BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                       AB 179


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          ASSEMBLY THIRD READING


          AB  
          179 (Bonilla)


          As Amended  May 5, 2015


          Majority vote


           ------------------------------------------------------------------- 
          |Committee       |Votes |Ayes                  |Noes                |
          |                |      |                      |                    |
          |                |      |                      |                    |
          |----------------+------+----------------------+--------------------|
          |Business &      |14-0  |Bonilla, Jones,       |                    |
          |Professions     |      |Baker, Bloom, Burke,  |                    |
          |                |      |Chang, Dodd, Eggman,  |                    |
          |                |      |Gatto, Holden,        |                    |
          |                |      |Mullin, Ting, Wilk,   |                    |
          |                |      |Wood                  |                    |
          |                |      |                      |                    |
          |----------------+------+----------------------+--------------------|
          |Appropriations  |17-0  |Gomez, Bigelow,       |                    |
          |                |      |Bonta, Calderon,      |                    |
          |                |      |Chang, Daly, Eggman,  |                    |
          |                |      |Gallagher,            |                    |
          |                |      |                      |                    |
          |                |      |                      |                    |
          |                |      |Eduardo Garcia,       |                    |
          |                |      |Gordon, Holden,       |                    |
          |                |      |Jones, Quirk, Rendon, |                    |
          |                |      |Wagner, Weber, Wood   |                    |
          |                |      |                      |                    |
          |                |      |                      |                    |
           ------------------------------------------------------------------- 








                                                                       AB 179


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          SUMMARY:  Extends the operation of the Dental Board of California  
          (DBC) until January 1, 2020, and increases statutory fee caps  
          relating to dentists and dental assistants.  Extends the operation  
          of the Board of Vocational Nursing and Psychiatric Technicians  
          (BVNPT) until January 1, 2018, and merges the Vocational Nursing  
          fund and the Psychiatric Technician funds, as specified.   
          Specifically, this bill:   


          1)Extends the operation of the DBC until January 1, 2020.


          2)Authorizes the DBC to increase specified fees for dentists and  
            Registered Dental Assistants (RDAs), as specified, including  
            raising the maximum fee for initial and renewal licensure for a  
            dentist from $525 up to $650, and on or after January 1, 2018,  
            from $650 up to $800. 


          3)Requires DBC applicants and licensees to report electronic mail  
            addresses to the DBC no later than July 1, 2016, and provides  
            that those email addresses are confidential and not subject to  
            public disclosure. 


          4)Requires the DBC to annually send an electronic notice to each  
            applicant and licensee that requires confirmation from the  
            applicant or licensee that his or her electronic email address  
            is current.  


          5)Extends the operation of the BVNPT until January 1, 2018. 


          6)Merges the funds of the BVNPT, as specified. 










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          7)Provides that it is not unprofessional conduct for healing arts  
            licensees who do not provide psychotherapeutic medical treatment  
            to treat spouses or persons in equivalent domestic  
            relationships.


          8)Makes conforming changes.  


          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee:  


          1)$14.6 million annually to the State Dentistry Fund, until  
            January 1, 2020, in order to maintain current operations of the  
            DBC; 


          2)$11.2 million annually to the Vocational Nursing and Psychiatric  
            Technicians Fund, until January 1, 2018, in order to maintain  
            current operations of the BVNPT; and,


          3)Unknown potential increased revenues, if DBC adopts regulations  
            to raise fees based on the increased fee caps.  


          COMMENTS:


          Purpose.  This bill is author sponsored.  According to the author,  
          "This bill is necessary to ensure that consumers are protected by  
          the continued operation of the DBC.  The [DBC's] sunset bill  
          raised numerous issues, including the adequacy of the Dentistry  
          Fund condition and the practical examination for registered dental  
          assistants.  The DBC has been operating with a major structural  
          deficit, and is faced with impending deficits.  Prior to recent  
          increases to its initial and renewal licensure fees, the DBC had  
          not raised fees for nearly two decades.  A recent audit of the  








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          DBC's finances shows that the cost for licensure and permitting  
          categories do not sufficiently cover the cost for that license or  
          permit.  As a result, this bill proposes to increase statutory fee  
          caps across all categories to let the DBC begin to recover its  
          costs, help solve its structural imbalance, and build a healthy  
          reserve.  These fee caps are intended to carry the DBC over for  
          many years, and any actual increase in fees would need to go  
          through the regulatory process, thereby ensuring that licensees  
          may voice any concerns to potential increases.


          "In addition, on February 13, 2012, the BVNPT approved a merger of  
          the vocational nursing fund and the psychiatric technician fund as  
          an alternative to a statutory amendment to raising fees for the  
          psychiatric technician fees.  This bill would advance the fiscal  
          solvency of the BNVPT by merging these funds.  The bill will also  
          increase accountability by extending the BVNPT's sunset date only  
          until January 1, 2018, thereby increasing legislative oversight of  
          the BVNPT in light of the significant issues raised in the BVNPT's  
          sunset background paper."    


          Sunset Review.  On March 23, 2015, the Assembly Business and  
          Professions Committee and the Senate Business, Professions, and  
          Economic Development Committee held a "sunset review" hearing for  
          the DBC and the BVNPT.  As part of the Sunset Review, the DBC and  
          the BVNPT each prepared a sunset report, which was submitted to  
          the Committees and Committee staff prepared a background paper on  
          each board.    


