Legislature(2013 - 2014)HOUSE FINANCE 519
02/17/2014 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB32 | |
| HB187 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 32 | TELECONFERENCED | |
| + | HB 187 | TELECONFERENCED | |
| + | TELECONFERENCED |
HOUSE BILL NO. 187
"An Act relating to professional and occupational
licensing fees, including renewal fees, duplicate
license fees, examination fees, instructor license
fees, temporary license fees, continuing education
course certification fees, out-of-state permit fees,
delinquency fees, application fees, penalty fees, and
trainee license fees; and providing for an effective
date."
2:35:46 PM
KONRAD JACKSON, STAFF, REPRESENTATIVE KURT OLSON, shared
that the bill had been introduced at the request of the
Department of Commerce, Community and Economic Development
to levelize the dramatic changes in professional licensing
fees. The stability provided by the concept in the out
years would be of great benefit to Alaskan professional
license holders. The bill's fiscal note proposed the
transfer of costs using general fund dollars to cover
investigatory costs. The current costs were spread across
other like license holders. The investigations were
important because they provided a consumer protection for
Alaskans. He deemed it appropriate for the consumers to
bear some of the cost, as the issue was related to consumer
protection.
2:38:34 PM
JO ELLEN HANRAHAN, DEPUTY COMMISSIONER, DEPARTMENT OF
COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT
Thank you for the opportunity to discuss HB 187
related to professional licensing fees
The purpose of the bill before you is to mitigate
spiking of the licensing program costs, and provide
alternatives for smoothing the potential for license
fee spiking. The bill allows for:
• GF support, for investigations which at times are
an unpredictable cost of consumer protection
o Of the 39 professional licensing programs, 36
experienced at least one year with a 25 percent or
greater change in investigative costs from 2008
through 2012. The impact on small programs can be
significant.
o During this same time period, the investigator
cost charged directly to licensing programs varied
from a low of $876.0 to $1.7 million.
o These variances - speak to the dramatic effect
an "outlier" year can have on licensing fees and to
the uneven nature of investigations.
o Investigations are a consumer protection
function, and perhaps should really be viewed as a
public benefit as all Alaskans are beneficiaries of
professional licensees and their services.
• Averaging of revenue and expenses from current
and prior biennium's
• Extend the fee collection period over multiple
biennium's - leveling out the fees over time
• Consolidate fee types into a single fee (ex-
license, examination, registration) where
administrative efficiency could be gained)
These proposed changes are permissive, not mandatory,
and they do not reduce the authority of the boards.
As I've stated previously in this committee, we have a
collective responsibility to balance the encouragement
of a positive business climate with the requirements
of appropriate accountability and the protection of
consumers. This conversation includes the push and
pull between proposed regulation, public input and
policy decisions.
This bill is a continuation of the department's on-
going commitment to address professional licensing
issues, while focusing on the business climate and the
need to stabilize cost and establish consistency for
the professions.
I say "on-going" as there are a number of efforts and
solutions the department has grappled with to address
the errors and issues that accumulated ,over what
records show is an eight year time period.
In summary, HB 187 provides tools for the boards,
commissions, and the division to modulate professional
licensing fee adjustments and encourage a positive
business climate.
2:42:54 PM
Vice-Chair Neuman asked Mr. Habeger if the state had
collected fees or penalties if the profession operated
without a license. He wondered why the department spent so
much time on license enforcement if a penalty was not
attached.
Mr. Habeger replied that professional licensing occupied 90
percent of the department's investigative time.
Vice-Chair Neuman assumed that the professional licenses
were different than standard business licenses.
Mr. Habeger agreed.
Co-Chair Stoltze asked about the legislation's process of
leveling out expenses for licensed professionals.
Ms. Hanrahan replied that the professional licensees would
obtain a benefit through obtaining an average of biennium
costs when calculating fees. The fee collection would be
spread over two or three biennium.
Co-Chair Stoltze asked about the general fund impact of the
proposed legislation.
