit the Council to continuing operating if, but only if, it generates sufficient revenue in its first year to pay for three full-time employees, rent, and any necessary office equipment. Such an amendment would allow the Council to continue operating if it provides value to the market, but would eliminate the Council if it does not. This prevents a legal entity from continuing to exist without the funding necessary to actually operate, helping to avoid uncertainty and confusion in the pet grooming industry. Analysis Prepared by : Jonathan Stein / APPR. / (916) 319-2081