HOUSE BILL NO. 275 "An Act extending the termination date of the Board of Massage Therapists; and providing for an effective date." REPRESENTATIVE SAM KITO, SPONSOR, reported that the board was recently created and was operating effectively. He believed extending the Board of Massage Therapy was warranted. Co-Chair Foster invited Ms. Curtis to the table. KRIS CURTIS, LEGISLATIVE AUDITOR, ALASKA DIVISION OF LEGISLATIVE AUDIT, reported that the board was new, and the audit was the board's first sunset. She read directly from the audit: In all areas except licensing, the audit found the board was operating in the public's interest. In general, meetings were conducted effectively, investigations were appropriately processed, and the board actively issued or changed regulations to improve the industry and better protect the public. The audit concluded the board and DCBPL staff should improve its licensing procedures. Testing found that applicants were not consistently issued licenses in accordance with statutes, regulations, and/or procedures. Additionally, improvements are needed to comply with the federal standards over criminal history record information obtained as part of the licensing process. Ms. Curtis offered that the Federal Bureau of Investigation (FBI) audit discovered the deficiency in federal standards over criminal history records. She highlighted that page 11 contained the scheduled licensing activity in the table " Exhibit 2" and reported that from July 2016 through August 2017, the board issued 1,186 new licenses. The number was almost double the 600 licenses that DCBPL management expected. She moved to the Schedule of Revenues and Expenditures in "Exhibit 3" on page 14. The board had a surplus of $265,128 thousand at the end of FY 2017 and license fees were lowered in FY 2018. She turned to the audit's three recommendations beginning on page 17. Recommendation 1, "Division of Corporations, Business, and Professional Licensing's (DCBPL) director, in consultation with the Board of Massage Therapists (board), should take action to improve procedures to ensure licensure requirements are met." She elaborated that 3 of 31 license applications tested as part of the audit were licensed without adequate supporting documentation. She reviewed the findings on page 17 and read the following excerpts: A background check report for one initial applicant was not completed. Th e licensee operated without a background check report from licensure date of September 2015 through receipt of the background check report July 2017 during the license renewal process. Regulation6 requires applicants submit their fingerprints for a background check report in order to obtain a license to practice massage therapy. Per regulation,7 licenses can be issued to applicants even though a background check report has not been received. However, DCBPL staff must ensure the background check is completed timely. Th e applicant's fingerprint card was sent back multiple times due to incomplete information. DCBPL staff did not perform additional follow-up to obtain a completed fingerprint card because staff failed to list the applicant on the DCBPL spreadsheet used for tracking background reports. One applicant answered "yes" to a professional fitness question, however no evidence could be located to demonstrate that the applicant provided an explanation. Furthermore, it is unclear whether the board considered an explanation prior to licensing. One applicant answered "yes" to a professional fitness question and provided an explanation which included evidence of a permanent revocation of a national board certification for violating the respective code of ethics and standards of practice. DCBPL staff and the board did not forward the application to the investigative section for review. A license was granted with the requirement that the individual take a two-credit ethics course. The background check did not show any convictions, and according to the board chair, the board believed that a license could not be denied based on the revocation of a national certifi- cate. However, DCBPL procedures called for the application to be forwarded to investigations for further review. 3:03:30 PM Ms. Curtis addressed Recommendation 2, "DCBPL's director should address the Federal Bureau of Investigations (FBI) audit findings and concerns." She reviewed the findings and read the following: DCBPL did not comply with federal standards over criminal history record information. The FBI audit conducted in April 2017 found DCBPL did not have secure channels of communication. Additionally, applicants were not notified in writing that their fingerprints were to be used for an FBI background check and were not advised of the procedures for obtaining, changing, correcting, or updating an FBI identification record. Additionally, the federal audit found inadequate chain of custody for fingerprint cards. A chain of custody ensures the integrity of the applicant/fingerprint process. DCBPL addressed one of the findings by including verbiage in the application that submitted fingerprints will be sent to the FBI for a federal background check. However, as of October 2017, the other issues remain outstanding. Ms. Curtis pointed to Recommendation 3, "The director of the Office of the Governor, Boards and Commissions should work to fill the public member position." She read the following finding: The public member position on the board became vacant March 2017 and remained vacant as of October 2017. Per AS 08.61.010, the board is statutorily required to consist of five members appointed by the governor, one of which is a public member who is not a licensed health care provider, employee of the State, or a current or former member of another occupation licensing board. According to Boards and Commissions staff, stringent requirements make it difficult to find interested applicants. 