BILL ANALYSIS                                                                                                                                                                                                    Ó

                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de León, Chair

          AB 1685 (Williams) - Structural pest control operator fees.
          Amended: April 21, 2014         Policy Vote: BP&ED 8-0
          Urgency: No                     Mandate: No
          Hearing Date: June 30, 2013                             
          Consultant: Mark McKenzie       
          This bill does not meet the criteria for referral to the  
          Suspense File. 

          Bill Summary: AB 1685 would increase the license examination  
          fees imposed by the Structural Pest Control Board (SPCB) on pest  
          control operators, field representatives, and applicators.  The  
          bill would also authorize a structural pest control company to  
          provide a specified written notice to a building owner, or  
          owner's agent, and tenant by electronic mail. 

          Fiscal Impact: 
              Minor costs to the SPCB to revise regulations to reflect  
              increased examination fees. (Structural Pest Control Fund)
              Estimated revenue gains of approximately $364,000 for  
              expenditure on computer based testing of applicants, based  
              on an anticipated examination fee increase of $40.  
              (Structural Pest Control Fund).

          Background: Existing law provides for the licensing and  
          regulation of structural pest control applicators, field  
          representatives and operators, and structural pest control  
          companies by the SPCB within the Department of Consumer Affairs  
          (DCA) and repeals the SPCB on January 1, 2015.  Existing law  
          also prescribes a fee schedule for various licensing and  
          examination fees, including examination fees of up to $25 for  
          operators, up to $15 for field representatives, and up to $15  
          for applicators. 

          Proposed Law: AB 1685 would authorize a structural pest control  
          company to provide a written notice by electronic mail to a  
          building owner, or owner's agent, and tenant of the premises  
          where work is to be done.  The bill would also raise the maximum  
          fees that the SPCB may charge for examinations as follows:
                 Operator examination fee:  increase from $25 to $100


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                 Field representative examination fee:  increase from $15  
               to $75
                 Applicator examination fee:  increase from $15 to $60

          In addition, the bill would remove specified caps on examination  
          fees and instead authorize the SPCB to charge a fee in an amount  
          sufficient to cover the "reasonable regulatory cost" of  
          administering each exam.

          Related Legislation: SB 1244 (Lieu), currently pending in the  
          Assembly Appropriations Committee, would extend the sunset of  
          the SPCB and the term of its executive officer until January 1,  
          2019.  The bill would also make a number of technical and  
          clarifying changes to update the Structural Pest Control Law.

          Staff Comments: The proposed increase to the fee cap is intended  
          to facilitate the implementation of a modernized computer based  
          testing (CBT) methodology.  This would enable the SPCB to  
          enhance the security of the testing, since there was a recent  
          incident in which the written test was compromised, simplify  
          test validation and monitoring, and improve the convenience of  
          the examination.  Under the written test system, there were only  
          two testing locations and examinations were only held at  
          scheduled intervals.  Under a fully implemented CBT model, there  
          would be 17 testing sites in the state, testing could be offered  
          at any time, and the tests could be offered remotely in other  
          states.  The SPCB has begun to offer CBT on a pilot basis in two  
          locations and is currently absorbing the additional examination  
          costs.  Through DCA's current vendor, the CBT costs an  
          additional $37.50 per exam to administer.

          The SPCB anticipates increasing the examination fees by roughly  
          $40 per licensure category to cover the actual costs of  
          administering the CBT examinations.  The proposed examination  
          fee increases by the Board would raise the operator examination  
          fee from $25 to $65; the field representative examination fee  
          from $15 to $50; and the applicator examination fee from $15 to  

          Staff notes that the Structural Pest Control Fund, which  
          supports the activities of the SPCB, is in a declining  
          condition.  Expenditures from the fund outpaced revenues by  
          $593,000 in the current year and are projected to outpace  
          revenues by $547,000 in 2014-15.  The fund's reserve has  


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          declined from $1.37 million at the end of 2012-13, to $770,000  
          at the end of 2013-14, and is projected to be $223,000 at the  
          end of 2014-15.  The bill provides authority to raise the  
          licensing examination fees beyond the current proposal to  
          increase the fees by $40 per licensing category.  The additional  
          fee authority could help the condition of the fund.