BILL ANALYSIS Ó AB 179 Page 1 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 Page 2 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. AB 179 Page 3 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 AB 179 Page 4 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. AB 179 Page 5 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 AB 179 Page 6 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 AB 179 Page 7 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