BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 467 (Hill) - Professions and vocations ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: April 21, 2015 |Policy Vote: B., P. & E.D. 9 - | | | 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: May 11, 2015 |Consultant: Mark McKenzie | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: SB 467 would extend the sunset on the Board of Accountancy (Board) and the term of its executive officer until January 1, 2020, and authorize the Board to place practice restrictions on licensees for disciplinary reasons. The bill would transfer authority for approving pro-rata charges for Department of Consumer Affairs (DCA) administrative expenses that are imposed upon boards and bureaus within DCA to the Legislature, rather than having those charges set by the director of DCA with Department of Finance (DOF) approval. SB 467 would also require the Attorney General (AG) to submit an annual report to the Legislature, Governor, and DCA, beginning SB 467 (Hill) Page 1 of ? on January 1, 2017, that includes specified information on cases referred to the AG by DCA's boards and bureaus. Fiscal Impact: Board of Accountancy: projected expenditures of approximately $14.1 million annually (Accountancy Fund), supporting 98.8 PY, until January 1, 2020, partially offset by annual fee revenues of approximately $5.4 million in 2015-16, based on the proposed 2015-16 budget. Annual fee revenues will increase to approximately $11 million annually beginning July 1, 2016. The AG's Office indicates that it would incur significant increased workload and costs of approximately $1.45 million in 2015-16 ($537,000 General Fund and $911,000 Legal Services Revolving Fund - LSRF), $1.8 million in 2016-17 ($268,000 General Fund and $1.534 million LSRF), and $1.534 million ongoing (LSRF). AG costs from the LSRF would be reimbursed from the funds of the boards and bureaus that refer cases to the AG. Unknown impact on the funds and accounts of individual boards and bureaus as a result of transferring the authority to the Legislature for setting pro-rata charges on boards and bureaus to cover DCA's administrative expenses. There should not be a net overall impact to the charges, but the change will likely result in losses to some funds and gains to others. (various special funds) Background: Existing law, the California Accountancy Act, establishes the Board of Accountancy within DCA, authorizes the Board to appoint an executive officer, and sunsets the Board and executive officer on January 1, 2016. The Board licenses and regulates over 81,000 accounting professionals to ensure adherence to professional standards. A person is deemed to be engaged in the public practice of accountancy if he or she performs certain acts, makes certain representations, and renders accounting services to the public and clients for compensation. Existing law authorizes the Board to revoke, suspend, or refuse to renew a license or certificate, or censure the licensee, for SB 467 (Hill) Page 2 of ? unprofessional conduct that includes one or any combination of criminal acts, specified false statements or omissions, dishonesty, fraud, gross negligence or repeated negligent acts in performance of professional standards, and other acts or violations, as specified. Existing law specifies that the boards and bureaus within the DCA are established for the purpose of ensuring that those private businesses and professions deemed to engage in activities which have potential impact upon the public health, safety, and welfare are adequately regulated in order to protect the people of California. Existing law authorizes the director of DCA to levy a charge for the pro-rata share of DCA's administrative expenses against any of the boards, bureaus, commissions, divisions, and agencies, at the discretion of the director and with approval of DOF. DCA is required to submit an annual report of the accounting of the pro-rata calculation of administrative expenses to the appropriate policy committees of the Legislature, beginning on July 1, 2015. DCA is also required to conduct a one-time study of its current system of prorating administrative expenses to determine if that system is the most productive, efficient, and cost-effective manner for DCA and its boards and bureaus, and requires DCA to consider certain options and include the findings from the study in the July 1, 2015 report to the Legislature. Proposed Law: SB 467 would do the following: Extend the sunset on the Board of Accountancy and its executive officer until January 1, 2020. Authorize the Board to permanently restrict or limit the practice of a licensee, or impose a probationary term or condition on a license, for unprofessional conduct. This action would prohibit the licensee from performing or engaging in any of the acts or services as provided for in the practice of accountancy. Unprofessional conduct would include, but not be limited to, those grounds for discipline or denial specified in current law. Require DCA to receive approval from the Legislature in order to levy a charge for the estimated administrative expenses of the DCA on a pro rata share basis against any of the boards, bureaus, commissions, divisions, and agencies. SB 467 (Hill) Page 3 of ? Require the AG to submit an annual report to DCA, the Governor, and the appropriate policy committees of the Legislature, beginning January 1, 2017, that includes specific statistical information regarding cases referred to the AG by each constituent entity comprising the DCA and the Division of Investigation (DOI) within DCA. Require the director of DCA, through the DOI, to work cooperatively with the health care boards to standardize referral of complaints to the DOI and those that are retained by the health care boards for investigation. Related Legislation: This bill is one of five measures introduced this session by the Senate Business, Professions, and Economic Development Committee to extend the sunset on licensing boards within DCA - including SB 465 (Hill), SB 466 (Hill), SB 468 (Hill), and SB 469 (Hill). Five additional bills that extend the sunset on DCA licensing boards and bureaus are being considered by the Assembly this year. Staff Comments: DCA indicates that any costs to extend the sunset on the Board of Accountancy, and provide authority for the Board to place practice restrictions on licensees for disciplinary reasons, would be minor and absorbable. There are several things to note about the Accountancy Fund, which supports the operations of the Board. Effective July 1, 2014, the Board reduced licensing and exam fees in a deliberate effort to bring the Accountancy Fund reserve in line with appropriate levels (it had over 12-months of revenues in reserve at that time). This explains the primary source of imbalance in fees and expenditures in the current year and the 2015-16 fiscal year (fee revenues are approximately $5.4 million and expenditures are about $13.8 million in those years). According to the proposed 2015-16 budget, there will be a projected reserve of about $3.35 million at the end of the 2015-16 fiscal year, which is the equivalent of an appropriate three-month reserve. The temporary reduction in licensing and exam fees will expire on July 1, 2016, which is expected to bring annual fee revenues to over $11 million in 2016-17. This amount is still less than projected expenditures through the remaining sunset period, but the Board could raise the fees further, if SB 467 (Hill) Page 4 of ? necessary. Staff notes that the 2002 Budget Act included a loan of $6 million from the Accountancy Fund to the General Fund to help close a budget gap. The Governor's proposed budget anticipates the repayment of this loan in 2015-16. Current law does not require the AG to compile statistical data or results of cases referred to the AG by constituent entities comprising the DCA, or to report any such information to DCA, the Governor, or Legislature. The AG reports they would experience significant workload impacts as a result of this bill, and would incur staffing costs of $911,000 in 2015-16 and $1.534 million ongoing, as well as an 18-month contract for external consulting resources of approximately $805,000. Staff notes that the AG report requirement in this bill was also included in the June 30, 2014 version of SB 1243 (Lieu), last year's bill dealing with professions and vocations, but the Assembly Appropriations Committee voted to delete the AG report from the bill when it was reported to the Assembly Floor from the Suspense File. DCA indicates that any costs related to provisions requiring complaint standardization among the healing arts boards would be minor. -- END --