Legislature(2023 - 2024)BELTZ 105 (TSBldg)
03/15/2024 01:30 PM Senate LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB44 | |
| SB225 | |
| SB237 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 44 | TELECONFERENCED | |
| *+ | SB 225 | TELECONFERENCED | |
| *+ | SB 237 | TELECONFERENCED | |
SB 225-OCCUPATIONAL LICENSING FEES
2:33:14 PM
CHAIR BJORKMAN reconvened the meeting and announced the
consideration of SENATE BILL NO. 225, "An Act relating to
occupational licensing fees; and providing for an effective
date."
2:33:54 PM
SYLVAN ROBB, Director, Corporations, Business & Professional
Licensing, Department of Commerce, Community and Economic
Development (DCCED), Juneau, Alaska, introduced SB 225 on behalf
of the administration. She began a presentation and advanced to
slide 2:
[Original punctuation provided.]
What Does SB 225 Do?
• Removes investigation, legal, and hearing costs
from the "regulatory costs" covered by
professional license fees as required under AS
08.01.065.
• Shifts funding for investigations and hearings
from professional licensing fees (1156) to
corporations' fees (1005) so the division remains
self-sufficient.
MS. ROBB explained that the division collects more from
corporate filings than is needed to fund the program. This
change does not require an increase in corporate fees (the
division currently diverts lapses funds to the general fund from
these fees).
2:35:12 PM
CHAIR BJORKMAN referred to SB 203, which would increase fees. He
asked what those fees are for and where they would go.
MS. ROBB replied that this is another bill by the Governor that
proposes to return business license fees to 2008 levels. She
explained that licensing fees were reduced in 2009.
CHAIR BJORKMAN asked what account these fees go in to.
MS. ROBB replied that the collections come in as DGF collections
and excess funds flow into the general fund. She noted that
these are the funds referred to in slide 2. She explained that
collectively - between corporations and business licensing - the
division lapses over $8 million to the general fund in a typical
year. SB 225 proposes that some of these funds be used to help
pay for investigations for professional licensing.
2:36:36 PM
MS. ROBB advanced to slide 3 and stated the important language
regarding the calculation of professional licensing fees on the
slide is bold print:
[Original punctuation provided.]
AS 08.01.065(a) & (c) Currently
(a) Except for business licenses, the department shall
adopt regulations that establish the amount and manner
of payment of application fees, examination fees,
license fees, registration fees, permit fees,
investigation fees, and all other fees as appropriate
for the occupations covered by this chapter.
(c) Except as provided in (f) (k) of this section,
the department shall establish fee levels under (a) of
this section so that the total amount of fees
collected for an occupation approximately equals the
actual regulatory costs for the occupation. The
department shall annually review each fee level to
determine whether the regulatory costs of each
occupation are approximately equal to fee collections
related to that occupation. If the review indicates
that an occupation's fee collections and regulatory
costs are not approximately equal, the department
shall calculate fee adjustments and adopt regulations
under (a) of this section to implement the
adjustments. In January of each year, the department
shall report on all fee levels and revisions for the
previous year under this subsection to the office of
management and budget. If a board regulates an
occupation covered by this chapter, the department
shall consider the board's recommendations concerning
the occupation's fee levels and regulatory costs
before revising fee schedules to comply with this
subsection?.
MS. ROBB said that "investigation fees" includes the cost of
certified investigators as well as legal costs for the
Department of Law and hearing costs at the Office of
Administrative Hearings, superior court, and supreme court. She
explained that this will impact licensing fees for the
associated professions in years with a high number of complaints
or complex cases. SB 225 is an attempt to mitigate this.
2:37:27 PM
SENATOR GRAY-JACKSON asked for clarification that the lapsed
money would cover the fees.
MS. ROBB returned to slide 3 and replied that currently, the
professional licensing fees must cover the costs of regulating
the program. She explained that the money that is lapsed to the
general fund comes from dues paid for business license fees and
corporate filing fees.
