BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: Sb 1162
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: Walters
VERSION: 4/6/10
Analysis by: Jennifer Gress FISCAL: yes
Hearing date: April 20, 2010
SUBJECT:
Traffic violator schools: fees
DESCRIPTION:
This bill eliminates the $50 fee that a traffic violator school
owner must pay to the Department of Motor Vehicles (DMV) to
renew the license for each of its branch or classroom locations.
ANALYSIS:
Existing law defines a "traffic violator school" as a "business
which for compensation provides, or offers to provide,
instruction in traffic safety, including, but not limited to,
classroom defensive-driver concepts, for persons referred by the
courts?or to other persons who elect to attend."
A court may order a person to attend a licensed traffic violator
school, a licensed driving school, or other court-approved
program of driving instruction, under specified circumstances,
in lieu of adjudicating the traffic offense. A person is
entitled to have a complaint relating to the safe operation of a
vehicle dismissed (masked) when he or she attends a
court-directed traffic violator school, licensed driving school,
or other court-approved program of driving instruction.
DMV regulates the licensing and administration, including
minimum curriculum requirements, of classroom-based traffic
violator schools, but does not regulate "home study" programs,
which may offer instruction through a variety of non-classroom
means (e.g., internet, textbook, video, and CD ROM). Home study
programs are not licensed by DMV. Instead, each court approves
those home-study programs that it orders violators to attend.
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Existing law establishes various fees that DMV charges to
license traffic violator school owners, operators, and
instructors. The licenses for owners, operators, and
instructors are valid for one year and therefore must be renewed
on an annual basis. With regard to fees charged to traffic
violator school owners, the fee for an original license is $150
with an additional $70 for each branch or classroom location
licensed. The annual license renewal fee is $50 for a school
and for each branch or classroom location.
This bill eliminates the $50 fee that a traffic violator school
owner must pay DMV to renew the license for each of its branch
or classroom locations.
COMMENTS:
1.Purpose . According to the sponsor, Traffic Safety
Consultants, Inc., which represents classroom-based traffic
violator schools, the funds collected by DMV from the annual
$50 classroom renewal fee are not significant for DMV, but are
for traffic school owners who are hard pressed to meet their
financial obligations. Classroom-based programs are
experiencing low student enrollments due to their inability to
compete with home-study programs.
The sponsor explains that when a traffic school initially
secures a classroom location, the school pays DMV a $70
nonrefundable fee to have DMV inspect and approve the
particular location. Even though different schools may use
the same hotel room to conduct classes, DMV will nonetheless
charge each school the same $70 fee for the same room. The
sponsor further argues that DMV does not re-inspect classrooms
thereafter to justify the $50 annual renewable fee.
In light of the substantial loss of business arising from the
popularity of internet-based traffic violator programs,
classroom-based traffic programs, the sponsor would like the
renewal fee to be repealed.
2.How DMV uses fee revenues . The license fees (original and
renewal) pay for the following personnel and activities
necessary to oversee classroom-based traffic violator schools:
Inspectors who work with licensees to obtain correct
application forms, perform background checks, and issue
SB 1162 (WALTERS) Page 3
temporary licenses.
Technicians who create automated records, store
documents, and issue final licenses.
Handling of consumer complaints and the monitoring
reports provided by court-assistance programs (CAPs). (A
CAP works under contract with a court to oversee both
classroom-based and home-study programs to which a court
may refer violators.)
Maintenance of a database of traffic violator schools
and their classroom locations, as well as the production
and distribution of lists of schools.
In response to the claim that DMV does not re-inspect
classrooms upon renewing a license, DMV notes that its
monitoring capabilities have diminished as its funding has
decreased. DMV typically does a pre-licensing inspection and
follows up on complaints. The number of consumer complaints
it investigated, a process which typically includes an office
audit and/or a classroom visit, for the past three years is
provided as follows:
Fiscal Year 2007-08: 461
Fiscal Year 2008-09: 862
Fiscal Year 2009-10: 574 to date
From 2007 through 2009, those investigations resulted in the
revocation of 10 traffic violator schools' licenses, 3 schools
being put on probation, and 3 applicants for licenses being
denied.
DMV is currently assembling an updated number of classroom
locations, but estimates that there are about 3000 locations.
A loss of $50 per location would diminish annual revenue by
approximately $150,000.
1.A bigger problem . The laws and regulations that govern
traffic violator schools treat classroom-based programs and
home-study programs differently. DMV licenses classroom-based
programs whereas each court approves the schools it refers
violators to attend. State law prescribes no licensing
requirements or fees for court-approved programs.
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Furthermore, because each court approves the home-study
programs to which it sends violators, the rules and processes
governing these schools could vary for each of the courts
across the state. For this reason, classroom-based programs
that pay DMV licensing fees may in fact experience a
competitive disadvantage over home-study programs that do not.
This problem, however, will not be solved by eliminating the
$50 renewal fee. Doing so would serve only to hamper DMV's
efforts to oversee classroom-based programs further.
To address the many issues that arise from having a fragmented
system of traffic violator schools, the Legislature passed and
the Governor signed AB 758 (Plescia and Portantino), Chapter
396, Statutes of 2007, that required DMV to develop a plan by
which licensing and oversight of all traffic violator schools,
regardless of modality, would be consolidated under DMV's
authority. DMV submitted its report to the Legislature in
July 2008 and in it recommended a number of statutory and
regulatory changes that would be necessary to achieve that
objective. Assembly Member Portantino is authoring a bill,
AB 2499, to make many of those changes. That bill is
currently awaiting hearing in the Assembly Appropriations
Committee. Given the larger problems posed by the fragmented
licensing system that exists today and the current effort to
consolidate the licensing of all traffic schools under DMV,
the committee may wish to hold this bill and consider the
broader changes contained in AB 2499.
2.Suggested amendment . The provision of law this bill amends
currently reads, "For annual renewal of the license for a
traffic violator school and for each branch or classroom
location, a fee of fifty dollars ($50)." The bill only
deletes "or classroom," leaving "branch location" in tact.
There does not appear to be a meaningful difference between
"classroom" and "branch" locations, making the implementation
of this bill unclear. For this reason, if the bill moves
forward, the committee may wish to consider an amendment to
delete "and for each branch or classroom location."
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
April 14, 2010)
SUPPORT: Traffic Safety Consultants, Inc. (sponsor)
California Traffic Classes, Inc. (Traffic School)
California Traffic School Association
SB 1162 (WALTERS) Page 5
Instant Traffic School
7 Days-A-Week and Evening Classes
OPPOSED: None received.