Ms. Hanrahan replied $1.8 million.
2:46:48 PM
Representative Wilson agreed that the licensing boards
should not have to pay for the investigations. She asked
how many investigations were embarked on and how many
licensed professionals were found guilty. She asked if the
department collected fees from those found guilty.
Mr. Hanrahan replied that approximately 1300 matters were
brought to the staff of investigators annually. The
department had 18 investigators on staff. Not all matters
resulted in a case; some were moved to civil authority if a
violation of statute occurred. The amount fined was limited
by statute.
Mr. Habeger stated that the investigative processes were
established by the department. Complaints must be submitted
in writing. Regulations must be addressed in the complaint.
Evidence must be gathered to indicate that a violation
occurred. If the evidence was present a licensing action
would occur. He recalled 230 actions last year.
Representative Wilson clarified that 70 cases were
addressed per position, or 6 per month. She described a
process where those found guilty were charged the
investigation fee. She asked if the department embarked on
a similar process.
Mr. Habeger replied that the department's system had a
civil fine penalty system. The department did not have
authority to assign an investigative fine.
Representative Wilson wanted additional information about
the proposed investigations. She agreed that the fees
should not be the responsibility of the board. She
requested additional details about the 80 percent of cases
reviewed. She opined that those licensed professionals
found guilty should pay the investigation costs.
2:52:51 PM
Representative Costello understood that the information
regarding an ongoing investigation was limited to only one
board member. She asked if the entire board would be privy
to the information if the legislation passed. She thought
that the investigation would benefit from the entire
boards' judgment.
Mr. Habeger replied no because ultimately a board would sit
in judgment over the license. The Department of Law deemed
the practice improper to allow too much information to
board members prior to the judgment to preserve the rights
of the licensee.
Representative Costello asked if the boards had weighed-in
on the legislation.
Co-Chair Stoltze noted that two boards were present for
public testimony.
Mr. Habeger replied that 14 boards indicated some level of
support. Some boards had motions in their minutes.
2:56:04 PM
Co-Chair Austerman appreciated the idea of stabilization
offered by the legislation. He opined that the Department
of Law should handle the investigative cost. He understood
that the single-fine system denied all restitution within
the statutes.
Mr. Habeger replied that a board would determine the
severity of an issue and may assign a fee structure. He
provided an example of a continuing education violation.
Any income received by the division was deposited into the
general fund.
Co-Chair Austerman asked if the discussed matrix was in
statute or regulation.
Mr. Habeger replied that the matrix was considered an
action of the board.
Co-Chair Austerman asked if the process was in statute or
regulation.
Mr. Habeger replied that Title 8 allowed the boards
jurisdiction over the licensees.
Co-Chair Austerman asked about confidentiality in reference
to the release of information. He proposed an example
regarding medical professionals in anchorage.
Mr. Habeger explained that the complaint was not a public
issue until a board took an action or an accusation was
filed. An investigation for a healthcare professional,
often took time. He stated that the one board member privy
to information about the investigation might advise the
division about a concerning practice issue. The public
would not be notified until the end of the investigative
process.
Co-Chair Austerman asked about the 230 cases that went to
investigation. He asked about a general fund benefit
related to convictions.
Mr. Habeger replied that the figure changed from year to
year. He noted that various fines were collected.
Co-Chair Austerman asked if the $1.8 million in general
funds would cover 100 percent of the investigation.
Mr. Habeger replied that personal services time was the
major issue. The total cost was approximately $2.5 million
per year. The last 33 percent was for the Department of Law
and expert witnesses. The licensees would assume
responsibility for the last third.
3:02:15 PM
Co-Chair Austerman asked if Mr. Habeger referred to
administrative personal services including the
commissioner's office.
Ms. Hanrahan replied that the $1.8 million was specific to
the 18 investigator positions. She noted that true
investigations were distilled through a division process
beginning with the 1300 reported matters. The hesitation to
allow the public access to the information was related to
the distilling process.