3:04:20 PM Ms. Curtis noted that the response relating to Recommendation 3 from the Office of the Governor was found on page 29. The office concurred with the audit and recommended a legislative solution. She offered that the agency response was on page 31 and agreed with Recommendation 1 but felt that additional supervisory resources were necessary to ensure the license files met the standards. The department stated that the division had been unaware of the issue until recently and was responding quickly to address the finding. The board's response was on page 33 and concurred with the audit conclusions. Representative Guttenberg asked what other boards had the same licensing requirement on fingerprinting and whether the FBI audited the other boards and what the results were. Ms. Curtis deferred the question to the department. 3:06:39 PM Representative Pruitt asked if Ms. Curtis thought the faults of the department were systemic and enabled unqualified applicants to become licensed or was unique to a few applications. Ms. Curtis responded that for the first recommendation the audit discovered 3 out of 31 licensing errors. The division felt it was a "significant problem." The audit discovered an issue with staff that was corrected. She characterized the issue as the "growing pains" of a new inexperienced board. Co-Chair Foster OPENED Public Testimony. Co-Chair Foster CLOSED Public Testimony. 3:08:55 PM Co-Chair Seaton asked if the chair of the massage board was available. He understood there was a concern with background checks. He asked for the boards position on background checks. DAVID EDWARDS-SMITH, CHAIR, BOARD OF MASSAGE THERAPISTS, answered that the board felt that the initial licensure should require a background check. However, the board's official position was to reduce the burden on applicants and lessen the requirement to every third renewal cycle rather than every cycle. Co-Chair Seaton asked what the cost of the background checks were and who paid for the checks. Mr. Smith answered that the background check was approximately $80. The burden was placed on the licensee. Co-Chair Foster asked Ms. Chambers to walk through the fiscal note. 3:10:09 PM Ms. Chambers spoke to the previously published fiscal impact note from DCCED FN1 (CED) and noted that the total cost of the board was $21.4 thousand. She explained that $19.9 thousand was allocated for travel costs and that the board was trying to keep its travel costs down by using teleconferencing capabilities when possible. She added that the remaining $1.5 thousand was allocated for $400 for public notice of board meetings, $1 thousand for training and conference fees, and $100 for meeting per diem. Representative Pruitt referred to the commissioner's response to recommendation 1 and read "with over 13,000 new licenses issued in FY 17, additional supervisory resources are needed to ensure that all license files are reviewed to meet this standard." He asked if additional staff was necessary. He wondered how the fees would be spread across all the various boards. Ms. Chambers commented that at present the board was not requesting additional personnel. The division was assessing the information provided in the audit to determine whether some of the challenges were due to the startup of a new board and the unexpected significant increase in estimated applications. She thought that the process would stabilize. She stated that the boards were "constantly" growing, and the division wanted to ensure the resources were available to meet the public's expectations. Representative Pruitt asked if enough notice would be provided to the boards of the need for additional staff, so fees could be increased to avoid any impact on UGF. Ms. Chambers reported that the division was not authorized to accept UGF and was entirely supported by licensing fees. The staff maintained positive time keeping. The license programs were only being charged the amount the staff worked on their program. She commented that managers and certain administrative staff dealing with all licensures charged their time to a general indirect category that involved a specific methodology. However, the lion's share of the staff and costs were being accurately assessed to each board for the amount it cost to manage them. If the division expected a dramatic increase in staff time for a board. it would discuss the matter with the board and put the licensees on notice of a potential fee increase. 