BILL ANALYSIS
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|Hearing Date:July 6, 2009 |Bill No:AB |
| |1145 |
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SENATE COMMITTEE ON BUSINESS, PROFESSIONS AND
ECONOMIC DEVELOPMENT
Senator Gloria Negrete McLeod, Chair
Bill No: AB 1145Author:Price
As Introduced: February 27, 2009 Fiscal: Yes
SUBJECT: Architects: fees.
SUMMARY: Increases the maximum fee for renewal of an architect
license from $200 to $400.
Existing law:
1)Licenses and regulates more than 22,000 architects by the California
Board of Architecture (Board) within the Department of Consumer
Affairs (DCA).
2)Imposes various fees on licensees and applicants for an architect's
license, which are set by the Board in regulation at an amount not
to exceed a statutory maximum amount. The fees are deposited in the
California Architects Board Fund (Fund), a continuously appropriated
fund.
3)Requires an architect's license to be renewed every two years and
provides that the renewal fee may not exceed $200.
This bill:
1) Increases the maximum fee for renewal of an architect's license
from $200 to $400.
FISCAL EFFECT: The Assembly Appropriations Committee analysis, dated
May 6, 2009 indicates that the 2009-10 Budget assumes that the
California Architects Board Fund will receive $2.5 million from
licensing renewals. This legislation would double that amount to $5
million per year in licensing renewal revenue.
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COMMENTS:
1.Purpose. This bill is sponsored by the California Architects Board ,
and the American Institute of Architects, California Council (AIACC)
(Sponsors). According to the Author, the bill's intent is to
provide the Board with more flexibility by raising the statutory
cap, thereby allowing the Board to raise the fees if it is ever
deemed necessary. The Sponsors indicate that the architect's
licensing fee has not been adjusted for 20 years and is currently at
the statutory $200 maximum for a two-year license. The Sponsors
state that after two decades, it has become necessary to increase
the fee in order for the Board to sustain its current level of
services. According to the Board, it will not be able to generate
the revenue to maintain current operations beginning in Fiscal Year
2010-11.
2.Background. The Board indicates that the license fee cap has been
at the current level for 20 years. With new program mandates and
the increase in costs of doing business, the Board's current amount
of revenue is inadequate to pay for the level of service that is
needed to protect consumers. New mandated programs are very
important, but expensive, and take a large amount of funding and
resources to implement. The Board states, "If the current fee
schedule remains, the Board's fund will be insolvent in FY 2010-11."
The Board's proposed license renewal fee cap increase is the result of
two main causes. First, there are new mandated program changes that
the Board must fund in order to fulfill its mandate. The Board
cites, as an example, last year's SB 1608 (Corbett, Chapter 549,
Statutes of 2008) which requires disabled access continuing
education for licensees as a condition of license renewal.
Second, the Board indicates that the cost of doing business has risen
consistently for many years due to the increase in program, staff,
and equipment costs. However, the Board's revenue base has not kept
pace with the rise in the cost of doing business. The Board states,
"Without any increase of revenue collection for so many years, it
was a matter of time before the cost of doing business out-paced the
amount of revenue the Board collected to maintain a balance in its
reserve and keep the fund solvent." The Board's fund is projected
to be insolvent in FY 2010-11, if an additional revenue source is
not identified. The Board's license renewal fee is currently at its
statutory maximum of $200.
The Board and the DCA Budget Office analyzed many fee scenarios in an
attempt to identify the best source of additional revenue. The
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first step in the process, according to the Board, is to request the
increase of the license renewal fee cap as it is at the statutory
maximum of $200. This will allow the Board some flexibility to
generate additional revenue from its primary revenue source. This
bill would increase the license renewal fee ceiling from $200 to
$400, which is the same fee cap as for the other design professions
in DCA. Landscape architect licenses and professional engineer
licenses each have a $400 renewal fee.
3.Arguments in Support. The California Architects Board , in
sponsoring the bill, indicates that the Board pursued this bill at
the suggestion of the DCA Budget Office which has projected that the
Board will become insolvent in the 2009/10 Fiscal Year. "The Board
will only increase the fee to a level necessary to maintain solvency
pursuant to DCA's recommendation. This proposed statutory fee cap
level will enable the Board to keep its fund solvent and maintain
its valuable services to consumers, candidates for licensure, and
architects," according to the Board.
The American Institute of Architects, California Council , with a
membership of nearly 10,000 architects, is the largest professional
association of licensed architects in California. AIACC, who is
co-sponsoring the bill along with the Board, states that it supports
giving the Board the ability to raise the architect's licensing fee
for a simple reason; the Board soon will be unable to sustain its
current level of service to the public without an increase in the
architect's licensing fee.
AIACC argues that the architectural profession is licensed for the
sole purpose of protecting the health, safety, and welfare of the
public, and the Board has the responsibility to license, regulate,
and discipline architects for the benefit of the public. AIACC
states that because the state restricts who can provide
architectural services, it is the obligation of California licensed
architects to completely fund the operation of the Board which
receives no general fund support. According to AIACC, the
stewardship, smart planning, and strong management of the Board has
allowed the architect's licensing fee to remain unchanged for 20
years. Finally, the AIACC suggests that the $200 fee adopted in
1989, would be $342 today if adjusted for the increase in the cost
of living.
4.Related Legislation. SB 1608 (Corbett, Chapter 549, Statutes of
2008) made a number of reforms intended to increase compliance with
longstanding state and federal laws requiring access to persons with
disabilities in places of public accommodation. As it relates to
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architects, the bill required, as a condition of license renewal,
that an architect must complete coursework regarding disability
access requirements, and certify to the Board, as part of the
license renewal process, completion of the coursework prior to
renewing the license. The bill required licensees to certify that
they have completed the required continuing education, and provide
documentation to the Board from the course provider that meets
specified requirements.