Co-Chair Austerman explained that some people in small
communities were hesitant to file complaints because of the
worry about small-town politics and public information. He
was pleased to hear about the delay in releasing
investigative information to the public.
3:03:48 PM
Representative Gara understood that the cost of the board
was borne by the members in terms of fees. The
investigative portion would be held over a number of years.
Ms. Hanrahan agreed. She proposed that the investigator
positions be funded with general funds every year.
Representative Gara asked if the board members compensated
the state for the cost of the investigation.
Ms. Hanrahan replied that the members of the profession
would not compensate the state for the cost of the
investigators' time. The members of the profession would
cover the cost of any mediation or expert witness cost
associated with an investigation or the Department of Law
costs.
Representative Gara clarified that the cost of the
investigation was transferred to the general fund without
an avenue for compensation.
Ms. Hanrahan stated that the cost of the investigator
positions was transferred to the general fund. The cost of
the expert witnesses, mediations and hearings would be
borne by the professional licensees.
Representative Gara observed the zero fiscal note. He
wondered why the $1.8 million was not noted on the fiscal
note.
Ms. Hanrahan agreed.
Representative Gara asked if the state would be reimbursed.
Ms. Hanrahan replied that the general fund would not be
reimbursed. She noted the fund change from receipt
supported services to the general fund.
Representative Gara noted that the state was previously
compensated with receipt supported services, but would no
longer be compensated for investigation costs.
3:07:34 PM
Ms. Hanrahan replied that the state would not be
compensated for the cost of the investigations.
Co-Chair Stoltze added that the fiscal note reflected the
change in fund sources.
Ms. Hanrahan concurred.
Representative Gara voiced his confusion.
Co-Chair Stoltze believed that the fiscal note was factual.
Representative Gara stated that his current understanding
was that members of the profession paid the cost of the
investigation through receipt supported services. Without
the reimbursement, he wondered how the fiscal note was
zero.
Ms. Hanrahan replied that the change led to a zero fiscal
note because the operating budget showed no increase with
the change in funding source.
3:09:25 PM
Representative Gara asked if the member fees would increase
to cover the cost of the investigations.
Ms. Hanrahan stated that one purpose of the legislation was
to stabilize the licensing fees because the members would
no longer cover the cost of the investigator positions.
Co-Chair Stoltze clarified that he only wished to explain
the department's approach, he did not endorse it.
Representative Munoz asked if the state collected $1.8
million last year in fees that covered investigations.
Ms. Hanrahan explained that the statute required for
collection of any expense incurred by the boards.
Representative Munoz asked if the personal services expense
was $1.8 million last year.
Ms. Hanrahan replied that the state collected fees for more
than the costs of the investigators. The state collected
fees for the cost of processing, examinations and the
underlying infrastructure to provide the services.
Representative Munoz asked for the total cost that the
department collected.
Ms. Hanrahan agreed to provide the information.
3:11:26 PM
PATRICIA SENNER, ALASKA NURSES ASSOCIATION, ANCHORAGE (via
teleconference), testified on behalf of the Alaska Nurses
Association.
The Alaska Board of Nursing licenses 11.732 Registered
Nurses, 907 Licensed Practical Nurses and 3,399
Certified Nursing Aids for a total of 16,038
licensees. This represents about one-third of the
professionals receiving licenses from the Division of
Corporations Business and Professional Licensing. This
also means that nurses pay about one-third of the
overhead for the Division.
The Alaska Nurses Association has no objection to the
Division's attempt to reduce the number of small fees
it collects. We also have no objection in calculating
licensing fees based on a 2-year license renewal cycle
rather than yearly. We are also not opposed to
"amortizing" individual Board expenses over a longer
period of time. In order to increase efficacies and
reduce costs we thing these changes are needed.
We are however opposed to shifting the total cost of
paying for investigators form licensing fees to
general funds. In a time of billion dollar budget
shortfalls it does not make sense to increase the cost
to the general fund by 1.7 million. This bill
effectively reduces the income coming into the State
by 1.7 million.
