BILL ANALYSIS Ó
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Date of Hearing: March 29, 2016
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Rudy Salas, Chair
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(Patterson) - As Introduced February 2, 2016
SUBJECT: Professions and vocations: licensing fees: equity.
SUMMARY: Encourages the Department of Consumer Affairs (DCA)
and its licensing entities to create policies that promote
fairness and equity to guarantee that each licensee pays a fair
amount, especially in regards to initial and ongoing license
fees.
EXISTING LAW:
1)Provides for the regulation and licensure of various
professions and vocations by licensing entities within the DCA
and establishes fees and schedules for licensing and renewals.
(Business and Professions Code (BPC) §§ 100-11506)
THIS RESOLUTION:
2)Declares that existing law provides for the licensure and
regulation of various professions and vocations by boards,
bureaus, and committees within the DCA, including, among
others, accountants, acupuncturists, architects, athletes,
automotive mechanics, barbers and cosmologists, chiropractors,
contractors, court reporters, dental hygienists, dentists,
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doctors, engineers, fiduciaries, marriage and family
therapists, nurses, optometrists, osteopathic physicians and
surgeons, pharmacists, physical therapists, physician
assistants, private schools, private guards and other
security-related jobs, psychologists, realtors, respiratory
care practitioners, speech pathologists, social workers, and
veterinarians.
3)Declares that the mission of many of the boards, bureaus, and
committees within the DCA is to protect people and promote the
health and safety of Californians by licensing and regulating
various professions and vocations.
4)Declares that hardworking individuals must often complete
hundreds of hours of professional training requirements,
including, but not limited to, education, schooling,
internships, or other requirements, to meet professional
licensing standards in order to be licensed by the State of
California and pursue their profession.
5)Declares that existing law establishes fees for initial
licenses, initial temporary and permanent licenses, and
original licenses for those various professions and vocations.
6)Declares that licensees may spend up to hundreds of dollars
for their initial license and pay thousands of dollars to the
State of California over their career to maintain their
license, not including the thousands of dollars licensees may
pay to put themselves through training or educational programs
to gain the skills needed for a given profession.
7)Declares that existing law requires that licenses issued to
certain licensees expire at 12 a.m. on either the last day of
the birth month of the licensee or at 12 a.m. of the legal
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birth date of the licensee during the second year of a
two-year term if not renewed, yet fails to provide licensees
the opportunity to prorate their initial licensing fee to the
specific amount of time actually licensed.
8)Declares that the Governor supports an equitable licensing fee
policy that would prorate license fees based on how many
months have elapsed between the initial issuance of a license
and the time of renewal, as stated in his message upon vetoing
Assembly Bill 483 (Patterson) of 2015, which was unanimously
passed by the Senate and passed the Assembly with a vote of
78-0.
9)Declares that the Legislature recognizes the important and
valuable services that those licensees provide to the state.
10)Resolves that the Legislature encourages the DCA and its
boards, bureaus, and commissions to create policies that
promote fairness and equity to guarantee that each licensee
pays a fair amount, especially in regards to initial and
ongoing license fees.
11)Resolves that the Chief Clerk of the Assembly transmit copies
of the resolution to the author for appropriate distribution.
FISCAL EFFECT: Unknown. This bill is keyed fiscal by the
Legislative Counsel.
COMMENTS:
Purpose. This resolution is author sponsored. According to the
author, "[this resolution] recognizes the many professionals in
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the state of California that provide a variety of services to
Californians ranging from [barbering] and cosmetology to fields
of medicine. Licensed professions bring valuable services and
are also economic drivers within our state. [This resolution]
expresses that it is the goal and intent of the Legislature to
direct government entities in establishing policies that make it
fairer for newly licensed Californian's to enter the workforce."
Background. Under existing law, many professional licensing
entities under the DCA have either a biennial (two-year) renewal
schedule or a biennial renewal schedule that varies based on a
licensee's birthdate. Under the pure biennial renewal schedule,
the renewal date is two years from the date the license is
issued. For example, if a licensee is issued a license on
January 15, 2016, the license would expire on January 15, 2018.
However, this can result in workload issues. For many of the
entities, applicants tend to submit applications at the same
time because of the timing of exams and training programs. This
results in licensing entities receiving a large number of
applications for initial licenses during peak times. This means
those entities under a biennial renewal schedule will also
process a large number of renewals at one time.
As a result, many licensing practice acts have been amended to
require entities to stagger the renewals by using licensee birth
dates. Under typical birth date renewal programs, licenses
expire on the last day of the licensee's birth month during the
second year of the biennial term. However, this means the
initial license period can vary from between 12 months to 24
months, depending on how close the applicant's birth month is to
the issuance date.
For example, if a licensee is issued a license on February 1,
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2016 and the licensee's birthday is in January, then the license
will expire January 30, 2018, a full 24 months. However, if the
licensee's birthday is in February, then the license will expire
February 30, 2017, the minimum of 12 months. This is because
two years from February 30, 2016 would be February 30, 2018.
However, since the issuance date was February 1, 2016, the
result would be a 25 month license period that exceeds the
biennial term.
