BILL ANALYSIS                                                                                                                                                                                                    Ó

                                                                    SB 1039

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          1039 (Hill)

          As Amended  August 19, 2016

          Majority vote

          SENATE VOTE:  25-12

          |Committee       |Votes|Ayes                   |Noes                 |
          |                |     |                       |                     |
          |                |     |                       |                     |
          |                |     |                       |                     |
          |Business &      |11-5 |Salas, Bloom, Campos,  |Brough, Baker,       |
          |Professions     |     |Dodd, Eggman, Gatto,   |Chávez, Dahle, Jones |
          |                |     |Gomez, Holden, Mullin, |                     |
          |                |     |Ting, Wood             |                     |
          |                |     |                       |                     |
          |Appropriations  |14-6 |Gonzalez, Bloom,       |Bigelow, Chang,      |
          |                |     |Bonilla, Bonta,        |Gallagher, Jones,    |
          |                |     |Calderon, Daly,        |Obernolte, Wagner    |
          |                |     |Eggman, Eduardo        |                     |
          |                |     |Garcia, Holden, Quirk, |                     |
          |                |     |Santiago, Weber, Wood, |                     |
          |                |     |McCarty                |                     |
          |                |     |                       |                     |
          |                |     |                       |                     |


                                                                    SB 1039

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          SUMMARY:  Makes several changes to the statutes governing  
          various boards and bureaus under the Department of Consumer  
          Affairs (DCA); includes specified fee increases for several  
          boards including the Dental Hygiene Committee of California  
          (DHCC), the California Board of Optometry (CBO), the Board of  
          Registered Nursing (BRN), the Board of Pharmacy (BOP), and the  
          Contractors State License Board (CSLB); and eliminates the  
          Telephone Medical Advice Services Bureau (TMAS).  Specifically,  
          this bill:

           1) Increases the statutory cap for the biennial renewal fee for  
             various types of registered dental hygienists from $160 to  
           2) Establishes a specified minimum and maximum application fee  
             amount for nonresident contact lens sellers, registered  
             dispensing opticians, and spectacle lens dispensers and  
             increases minimum and maximum amounts for already established  
             fees.  Authorizes the CBO to periodically revise and fix the  
             fees, as specified.

          3)Clarifies that the $50,000 cap on the administrative fine that  
            the CBO may issue for violations of the ownership prohibitions  
            applicable to optometrists, optical companies, and registered  
            dispensing opticians is "per investigation."

          4)Authorizes the CBO to at any time inspect the premises in  
            which optometry is being practiced or in which spectacle or  
            contact lenses are fitted or dispensed, as specified.

           5) Specifies that the CE standards established by the BRN for  
             nurses shall take cognizance of specialized areas of  
             practice, as currently required, but in addition the content  
             shall be relevant to the practice of nursing and shall be  
             related to the scientific knowledge or technical skills  


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             required for the practice of nursing or be related to direct  
             or indirect patient or client care.  
           6) Requires the BRN to audit CE providers at least once every  
             five years to ensure adherence to regulatory requirements,  
             and requires the BRN to withhold or rescind approval from any  
             provider that is in violation of the regulatory requirements.

           7) Prescribes various fee changes to be paid by licensees and  
             applicants for licensure and requires these fees to be  
             credited to the BRN Fund, which is a continuously  
             appropriated fund as it pertains to fees collected by the BRN  
             and also raises specified fees, and provides for additional  
             fees to be paid by licensees and applicants for licensure as  
             well as by schools seeking approval by the BRN.

           8) Modifies, on or after July 1, 2017, specified fees to be  
             paid by the licensees and applicants for licensure with the  

           9) Specifies that a veterinarian from another state or country  
             does not have to be licensed in California if they are  
             holding a current, valid license in good standing in another  
             state or country and provide assistance to a California  
             licensed veterinarian.  The California licensed veterinarian  
             shall maintain a valid veterinarian-client-patient  
             relationship and that the veterinarian providing the  
             assistance shall not establish a veterinarian-client-patient  
             relationship with the client, as specified.  Clarifies that a  
             veterinarian in good standing from another state does not  
             have to be licensed in California if they are called into  
             this state by law enforcement agency or animal control  
             agency, as specified.

           10)Eliminates the TMAS and repeals the requirement that certain  
             businesses that provide telephone medical advice services to  


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             a patient at a California address to be registered with the  

           11)Raises specified fees to be paid by the licensees and  
             applicants to the CSLB and requires the CSLB to establish  
             criteria for the approval of expedited processing  
             applications, as specified.

           12)Requires the operator licensed and regulated by the  
             Structural Pest Control Board (SPCB) prior to conducting an  
             inspection as specified above to be employed by a registered  
             company.  Requires that the written inspection report be  
             prepared and delivered to the person requesting it, the  
             property owner, or the property owner's designated agent.   
             Requires all inspection reports to be submitted to the SPCB  
             and maintained with field notes, activity forms, and notices  
             of completion until one year after the guarantee expires if  
             the guarantee extends beyond three years.  Requires the  
             inspection report to clearly list the infested or infected  
             wood members or parts of the structure identified in the  
             required diagram or sketch.  Clarifies the definition of  
             "control service agreement" as an agreement, including  
             extended warranties, to have a licensee conduct over a period  
             of time regular inspections and other activities related to  
             the control or eradication of wood destroying pests and  
             organisms.  Makes other clarifying and technical changes  
             regarding the SPCB.