We understand that smaller Boards have difficulty
covering expensive investigations because of their
small licensee base. We would suggest that a cheaper
alternative would be to create a fund to help pay for
expensive investigations. For instance, a fund could
be set up to pay for investigations that cost over
$10,000. There are fewer investigations that have a
large cost so this approach should be much cheaper to
the State.
From a historical perspective, the decision to have
licensee fees pay for the cost of the Boards was made
during a time of diminishing state revenues. We do not
think that over the next several years the Division is
going to want to be reliant on a diminishing source of
general fund revenues when they could have had a more
steady income source with licensee fees. If the
Division can't get enough general funds to pay for
their investigators how are they going to prioritize
investigations?
There is also some concern about what the Division
means by licensing groups. Within the Board of Nursing
there are many groups of licensees, each which has a
different license fee. These fees are based in part on
the income levels of that particular group of
licensees. For instance, the license fees for RNs are
higher than those of Nurse Aids. We do not want to see
all the Board of Nursing licensees lumped into one
group.
3:15:28 PM
DALE NELSON, ALASKA PROFESSION DESIGN COUNCIL, ANCHORAGE
(via teleconference) testified on behalf of 5000 registered
professionals. He expressed confusion about the
legislation. He explained that the fees for his profession
doubled last year. He requested information to better
understand the fees collected by the state, but did not
receive an answer from the department. He noted concern
about the first section of the bill. He wished to
understand where the fees were spent. He mentioned the
value of the investigator working for the board. He opined
that the bill required additional discussion.
Co-Chair Stoltze asked Mr. Jackson if he preferred that
members contact him or Ms. Hanrahan with questions.
3:23:36 PM
Mr. Jackson stated that his office worked well with the
department. He believed that either contact was
appropriate.
Co-Chair Stoltze stated that Mr. Jackson would provide the
voice for discussions.
Co-Chair Austerman asked if public testimony would remain
open.
Co-Chair Stoltze replied yes.
Co-Chair Austerman asked about balancing revenues over a
two or three year cycle. He wondered about the criteria
used to establish the type of board that would encounter a
two or three year cycle. He assumed that the bill allowed
the department to make the choice of cycle.
Ms. Hanrahan replied that the bill allowed the boards,
commissions and divisions to use the tool. The department
would approach each board with the information about fee
changes. Recommendations would be received by each board
for input in the process.
Co-Chair Austerman asked if the board would make their own
decisions by regulation.
Ms. Hanrahan replied that the statute required the
department to have board input when setting fees.
Co-Chair Austerman asked if each board made their own
decision.
Ms. Hanrahan replied that the department had the
responsibility to regulate the recommended fee with public
input.
Co-Chair Austerman asked about the consolidation of certain
fee types.
Ms. Hanrahan replied that a profession may have multiple
types of fees including registration, examination, permit
and license fees. The bill would allow for consolidation of
those fees into one fee if the board wished to gain
administrative efficiencies. She noted that the department
tracked 457 types of fees in the professional licensing
program.
3:28:21 PM
Vice-Chair Neuman asked how much money was recovered for
fees and penalties. Fees were covered by the professional
licensing and the department wished to see the general fund
cover the cost of the investigators. He asked how much was
generally collected in fees as opposed to the $1.8 million
figure provided.
Ms. Hanrahan responded that she did not have a total
collection figure for the professional licensing program.
She clarified that the fees were collected to support the
program.
Vice-Chair Neuman asked if the fees swept into the general
fund.
Ms. Hanrahan replied no, the fines swept into the general
fund. The fees were collected to support the program. She
stated that she would provide the total revenue in fees and
the total revenue in fines to the committee.
Vice-Chair Neuman asked if the fines were matched to the
cost of the investigations.
Ms. Hanrahan replied that the fines did not match up with
the cost of the investigation; they ranged from $150
thousand to $300 thousand.
Vice-Chair Neuman understood that the professional
licensing members covered the differential.
Ms. Hanrahan concurred.
