BILL ANALYSIS �
AB 2598
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Date of Hearing: April 22, 2014
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Susan A. Bonilla, Chair
AB 2598 (Hagman) - As Introduced: February 21, 2014
SUBJECT : Department of Consumer Affairs: administrative
expenses.
SUMMARY : Adjusts the calculation by which the Department of
Consumer Affairs (DCA) may charge its constituent boards,
bureaus, committees, programs, and commissions ("boards") a pro
rata cost for DCA's administrative expenses. Specifically, this
bill :
1)Deletes existing provisions for payment of pro rata, and
instead requires DCA to charge boards monthly for that board's
pro rata share of the department's estimated monthly
administrative expenses, rather than yearly.
2)Requires DCA to charge pro rata costs based on the amount of
filled positions working for a board, not on the number of
positions allocated to the board.
3)Prohibits the Controller from withdrawing board funds, upon
proper request by DCA, to pay pro rata costs for any fiscal
year in an amount that exceeds 20% of a board's budget for
that year, as specified.
EXISTING LAW :
1)Permits DCA to charge the funds of any of the boards, bureaus,
commissions, divisions, and agencies on a pro rata share basis
for its estimated administrative expenses, not to exceed the
available balance in any appropriation for any one fiscal
year, at the discretion of the DCA director, with the approval
of the Department of Finance. (Business and Professions Code
(BPC) Section 201)
2)Requires the State Controller to draw funds from the boards to
cover the board's share of the estimated administrative
expenses of DCA, upon proper presentation of claims by DCA,
and prohibits the fund of one board from being used to pay the
expenses of any other board (BPC 202(a))
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FISCAL EFFECT : Unknown
COMMENTS :
1)Purpose of this bill . This bill attempts to rebalance how DCA
charges boards to pay for DCA's provision of administrative
services to the boards. This bill would require DCA to charge
boards monthly, instead of yearly; calculate expenses based on
the number of positions actually filled, rather than
authorized; and prohibit total yearly charges that exceed 20%
of a board's yearly budget. This bill is author-sponsored.
2)Author's statement . According to the author's office, "The
Department of Consumer Affairs (DCA) provides centralized
administrative services to all boards, committees, commissions
and bureaus (boards). Most of these services are funded
through a pro-rata calculation that is based on the number of
allocated positions the boards are statutorily allowed to
have, without taking into consideration if those positions are
actually filled or not. Other functions and services provided
to the boards by the DCA (i.e. call center services, complaint
resolution, and correspondence unit) are based on the past
year's usage.
"In a budget document released by the Governor, the DCA revealed
what percentage of every board's budget is used to pay
pro-rata. The current formula has resulted in some boards
paying upwards of forty percent of their total budget to the
Department, for services and staff positions that they are not
necessarily utilizing. Budget restraints do not allow boards
to adequately or efficiently perform their duty to protect
California consumers. Efficiency in government is essential to
bringing about a wave of economic prosperity in California.
This is impossible if agencies under the DCA are required to
pay astronomical amounts to the DCA for services that they are
not using. It is time to bring balance to the system and
reevaluate how pro-rata is assessed, so that these agencies
can effectively perform the duties required of them."
3)The Department of Consumer Affairs . DCA is the parent
department of the 41 entities (25 boards, nine bureaus, four
committees, two programs, and one commission) that issue
licenses in California.
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DCA itself is also comprised of two divisions: the Consumer
and Client Services Division and the Division of
Investigation, which provide back-end office services from
legal and audits to cashiering and facility management. DCA
makes these various types of administrative support available
to its boards, which the boards pay for from their own license
fees.
4)DCA Pro-rata . Current law authorizes DCA to charge boards for
DCA's administrative expenses on a pro rata share basis.
DCA reports that it calculates the pro rata share based on
position allocation, licensing and enforcement record counts,
call center volume, complaints and correspondence, interagency
agreement, and other cost center specific distributions. The
DCA Director reports that "the majority of [DCA's] costs are
paid for by the programs based upon their specific usage of
these services." DCA does not break out the cost of their
individual services (cashiering, facility management, call
center volume, etc.), however.
The pro rata share figures range from a low of 6% of the total
budget for the Bureau of Real Estate Appraisers, to a high of
44% for the Professional Fiduciaries Bureau (PFB).
5)Committee comments . This bill would change DCA's calculation
to account for filled positions, rather than authorized
positions, and limit the amount a board may pay for pro rata
services.
According to DCA calculations, changing the calculation from
filled to authorized positions would not affect most boards by
more than one to two percentages points in either direction;
ten boards would see costs drop, and ten would see costs rise.
However, for some entities there is more dramatic change:
the Board of Guide Dogs for the Blind would see their pro rata
costs drop from 14% to 9%, representing a savings of $10,000,
and the State Athletic Commission would see a reduction of 19%
to 16% -- a savings of $58,000.
This bill also restricts the total amount available for
payment of a board's pro rata share to 20% of a board's yearly
budget. Currently, according to DCA, there are eight boards
whose pro rata share is over 20% of their respective budgets,
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including the Board of Registered Nursing, which spends 33% of
its budget on pro rata -- with a large portion going to DCA's
Division of Investigation for enforcement activity. Because
current law restricts boards from paying the expenses of other
boards, it is unclear whether restricting reimbursement will
result in DCA being uncompensated for some activity, or
whether certain enforcement and administrative duties will
simply not be provided.
It should be noted that both current law and this bill do not
tie the cost of a board's pro rata share to services received
by DCA. If it is the author's desire to rationalize a board's
pro rata share expenses, the Committee may wish to consider
instead requiring DCA to document and justify its costs
relative to the pro rata share calculation to determine if the
boards are getting adequate "bang for their buck".
REGISTERED SUPPORT / OPPOSITION :
Support
None on file.
Opposition
None on file.
Analysis Prepared by : Sarah Huchel / B.,P. & C.P. / (916)
319-3301