          13)Incorporates changes proposed in SB 1193 (Hill) of the  
            Current Legislative Session relating to outsourcing facility  

          FISCAL EFFECT: According to the Assembly Appropriations  


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          1)One-time costs of $260,000 and ongoing costs of $250,000 per  
            year for the BRN to audit providers of continuing education  
            (Board of Registered Nursing Fund).

          2)Increased licensing fee revenues of about $23 million per year  
            to the BRN (Board of Registered Nursing Fund).

          3)Increased licensing fee revenues of about $7 million per year  
            to the Board of Pharmacy (Pharmacy Board Contingent Fund).

          4)Increased licensing fee revenues of about $12.5 million per  
            year to the Contractor's State Licensing Board (Contractors  
            Licensing Fund). 

          5)Unknown additional fee revenues due to increases in dental  
            hygienist license renewal fees (State Dental Hygiene Fund) and  
            for contact lens sellers, registered dispensing opticians, and  
            spectacle lens dispensers (State Optometry Fund).

          6)Reduced expenditures (and license fee revenues) of about  
            $200,000 per year from the elimination of the Telephone  
            Medical Advice Services Bureau (Telephone Medical Advice  
            Services Fund).

          7)Information technology costs to change fee amounts are  
            expected to be minor and absorbable.


          Purpose.  This bill is sponsored by the author.  According to  


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          the author, "?this bill is intended to be an omnibus bill which  
          includes several changes to a number of boards under the [DCA]  
          and would also include necessary fee increases for certain  
          boards to ensure they continue to operate without a major  
          structural deficit and maintain adequate reserves.  With the  
          advent of the BreEZe project, which is an attempt to replace  
          multiple antiquated standalone information technology (IT)  
          systems for most of the boards under the DCA, some boards have  
          anticipated what may be significant costs and have also provided  
          projections of future fund conditions which show less than  
          possibly three months in reserve because of overall increased  
          budgetary costs for these individual boards.  (Typically, boards  
          consider seeking fee increases when they project their funds in  
          will be at, or dip below, a three-month reserve.)  

          This bill also makes other clarifying substantive changes for  
          the [SPCB] in regards to inspection conducted by structural pest  
          control operators and their companies and eliminates the [TMAS]  
          Bureau which is no longer necessary to provide oversight of  
          remote advice provided by healthcare practitioners."

          Background.  This bill contains several fee increases requested  
          by boards which have projected fund condition issues,  
          incorporates several of the recommendations from the DCA-wide  
          sunset paper published for this year's sunset review oversight  
          hearing in March, and other technical changes.

          Fee Changes for the CBO.  AB 684 (Alejo), Chapter 405, Statutes  
          of 2015, among other things, transferred the regulation of RDOs  
          from the MBC to the CBO, along with the authority to inspect  
          leases and premise locations for compliance with BPC section 655  
          (dealing with various kick-back arrangements).  However, neither  
          the MBC nor the CBO collected data on how many locations are  
          co-located, so there is no concrete data on how many registrants  
          are subject to inspection.  In the following years, the CBO will  
          collect the data and use it to further develop the inspection  


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          Currently, the additional revenue brought in by a fee floor will  
          not support the inspection program.  After more data is  
          collected, the CBO will reassess the cost of this new function  
          (as recommended by the fee audit) and potentially increase fees  
          through the regulation process.

          Still, the fee audit shows that current RDO fee structure is not  
          sufficient to sustain the new RDO program.  The fee audit shows  
          that the proposed fee floor is just enough to sustain the  
          program without factoring in the requirements specified in AB  
          684.  Further, the CBO notes that there are a lot of "unknowns"  
          pertaining to the total impact on the program in regards to the  
          license population and enforcement workload.   The fee auditor  
          recommended setting a fee floor, due to the immediate need, and  
          a fee ceiling high enough to allow the CBO to reassess total  
          impact after a few years of data collection.

          The auditor recommended fees based on cost per item.  However,  
          in an effort to even out the fees and make them more reasonable,  
          the DCA budgets used the auditor's projected program's  
          revenue/budget needs to determine the proposed fee structure.

          BRN CE Audits.  All BRN licensees are required by statute to  
          complete 30 hours of CE during each two year renewal cycle to  
          ensure continued competence. Licensees are required to submit  
          proof of their compliance by signing a statement under penalty  
          of perjury and agreeing to produce documentation upon request.   
          The BRN relies on adherence to CE standards as the primary  
          method of assuring the continued competence of its licensees,  
          but it has not institutionalized regular audits of licensees'  
          CEs or CE providers (CEPs) since 2002.  This issue was raised in  
          the 2011 Sunset Review Report.  