          A "sunset review" is a performance review of a state agency by the  
          Legislature aimed at determining whether that agency should  
          continue to exist, and if so, whether any statutory reforms are  
          needed to increase the agency's effectiveness.  Sunset review is  
          triggered by the statutory expiration date for the agency, which  
          is commonly called a "sunset."  Without an extension of this  
          sunset date, the Board would cease to exist. 









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          DBC Dental Fund Condition.  The Dentistry Fund is maintained by  
          the DBC and includes the revenues and expenditures related to  
          licensing for dentists.  For sixteen years, the license fee for  
          dentists was set at $365.  In 2013, for the first time in 16  
          years, the DBC increased its license fee for dentists from $365 to  
          its statutory cap at the time of $450.  These regulations went  
          into effect on July 1, 2014.  During that time, the DBC also  
          pursued an increase in statute from $450 to $525.  SB 1416 (Block)  
          Chapter 73, Statutes of 2014, raised the DBC's fee for initial and  
          renewal licenses for dentists from $450 to $525, and set fees at  
          that level.  During that time, an analysis conducted by the DCA's  
          Budget Office determined that the license fees should be raised to  
          $525 to ensure solvency into the foreseeable future.  While fees  
          increased have generated additional revenue, the DBC's  
          expenditures, projected to be over $12 million per year, continue  
          to outpace its revenue, projected to be less than $11 million per  
          year, thus perpetuating a structural imbalance.  Part of the  
          reason for the increase in projected and actual expenditures in  
          recent years has been due to funding 12.5 CPEI positions; funding  
          the diversion program; increased expenses associated with BreEZe;  
          unexpected litigation expenses; and the general increase in the  
          cost of doing business over the past 16 years.  While the DBC has  
          expended less than what it has been authorized by the budget due  
          to some cost savings and reimbursements, the DBC emphasizes that  
          its fund should be able to sustain expenditures without relying on  
          estimated savings or reimbursements.  


          Based on data from the past five fiscal years, the DBC calculated  
          that the Dentistry Fund will be able to sustain expenditures into  
          FY 2017-18 before facing a deficit.  The DBC projects it will only  
          have 0.5 months in reserve in FY 2016-17, and underwent a fee rate  
          audit to determine the appropriate fee amounts to assess and to  
          project fee levels into the future.  The DBC has shared its recent  
          fee audit, which discovered that in addition to the DBC's  
          operational imbalance, it is limited in its ability to recover the  
          true cost of licensure and regulation for dentists and dental  
          assistants based on many of the set fees, which do not cover the  








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          actual costs.  In light of this fee audit, the DBC is requesting  
          an increase in all statutory fee caps relating to dentists and  
          dental assistants, including, but not limited to, those fees  
          relating to licensure, permits, and examinations.  


          While some of these fee increases are dramatic, they reflect the  
          fact that many of these fee caps have not been raised in nearly up  
          to two decades.  The DBC's intent is for this large increase in  
          statutory fee caps to cover its potential need to increase fees  
          over a period of many years, including beyond the next sunset  
          period.  The DBC would have to raise any fees through the  
          regulatory process, however, ensuring that there will be  
          additional time and robust opportunity for public participation  
          prior to the increase of any fee. 


          BVNPT Fund Merger.  Both the Licensed Vocational Nurse (LVN) and  
          Psychiatric Technician (PT) programs are at the statutory maximums  
          for the fees they charge licensees. In July of 2012, the Board  
          submitted a Budget Change Proposal (BCP) requesting the merger of  
          the LVN and PT funds. The BCP was denied as the PTs fund condition  
          was expected to remain solvent through FY 2015-16.  The Board was  
          advised to seek a statutory proposal to merge the funds versus a  
          BCP. 


          According to the Board, current budget projections indicate that  
          the LVN program fund reserve will remain solvent past FY 2020-21.   
          The PTs program fund reserve will be exhausted by 2017-18. On  
          February 13, 2012, the Board approved a merger of the funds as an  
          alternative to a statutory amendment to raise the PTs fee ranges.  
          The Board has been advised by the DCA Budget Office that the  
          merger would delay a deficit and the need to increase fees for  
          three to four years. This bill will merge the LVN and PT funds.


          BVNPT Sunset Date.  A review of the issues raised during the last  
          review of the Board in 2011 reveals that the Board has made some  








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          strides towards meaningful change. However, the outstanding issues  
          also reveal that the Board has experienced some significant  
          problems that have impacted its overall functioning, the oversight  
          of licensees and protection of the public. As highlighted above,  
          the Board has shown deficiencies and discrepancies in the areas of  
          enforcement and management of funds. Due to these continuing  
          problems as well as potential issues concerning the management and  
          operations of the Board, it appears that this Board requires  
          additional oversight and direction.  This bill will extend the  
          BVNPT's sunset date to January 1, 2018.  In addition, AB 178  
          (Bonilla) of the current legislation session will address  
          additional issues pursuant to the Committees' recommendations.




          Analysis Prepared by:                                               
                          Eunie Linden / B. & P. / (916) 319-3301  FN:  
          0000679