BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     AB 179


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          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          179 (Bonilla)


          As Amended September 4, 2015


          Majority vote


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          |ASSEMBLY:  |      | (June 1,      |SENATE: |32-5  | (September 10,  |
          |           |60-17 |2015)          |        |      |2015)            |
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          Original Committee Reference:  B. & P.


          SUMMARY:  Extends the operation of the Dental Board of  
          California (DBC) until January 1, 2020, and increases statutory  
          fee caps relating to dentists and dental assistants, and  
          authorizes the Dental Board to suspend the dental assistant  
          practical examination.  Extends the operation of the Board of  
          Vocational Nursing and Psychiatric Technicians (BVNPT) until  
          January 1, 2018, requires the appointment of an enforcement  
          monitor to oversee the BVNPT's disciplinary system, and requires  
          the internal audit unit of the Department of Consumer Affairs to  
          review the BVNPT, as specified.  


          The Senate amendments: 


          1)Delay the merging of the Vocational Nurse Account and the  
            Psychiatric Technician Examiners Account until July 1, 2016. 









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          2)Limit the term of a member of the Dental Assisting Council to  
            no more than two full terms.


          3)On or before July 1, 2017, require the Dental Board, in  
            consultation with the Office of Professional Examination  
            Services, to determine whether a dental assistant practical  
            examination is necessary to demonstrate the competency of  
            registered dental assistants and to submit that determination  
            to the appropriate policy committees of the Legislature. 


          4)Authorize the Dental Board to suspend the dental assistant  
            practical examination until July 1, 2017, if it determines  
            that the practical examination is unnecessary or does not  
            accurately measure the competency of a dental assistant. 


          5)Until January 1, 2018, delete the requirement that the  
            executive officer of the BVNPT be a vocational nurse,  
            registered nurse, or psychiatric technician.


          6)Require the Director of the Department of Consumer Affairs  
            (DCA) to appoint an administrative and enforcement program  
            monitor no later than March 1, 2016, and would require the  
            monitor to monitor and evaluate the administrative process and  
            disciplinary system and procedures of the BVNPT for a period  
            of no more than two years, as specified. 


          7)Require the DCA's internal audit unit to review the BVNPT's  
            financial needs, fee structure, budget, and expenditures, as  
            specified. 


          8)Add double joining language to address chaptering out issues  
            with AB 177 (Bonilla) and AB 180 (Bonilla) of the current  
            legislative session.










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          9)Make technical and clarifying amendments. 





          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee: 


          1)No significant costs are anticipated due to the extension of  
            the sunset on the DBC. Current law imposes a sunset on the  
            existence of the DBC as an appointed board.  However, there is  
            no sunset on the larger body of law requiring licensure and  
            oversight of the practice of dentistry. If the DBC was allowed  
            to sunset, the overall licensing and regulatory program would  
            still exist in law.


          2)Significant increases in licensing fee revenues to the DBC are  
            possible under the bill. This bill authorizes the DBC, through  
            regulation, to raise a number of licensing fees currently  
            capped in statute. If the DBC were to raise the fees to the  
            maximum level authorized in the bill, additional annual  
            revenues would be about $2.8 million per year for dentist  
            licensing fees and $2.7 million per year for other regulatory  
            fees. The actual amount of fee revenue collected by the DBC  
            will depend on the actual fee levels set through regulation.


          3)No significant costs are anticipated due to the extension of  
            the sunset on the BVNPT. Current law imposes a sunset on the  
            existence of the BVNPT as an appointed board. However, there  
            is no sunset on the larger body of law requiring licensure and  
            oversight of the practice of vocational nurses or psychiatric  
            technicians. If the BVNPT was allowed to sunset, the overall  
            licensing and regulatory program would still exist in law.


          4)No significant fiscal impact on licensing fees is anticipated  
            due to the merger of the Vocational Nurses Account and the  
            Psychiatric Technician Examiners Account. The BVNPT operates  








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            the licensing and enforcement programs for vocational nurses  
            and psychiatric technicians as one administrative program.  
            Thus the current practice of separating licensing fees into  
            separate accounts does not reflect the BVNPT's current  
            business practices. Merging the two accounts is not  
            anticipated to require licensing fees from one group of  
            licensees to subsidize another group of licensees.