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          During the comprehensive sunset review oversight of the BRN  
          in 2015 conducted by the Senate Committee on Business,  
          Professions and Economic Development and Assembly Business  
          and Professions Committee (Committees), staff recommended  
          the following:  "The BRN should review its criteria for  
          CEPs and require content to be science-based and directly  
          related to professionally appropriate practice.  The BRN  
          should continue to pursue additional staffing for CE  
          auditors, but should simultaneously rebalance its existing  
          workload and prioritize ongoing CE and CEP audits."

          This measure reflects the recommendation made in 2015 during  
          sunset review and provides more staffing to audit CE provided  
          pursuant to the fee increase.

          Fee Changes for BRN.  The BRN Fund is maintained by the BRN and  
          includes the revenues and expenditure related to licensing  
          nurses.  According to the BRN, the cause of its projected  
          deficit is an ongoing problem.

          The BRN further indicates that as a result of the high volume of  
          work regularly referred to the Office of the Attorney General,  
          they have requested additional deputies beginning in fiscal year  
          (FY) 2016/17 and 10 senior legal analysts to comply with the  
          data reporting requirements contained in SB 467 (Hill), Chapter  
          656, Statutes of 2015.  The BRN also underwent a fee audit of  
          all fees to determine whether the BRN was charging appropriate  
          fees in order to conduct its business at an adequate service  
          level to provide public protection.  It was found that the BRN  
          has not been charging enough fees for many areas and has not  
          been collecting enough fees to support the increased enforcement  

          Fee Changes for the BOP.  The BOP's current statutory authority  


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          establishes both a minimum and maximum level for all fees.  The  
          BOP uses its regulatory authority to establish each fee within  
          this range.  As a result of a regulatory change that took effect  
          July 1, 2014, with few exceptions, all of the BOP's fees are at  
          their statutory maximums.  The BOP indicates that it is seeking  
          to realign its current fee structure to address a structural  
          imbalance in its current budget resulting from an increase in  
          annual authorized expenditures that is not offset by a  
          corresponding increase in revenue.  As a precursor to  
          establishing the new fee schedules, the DCA's Budget Office  
          completed a fee analysis of the BOP's fund condition and fee  
          structure in late 2015.  

          Requirements for Veterinarians from Other States.  This bill  
          makes changes to the exemption from California licensure for  
          out-of-state veterinarians who may consult or provide assistance  
          to a California licensed veterinarian to make it clear under  
          what circumstances veterinary practice in this state would be  

          TMAS.  Under current law, any business that provides telephone  
          medical advice services to a patient in California and who  
          employs or contracts with five or more health care professionals  
          to register with the TMAS.  The registrant must renew every two  
          years and file quarterly reports which, among other  
          requirements, list all California and out-of-state employees who  
          provide medical advice services to California patients.  The  
          TMAS ensures that all registrants file quarterly reports and  
          checks to make sure that all the licensees provided on the list  
          by the registrant are properly licensed.  However, there is no  
          effort to independently confirm the accuracy of the lists  
          provided - for example, whether the registrant has provided a  
          comprehensive list of their licensed providers or whether any  
          non-California licensed providers offered advice to  


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          TMAS receives, on average, 21 consumer complaints per year.  In  
          the past five years, 105 complaints were received, and all but  
          two were closed without referral for investigation.  According  
          to the most recent DCA reports, there have been zero citations,  
          fines assessed, referrals for criminal or civil action, formal  
          disciplinary actions filed, or consumer restitution ordered by  
          the TMAS in the last five years.  DCA licensing boards already  
          have concurrent authority with the practice of healthcare by  
          licensed and unlicensed individuals and can effectively police  
          this area without TMAS. 

          Fee Changes for the CSLB.  The proposed fee increases for the  
          CSLB seek to provide the CSLB with sufficient funding to support  
          its existing budget and provide for reasonable inflationary cost  
          increases.  While costs have increased in every area in the last  
          few years, the most significant areas are in Personal Services,  
          DCA Pro Rata and Enforcement.  The CSLB anticipates that it will  
          have, by FY 2018/19, a deficit of approximately $6 million.   
          CSLB needs a fee increase in order to continue to provide its  
          existing level of service to both licensees and consumers.  

          Inspection Requirements for Licensees of the SPCB.  Currently,  
          the Structural Pest Control Act outlines the procedures to be  
          followed during the performance of wood destroying organism pest  
          inspections and in the preparation of the accompanying  
          inspection reports and also provides guidelines for the  
          preparation of a notice of work completed and not completed  
          after a company completes work under a contract.  In 2010, the  
          SPCB created an Act Review Committee and tasked it with  
          reviewing the Act for the purpose of making recommendations to  
          modernize and improve the language for the benefit of consumers  
          and the pest control industry.  The proposed changes in this  
          measure related to SPCP are the result of that review and are  
          intended to clarify its provisions. 


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          Analysis Prepared by:    Le Ondra Clark Harvey Ph.D. / B. & P. /  
                          (916) 319-3301                    FN: 0004694