2:38:15 PM
SENATOR GRAY-JACKSON said that SB 225 removes investigation,
legal, and hearing cost and clarified that these are the costs
that her question is referring to. She asked if the money that
lapses to the general fund would cover these costs.
MS. ROBB replied yes. She added that it does not take all the
funds that currently lapse to the general fund as it would only
require $4.7 million.
SENATOR GRAY-JACKSON asked what would happen in the event that
the division does not have enough lapsed funds to cover the
costs.
MS. ROBB replied that the division would need to seek an
additional source of funding. She added that the number of
corporate filings and business licenses purchased have increased
consistently over the years and this growth is expected to
continue.
2:39:37 PM
MS. ROBB advanced to slide 4:
[Original punctuation provided.]
Primary Reasons for SB 225
• Currently volatile license fee rates would
stabilize, as investigations, legal, and hearing
costs are the most variable element of the fee
setting equation.
• Licensing fees would be reduced for many
programs, helping in the effort to attract
professionals to Alaska.
• This would be fairer to Alaska's professional
licensees who comply with the laws regulating
their profession as law-abiding professionals
would no longer bear the cost of investigations
of licensees who have potentially violated
licensing laws and/or on individuals practicing
without a license.
• Remove a potential disincentive to report members
of their profession.
MS. ROBB explained that investigations are the most volatile
aspect of the equation for setting licensing fees as there is no
way to determine what the costs will be. This can cause large
swings in licensing fees from year to year. She reiterated that
licensing fees are based on the costs to run the program and
removing investigatory and hearing costs from this equation
would reduce program costs and therefore reduce licensing fees.
She clarified that this would not be the same across the board
but would depend on how many investigations a particular
profession has seen - and how complex the investigations are.
However, no profession would be negatively impacted by the
change. Lower licensing fees would also help to recruit
professionals to work in much needed areas like veterinary
medicine and nursing (both of which have high licensing fees
relative to other states).
2:41:19 PM
SENATOR DUNBAR shared his previous understanding that SB 203 and
SB 225 impacted the same kinds of fees. He asked for
clarification that SB 203 impacts a flat fee while the fees in
SB 225 are variable. He asked for more information on the fees
and how they are calculated.
2:42:02 PM
MS. ROBB explained the difference between corporation, business
licensing, and professional licensing fees. She said that
corporation fees are set in regulation - there are 64 different
corporate fees depending on the type of filing and the type f
corporation. These fees are not impacted by SB 225. However, SB
225 proposes to use the funds collected to offset the costs of
investigations for professional licensing. She clarified that
[SB 203] applies to business licensing, the fees for which are
set in statute. She explained that "professional licensing"
refers to 45 programs, including doctors, dentists, naturopaths,
midwives, construction contractors, etc. Professional licensing
fees must cover the cost of regulating the program. SB 225
proposes to remove investigatory fees from the calculations of
the cost of regulating the program.
2:43:20 PM
SENATOR DUNBAR commented that transferring less money to the
general fund results in a large fiscal note for the state as a
whole. He pointed out that SB 203 raises more money by
increasing licensing fees. He commented that this is causing a
lot of volatility and asked if there is a way to stabilize at a
slightly higher number so that the cost of SB 225 is roughly
equivalent to the net raised in SB 203.
MS. ROBB replied she understands the question and surmised that
the cost of investigations could potentially be parsed out
further. She said that SB 225 only covers part of investigatory
costs and acknowledged that the legislature could agree to cover
a set amount from corporation fees to offset investigations. She
added that the rest of the investigatory costs would remain a
part of the fee setting equation. She commented that there are a
number of ways to achieve what he is suggesting.
SENATOR DUNBAR clarified that he is wondering if it would be
possible to reduce volatility by removing the investigatory fees
from the equation and setting the licensing fees a bit higher
(while still lowering them from their current amount) in order
to cause less fiscal harm to the state.