Therefore, under a birth month renewal program, there are
instances were some licensees have an initial license period
that is shorter than other licensees but still pay the full
initial license fee and renewal fee. While additional renewal
periods inevitably extend to a full two-year cycle, some
entities report that licensees find that it is unfair for those
licensees with shorter initial license periods to have to pay a
full renewal fee.
Potential Solutions. The issue of some licensees paying a full
renewal or initial license fee when their initial license period
is not as long as other licensees has at least a few potential
solutions, for example: 1) using a pro rata formula to decrease
either the initial license fee or the renewal fee based on the
length of the licensee's initial license period; 2) switching
back to a biennial renewal schedule; or 3) adjusting the initial
application period, such as putting a limit on the number of
initial applications allowed per week.
However, each solution has strengths and draw backs. Using a
pro rata formula has the benefit of ensuring each licensee is
paying a fee that directly correlates to the actual initial
license period, eliminating inequities between licensees. It
also continues to accommodate the administrative workloads of
the entities. However, the licensing entities under the DCA are
special fund agencies, meaning that they receive no
appropriations from the general fund and are funded solely
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through licensing and enforcement fees. This means that a pro
rata formula could have an impact on revenues.
Alternatively, switching back to a biennial renewal schedule
would again cause the large peaks in renewal processing.
Although some entities report that the peaks have leveled out
over time, it may still impact administrative workload.
Given that the underlying purpose of the birth month renewal
program was to stagger the timing of renewals, other solutions
might include adjustments to the timing of initial applications.
This might include authorizing entities to limit the number of
applications accepted during a specified time period or to
provide temporary, limited licenses while licensees wait for
their birth month. The downside to these mechanisms is that
they may have a negative impact on waiting applicants.
Since each licensing entity is unique, the benefit and burden of
each solution would have to be contemplated by the individual
entity and its stakeholders.
Authority to Adjust Fees. Under existing law, it is not clear
whether licensing entities under the DCA can promulgate
regulations to pro rate or collect variable fees without the
statutory authority to do so. For example, BPC § 2435 provides
that the biennial renewal fee for a physician and surgeon's
license "shall be fixed by the Medical Board of California (MBC)
consistent with this section and shall not exceed seven hundred
ninety dollars ($790)." The term "fixed" could be interpreted
to mean that the MBC cannot vary the fee between licensees.
Even if the MBC's or other entities' practice act could be
interpreted to allow additional renewal formulas, context
suggests otherwise-there are entities that have explicit
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statutory authority to use pro rata formulas, including the MBC
when approving physician and surgeon supervisors of physician
assistants (PAs). BPC § 3522 provides that the MBC "shall
establish a cyclical renewal program, including, but not limited
to, the establishment of a system of staggered expiration dates
for approvals and a pro rata formula for the payment of renewal
fees by physician and surgeon supervisors." Therefore, MBC has
the specific authority to establish a pro rata formula for that
specific class of licensee. This suggests that, since similar
language is lacking for other licensees, the MBC's authority is
limited by the statute.
Similarly, BPC § 3523 provides that the Physician Assistant
Board (PAB) "shall establish by regulation procedures for the
administration of a birthdate renewal program, including, but
not limited to, the establishment of a system of staggered
license expiration dates and a pro rata formula for the payment
of renewal fees by PAs affected by the implementation of the
program."
Further, all entities appear to be required to prorate initial
license fees in certain situations. BPC § 134 provides that
"[w]hen the term of any license issued by any agency in the
department exceeds one year, initial license fees for licenses
which are issued during a current license term shall be prorated
on a yearly basis."
Therefore, since there are instances of specific statutory
authority for entities to establish pro rata formulas, it is not
clear that entities without similar statutory language can
promulgate regulations establishing alternative fee formulas
without a statutory change.
Impact of BreEZe. In 2013, the DCA implemented the BreEZe
program, an online information technology program created to
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assist licensing entities with licensing and other pertinent
functions. Last year, the DCA anticipated that implementing a
pro rata formula would be impacted by the DCA BreEZe program.
During prior sunset review hearings, many entities under the DCA
noted that BreEZe can be inflexible. Therefore, it is unclear
whether BreEZe can be easily modified to accommodate new renewal
formulas in addition to other changes entities might need.
Prior Related Legislation. AB 773 (Baker), Chapter 336,
Statutes of 2015, switched psychology license renewals from a
birth month renewal to a biennial renewal program.
AB 483 (Patterson) of 2015 would have required that the fees for
an initial license, an initial temporary or permanent license,
an original license, or a renewal for specified regulatory
entities, be prorated on a monthly basis. NOTE: This bill was
vetoed by Governor Brown because an equitable licensing fee
policy "can be crafted more carefully and thoughtfully through
regulation."
AB 1758 (Patterson) of 2014 would have required that the fee for
an initial temporary or permanent license or an original license
be prorated on a monthly basis and authorized the licensing
entities to impose an additional fee to cover the reasonable
costs of issuing an initial or original license that expires in
less than 12 months. NOTE: This bill was held in the Senate
Appropriations Committee.
SB 1236 (Price), Chapter 332, Statutes of 2012, among other
things, required the MBC to establish a pro rata formula for the
payment of renewal fees by physician and surgeon supervisors of
PAs and required the PAB to establish a pro rata formula for the
payment of renewal fees by PAs.
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Analysis Prepared by:Vincent Chee / B. & P. / (916) 319-3301