3:16:13 PM Co-Chair Seaton referred to the first page of the audit relating to improving licensing procedures. He read the following: "?comply with the federal standards over criminal history record information obtained as part of the licensing process." He asked whether the conclusion was a department issue or a board matter. Ms. Chambers reported that the FBI findings "were specifically administrative" and lied with the division. She explained that the issue was "new information" that was received immediately before the audit started. The division resolved two out of the three issues. The unaddressed issue dealt with the chain of custody and the division worked with the Department of Public Safety (DPS) to help find a resolution. The department confirmed that no legal mechanism in the division's statutes addressed chain of custody. The division was looking into "alternative plans" to ensure a proper chain of custody was in place. Co-Chair Seaton asked if there was any fallout from not maintaining the required chain of custody. Ms. Chambers informed committee members that the division was audited by the FBI every three years for the five licensing programs that required fingerprinting. She was unaware of any negative repercussions to the licensees and acknowledged that it was the divisions responsibility to resolve the issue. Representative Guttenberg wondered whether the FBI's audit findings were the same for the 5 boards that required fingerprinting and if the division was addressing the problem for all 5 boards. Ms. Chambers responded in the affirmative. Representative Wilson asked whether four years was the proper amount of time for an extension or if a longer period worked. Ms. Chambers had not questioned the audit recommendations and was unable to offer an opinion about the sunset. She was working with the board to address its growing pains and felt confident that within four years all the findings would be addressed. Representative Wilson asked what the cost of the audit for each board was. Ms. Chambers deferred to Ms. Curtis for the answer. She noted that the cost was not born by the division. Representative Wilson ascertained that the boards also did not pay audit costs and the costs were assumed by the legislature. Ms. Chambers responded that she was correct. Representative Wilson asked for the information. Co-Chair Foster requested that Ms. Curtis provide the information. Ms. Curtis had anticipated the question. She did not currently have the information. She had asked Ms. Day to compile the number of hours an audit took to complete. She informed committee members that the rate was $77. per hour. She deferred to Ms. Day. 3:20:57 PM LINDA DAY, AUDIT MANAGER, LEGISLATIVE AUDIT DIVISION (via teleconference), did not have the number of hours in front of her and offered to provide the information quickly. 3:21:15 PM Representative Pruitt asked about the concern over filling the vacant board seat. He concurred that the criteria were challenging and noted the requirement that the board member was not a former member of another occupational licensing board. He wondered whether removing the requirement would facilitate finding the public board member more easily. Ms. Chambers responded that the appointment of board members was managed through the governor's office. She reported that she worked closely with the Board and Commissions director, Shirley Marquardt. She knew that the varying board requirements made it prohibitive and she wanted more people to apply for board seats. Her general response was in favor of removing restrictions for people to serve on boards. She deferred to Ms. Marquardt to provide the specific answer. Representative Pruitt clarified that he was only asking for the specific board. He asked Director Marquardt to contact the committee if his suggestion would be helpful without creating additional issues. Co-Chair Seaton was trying to determine the licensing fees. Ms. Curtis reminded the committee that the fee schedule was on page 15 of the audit. She relayed that the renewal few was $290 plus $60 totaling $350. Co-Chair Seaton asked if the $60 was for a background check. Ms. Chambers interjected that there were costs incurred by the licensees for fingerprinting. She concurred that the fess were $290 every two years to renew the license and an additional $60 for DPS to process the fingerprints. Co- Chair Seaton asked whether it was typical to require fingerprinting and background checks with every renewal cycle. Ms. Chambers replied that it was the only board where subsequent fingerprinting was required. She related that the board had recently tried to strike a balance between too frequently and not enough. Co-Chair Seaton asked if she knew the approximate cost of fingerprinting. Ms. Chambers answered in the negative. 3:27:15 PM Representative Guttenberg asked why repeated fingerprinting was necessary. Ms. Chambers responded that the chief investigator and DPS was looking into the possibility of renewing the requirement without additional fingerprinting. Co-Chair Foster indicated amendments were due on Friday, February 9, 2018 by 5:00 pm. HB 275 was HEARD and HELD in committee for further consideration. Co-Chair Foster reviewed the agenda for the following day.