Representative Costello stated that the budget subcommittee
discussed the issue over several years. She requested a
look-back over time of the professional licenses and fees
assigned on an annual basis. She believed that the
information would be valuable for the committee to solve
the problem. She opined that business planning required the
licensing fee requirements. She recalled discussion about
posting budgets online.
3:32:03 PM
Ms. Hanrahan responded that the quarterly financial reports
were published online detailing expenditures.
Representative Costello asked if the look-back spread sheet
could also be provided to committee members.
Ms. Hanrahan agreed to provide the spreadsheet.
3:32:41 PM
Representative Gara asked about page 4, lines 5 - 7. He
understood that the cost to the professional group should
approximate the regulatory cost for the licensing group. He
asked if the regulatory cost for the licensing group
included the investigation.
Ms. Hanrahan replied that the cost of regulating the group
included the cost of the investigators. The bill language
allowed for other appropriations to be included when
calculating the fees.
Representative Gara understood that the fees charged to the
members should cover the regulatory cost. He suggested that
some years might require a general fund supplement because
of the higher cost averaged over the course of years.
Ms. Hanrahan stated that the intent of the section was to
allow the state to provide other appropriations in addition
to the program receipts. The fiscal note identified other
appropriations linked to the cost of the personnel services
cost for the investigators on an annual basis.
Representative Guttenberg asked about the 42 sections of
the bill related to various occupations and licensing. He
assumed that the goal was to place all occupations on equal
footing.
3:35:44 PM
Ms. Hanrahan replied that the equal footing was limited to
the cost of investigations for the various occupations.
Representative Guttenberg noted that the statutes for the
different occupation were different.
Ms. Hanrahan concurred.
Co-Chair Stoltze encouraged the department to spend
additional time with Representative Gara.
Representative Gara offered to revisit the issue with the
department after the committee meeting.
Representative Munoz asked Ms. Hanrahan for additional
information about the consolidation of the occupational and
business licensing fees.
Ms. Hanrahan agreed to provide the requested information to
the committee.
Co-Chair Austerman asked the department about the
consolidation of fees and the supplementation of the
general fees collected for investigators. He wished to know
what the reduced fees would look like.
Co-Chair Stoltze wished for resolution of the issue prior
to close out of the operating budget. He suggested that
more clarity would aid the department in their presentation
of the legislation.
Mr. Jackson offered to work with Ms. Hanrahan to provide
the committee with answers to their questions.
HB 187 was HEARD and HELD in committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 32 Letters of Support.pdf |
HFIN 2/17/2014 1:30:00 PM |
HB 32 |
| HB32 Sectional Summary.pdf |
HFIN 2/17/2014 1:30:00 PM |
HB 32 |
| HB32 Sponsor Statement.pdf |
HFIN 2/17/2014 1:30:00 PM |
HB 32 |
| HB 187 Letters of Support.pdf |
HFIN 2/17/2014 1:30:00 PM |
HB 187 |
| HB 187 Repealed Statutes (section 44-ver C).pdf |
HFIN 2/17/2014 1:30:00 PM |
HB 187 |
| HB 187 Sectional Analysis.pdf |
HFIN 2/17/2014 1:30:00 PM |
HB 187 |
| HB 187 Sponsor Statement.pdf |
HFIN 2/17/2014 1:30:00 PM |
HB 187 |
| HB 32 NEW FN DCCED 21714.pdf |
HFIN 2/17/2014 1:30:00 PM |
HB 32 |
| CSHB 32 - Explanation of Changes.pdf |
HFIN 2/17/2014 1:30:00 PM |
HB 32 |
| HB 187 Testimony ANA Patricia Senner.pdf |
HFIN 2/17/2014 1:30:00 PM |
HB 187 |
| HB 32 Letter from Bridget Lujan.pdf |
HFIN 2/17/2014 1:30:00 PM |
HB 32 |
| HB32 - Business License Counts_2-18-14.pdf |
HFIN 2/17/2014 1:30:00 PM |
HB 32 |