2:45:27 PM
MS. ROBB expressed her understanding. She stated that part of
the argument for SB 225 is that investigations into professional
licensees and unlicensed practice is a public safety issue. She
explained that, as currently structured, the onus to pay for
this falls on licensees. She emphasized that these individuals
are licensed and following the rules are paying for those who do
not. She stated that professional licenses are intended to
mitigate harm that can be done by those who are not trained in a
particular profession.
SENATOR DUNBAR expressed his agreement. He commented that bad
actors in these professions are imposing the costs on the state.
2:46:27 PM
MS. ROBB returned to speaking to slide 4 and reiterated that
those following the rules are paying for the "bad apples." In
addition, an understanding of how the fees are set could act as
a disincentive for someone to report a member of their
profession. SB 225 would remove this potential disincentive.
2:47:09 PM
MS. ROBB advanced to slide 5:
[Original punctuation provided.]
Example of Substantial Fee Increases in Past Years
• Certified Direct-Entry Midwife Certificate Fees:
• In FY2017 initial and renewal application
fee increased from $1,750 to $3,800.
• That was after an increase from $1,450 to
$1,750 in 2016.
• Fees have since been reduced to $2,800.
• Midwife Apprentices in 2015:
• Initial and Biennial Renewal Certification
Fees increased from $125 to $825.
• Initial and Biennial Renewal Certification
Fees increased from $825 to $1,275.
• Fees have since been reduced to $550.
MS. ROBB gave another example of a dentist who is currently
involved in an Alaska Supreme Court case for performing a
procedure while on a hoverboard. She said all other licensed
dentists are paying for the ongoing investigation and court
costs.
2:48:40 PM
MS. ROBB advanced to slide 6, displaying FY 2023 investigative
stats. She explained that, in a typical year, anywhere from
1,200 to 1,600 investigations may be conducted by the division.
2:49:03 PM
MS. ROBB advanced to slide 7, displaying the top complaints
received by the division. She noted that the second most common
complaint is individuals operating without a license and
reiterated that those who are operating lawfully (i.e. licensed
professionals) are paying for those who choose to operate
without a license. The top complaints are listed as follows:
• Continuing Education Violations (303)
• Unlicensed Practice or Activity (178)
• License Application Reviews (146)
• Violation of Licensing Regulation (144)
• Unprofessional Conduct (77)
• Falsified Application (53)
• Standard of Care (28)
2:49:27 PM
SENATOR BISHOP asked if the department interacts with every
licensed business once a year or once every two years.
MS. ROBB replied that licenses are good for two years and all
licenses for a particular profession expire on the same day.
SENATOR BISHOP asked how the department finds a continuing
education violation.
MS. ROBB answered that when continuing education is required for
license renewal, applicants attest to meeting these requirements
on their application. The division selects a sample of
applicants to audit and these individuals are then required to
submit documentation showing that they have completed their
continuing education requirements.
2:50:41 PM
SENATOR BISHOP expressed his understanding that the division
does not check every business but is doing a random sample.
MS. ROBB replied that this is correct. She stated that the
division has 109,000 professional licenses and would require a
lot more staff to check each licensee.
SENATOR BISHOP agreed and compared this to the Occupational
Safety and Health Administration (OSHA), where the large number
of businesses makes it impossible to investigate each one for
possible violations. He surmised that complaints come in and are
then investigated.
2:51:21 PM
MS. ROBB agreed that a majority of investigations are complaint
driven, though they do conduct inspections for some professions.
2:51:37 PM
SENATOR GRAY-JACKSON said that she had the same question as
Senator Bishop.
2:51:47 PM
SENATOR DUNBAR referred to the current license renewal schedule
in which every person in a particular field is renewed on the
same day. He surmised that this would cause a variety of
challenges in certain professions (such as nursing). He asked if
there has been discussion of a rolling application process.