AB 623 (Emmerson) is also before the Committee at today's hearing, and
establishes a general continuing education requirement for
architects if the Board determines that the public health, safety
and welfare would be served by such a requirement. That bill, as
recently amended, revises the continuing education provisions
established in last year's SB 1608 (Corbett) and streamlines the
documentation requirements, to instead require that a licensee must
retain the documentation of completing the coursework and provide it
to the Board upon an audit of the architect's records by the Board.
5.Committee Fee Bill Worksheet. Included with this analysis is a Fee
Background Information Questionnaire (Questionnaire) which was
completed by the Author's office and the agency requesting a fee
increase. This Questionnaire is required by the Committee to
justify any fee increases and provide background information on
requested fee increases. The Questionnaire is to include fund
condition statements displaying five years of actual and five years
of projected expenditures and revenues with (a) current statutory
maximum fee amounts and (b) proposed statutory maximum fee amounts.
It also is to include a schedule of fee revenue by various fee
"categories" displaying five years of actual and five years of
projected revenue based on (a) current fees and (b) proposed fees
and includes the workload (e.g., number of licensees) and fee
charged per category. It is to provide a schedule displaying two
years of expenditures by program component. It is to provide a
table of comparison of existing and proposed fees which includes the
percentage by which the fee will change. Lastly, it should provide
the history for the past 10 years of legislative fee increase
authorizations.
The following is a summary of the Board's responses to the
Questionnaire:
5. What is the projected deficit, and what is the cause of the
deficit? Without an increase in revenues, the Board will
experience a deficit of $879,000 at the end of the 2010/11 fiscal
year. The projected deficit is the result of the ongoing cost of
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doing business and increased mandates over the last 20 years.
The deficit is not a one-time problem, but program, facility and
staffing costs have constantly risen over the years and the
Board's revenue stream has remained relatively constant and has
not kept pace with the rate of the increase in costs.
In addition, new program mandates have added to Board costs. The
Board cites the requirement to implement continuing education
(CE) in disability access requirements for licensees, established
by last year's SB 1608. "Due to the mandate . . . the Board has
the responsibility to monitor, authorize, approve, and possibly
audit the CE requirement implemented by the bill. The CE program
is projected to cost the Board $573,000 in FY 2009/10 and
$402,000 ongoing."
5. Are specific fee categories subsidizing the expenditures of
other categories? The license renewal fee partially subsidizes
the cost to administer and develop the California Supplemental
Examination (CSE) to applicants. Although the Board collects
application and examination fees that pay for some of the cost of
developing and administering the examination, if the license
renewal fee did not partially subsidize the CSE costs, the fee to
take the exam would be extraordinarily high for the applicants.
The Board suggests that if the examination fee were increased, it
could be a deterrent for applicants to pursue licensure in
California. The Board believes it would be inequitable to charge
a higher fee to those with the least ability to pay, and argues
that spreading a portion of the cost to 22,000 architects versus
1,000 examination candidates greatly minimizes the impact.
5. Comparison of the existing and proposed fees. The bill
proposes to increase the biennial renewal fee cap from $200 to
$400, a 100% increase. The $400 fee cap is the maximum fee that
could potentially be charged. As with other licensing boards,
the Board would be required to adopt regulations to set the
specific level of the renewal fee. According to the Board, it
anticipates setting the renewal fee at $350, a 75% increase.
At the current $200 level, there will be a $879,000 deficit in the
Board's fund at the end of FY 2010/11, an amount equal to a
negative 2.6 months in reserve. At the anticipated $350 level,
there will be a $559,000 balance in the Board's fund at the end
of FY 2010/11, an amount equal to 1.6 months in reserve.
(According to DCA Budget Office guidelines, a 3-6 month reserve
is considered to be a prudent reserve for a licensing program).
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6.Policy Issue: How would the recent amendments to AB 623 (Emmerson)
impact the Board's current revenue crisis? As previously indicated,
last year SB 1608 (Corbett) established a mandate to complete
continuing education in disability access requirements as a
condition for an architect's license renewal. The bill required
licensees to certify that they have completed the required
continuing education, and provide documentation to the Board from
the course provider that meets specified requirements. As recently
amended, AB 623 (Emmerson) would, among other things, revise the
continuing education provisions of
SB 1608 to streamline the documentation requirements, and instead
require a licensee to retain the documentation of completing the
coursework and provide it to the Board upon an audit of the
architect's continuing education records by the Board. These
amendments were done to make the provisions less onerous on
licensees, and upon the Board. Licensees will no longer be required
to submit the specified documentation to the Board prior to license
renewal, and the Board will no longer be required to accept each
licensee's documentation, monitor, authorize, approve, and determine
whether it meets the requirements of the law, and maintain that
documentation as a part of the licensing file.
As indicated in the Questionnaire responses, the SB 1608 continuing
education program is projected to cost the Board $573,000 in FY
2009/10 and $402,000 ongoing. It is anticipated that streamlining
the continuing education process would ease cost pressures upon the
Board. The Sponsors of this measure (the Board and the AIACC)
should speak to this issue and clarify how those amendments would
impact the Board's projected budget deficit and, ultimately the
necessity of this bill.
SUPPORT AND OPPOSITION:
Support:
California Board of Architecture (Sponsor)
American Institute of Architects, California Council
Opposition:
None received as of July 1, 2009
Consultant:G. V. Ayers
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