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 AB 1685 (Williams) Page 1 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 $55. 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 AB 1685 (Williams) Page 2 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.