MS. ROBB expressed her understanding and explained that
licensees are required to comply with regulations, which can
frequently change. She stated that without a firm date to
determine compliance, it would be difficult to track expiration
dates. She offered an example of nursing, which has 32,000
licensees. Tracking which had expired - and then notifying those
who need to renew would create a great administrative burden -
especially adding the extra burden of cross-referencing
individual expiration dates with regulation changes. She added
that the division needs to notify licensees in a timely fashion
when renewal is required. She pointed out that the 45 licensing
programs are spread out over the 2-year period in order to
minimize the burden on the division.
2:53:38 PM
SENATOR DUNBAR expressed hope that the technology to automate
this process would someday be available. He commented that if
all nursing licenses expire on January 1 - and someone becomes
licensed on December 30 - this means they would have to complete
the entire process again two day later.
MS. ROBB replied that the renewal process for professional
licenses can be done online, although some things require hands
on consideration or further viewing in order to renew. She added
that those who receive their licenses within three months of the
expiration date are grandfathered in and do not owe a fee for
the subsequent two-year period.
2:54:53 PM
MS. ROBB advanced to slide 8, displaying the top ten programs
that received complaints and number of licensees per program in
FY 2023:
Top 10 Programs Receiving Complaints:
• Board of Nursing (369 complaints; 32,169
licensees)
• State Medical Board (164 complaints; 9,221
licensees)
• Board of Pharmacy (138 complaints; 6,428
licensees)
• Big Game Commercial Services Board (70
complaints; 1,521 licensees
• Board of Barbers and Hairdressers (67 complaints;
7,086 licensees)
• Real Estate Commission (59 complaints; 4,335
licensees)
• Board of Massage Therapists (54 complaints; 1,232
licensees)
• Construction Contractors (43 complaints; 10,290
licensees)
• Board of Social Work Examiners (43 complaints;
1,351 licensees)
• Business Licensing (38 complaints; 99,599
licensees)
• Board of Dental Examiners (38 complaints; 3,355
licensees)
2:55:21 PM
SENATOR BISHOP asked for an example of a Construction
Contractors complaint.
MS. ROBB replied that many of the complaints received about
construction contractors are related to the maintenance of
required bond and insurance. Other complaints are related to
unlicensed practice. She added that the division sometimes
receives complaints that are outside of the division's
jurisdiction (e.g. someone may be unhappy with the way their
construction project looks when completed).
2:56:11 PM
MS. ROBB advanced to slide 9 and discussed the top 10
professions receiving complaints in FY 2023:
Top 10 Professions Receiving Complaints
• Registered Nurse (252)
• Physician (142)
• Massage Therapist (54)
• Certified Nurse Aide (53)
• Pharmacy (43)
• Real Estate Salesperson (42)
• Wholesale Drug Distributer (41)
• Dentist (38)
• Clinical Social Worker (37)
• Advanced Nurse Practitioner (37)
2:56:41 PM
CHAIR BJORKMAN expressed curiosity about the possibility of
adjusting the statute to allow licensing boards to maintain a
larger fund balance in their board account to act as a shock
absorber for large spikes in investigatory costs. He shared his
understanding that boards are required to draw their fund
balance (if they have one) down to nearly zero. He questioned
whether it would be possible to allow these boards to maintain a
larger fund balance to level out their fees.
MS. ROBB stated that this is an excellent idea and explained
that there is carry forward language for all professional
licensing fees that are collected. She added that the division
tries to maintain one year's worth of expenses for the program
in order to provide some amount of shock absorption. The
division tries to keep fees from changing excessively.
Generally, if a program has accrued a significant amount of
surplus, the division is conservative on the number of potential
license renewals and new applications while being generous with
what the potential costs might be. She acknowledged that this
carry-forward ability has allowed the division to smooth the fee
changes somewhat.
2:58:46 PM
At ease
3:00:02 PM
CHAIR BJORKMAN reconvened the meeting.
3:00:10 PM
CHAIR BJORKMAN held SB 225 in committee.