          5)One-time costs of $140,000 to change the information  
            technology systems used by the DBC to accommodate the  
            suspension of the practical examination. The cost to modify  
            information technology systems includes changes to the system  
            currently in use by the DBC and updates to the BreEZe system,  
            which the DBC will begin using to process licensing  
            applications and renewals in 2016.


          6)No significant additional costs are anticipated to review the  
            current practical examination in use by the DBC, as the DBC  
            has already begun this process.


          COMMENTS:  


          Purpose.  This bill is author sponsored.  According to the  
          author, "This bill is necessary to ensure that consumers are  
          protected by the continued operation of the DBC.  The [DBC's]  
          sunset bill raised numerous issues, including the adequacy of  
          the Dentistry Fund condition and the practical examination for  
          registered dental assistants.  The DBC has been operating with a  
          major structural deficit, and is faced with impending deficits.   
          Prior to recent increases to its initial and renewal licensure  
          fees, the DBC had not raised fees for nearly two decades.  A  
          recent audit of the DBC's finances shows that the cost for  
          licensure and permitting categories do not sufficiently cover  
          the cost for that license or permit.  As a result, this bill  
          proposes to increase statutory fee caps across all categories to  
          let the DBC begin to recover its costs, help solve its  
          structural imbalance, and build a healthy reserve.  These fee  
          caps are intended to carry the DBC over for many years, and any  








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          actual increase in fees would need to go through the regulatory  
          process, thereby ensuring that licensees may voice any concerns  
          to potential increases.


          "In addition, on February 13, 2012, the BVNPT approved a merger  
          of the vocational nursing fund and the psychiatric technician  
          fund as an alternative to a statutory amendment to raising fees  
          for the psychiatric technician fees.  This bill would advance  
          the fiscal solvency of the BNVPT by merging these funds.  The  
          bill will also increase accountability by extending the BVNPT's  
          sunset date only until January 1, 2018, thereby increasing  
          legislative oversight of the BVNPT in light of the significant  
          issues raised in the BVNPT's sunset background paper."    


          Sunset Review.  On March 23, 2015, the Assembly Business and  
          Professions Committee and the Senate Business, Professions, and  
          Economic Development Committee held a "sunset review" hearing  
          for the DBC and the BVNPT.  As part of the Sunset Review, the  
          DBC and the BVNPT each prepared a sunset report, which was  
          submitted to the Committees and Committee staff prepared a  
          background paper on each board.    


          A "sunset review" is a performance review of a state agency by  
          the Legislature aimed at determining whether that agency should  
          continue to exist, and if so, whether any statutory reforms are  
          needed to increase the agency's effectiveness.  Sunset review is  
          triggered by the statutory expiration date for the agency, which  
          is commonly called a "sunset."  Without an extension of this  
          sunset date, the Board would cease to exist. 


          DBC Dental Fund Condition.  The Dentistry Fund is maintained by  
          the DBC and includes the revenues and expenditures related to  
          licensing for dentists.  For 16 years, the license fee for  
          dentists was set at $365.  In 2013, for the first time in 16  
          years, the DBC increased its license fee for dentists from $365  
          to its statutory cap at the time of $450.  These regulations  
          went into effect on July 1, 2014.  During that time, the DBC  
          also pursued an increase in statute from $450 to $525.  SB 1416  








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          (Block) Chapter 73, Statutes of 2014, raised the DBC's fee for  
          initial and renewal licenses for dentists from $450 to $525, and  
          set fees at that level.  During that time, an analysis conducted  
          by the DCA's Budget Office determined that the license fees  
          should be raised to $525 to ensure solvency into the foreseeable  
          future.  While fees increased have generated additional revenue,  
          the DBC's expenditures, projected to be over $12 million per  
          year, continue to outpace its revenue, projected to be less than  
          $11 million per year, thus perpetuating a structural imbalance.   
          Part of the reason for the increase in projected and actual  
          expenditures in recent years has been due to funding 12.5 CPEI  
          positions; funding the diversion program; increased expenses  
          associated with BreEZe; unexpected litigation expenses; and the  
          general increase in the cost of doing business over the past 16  
          years.  While the DBC has expended less than what it has been  
          authorized by the budget due to some cost savings and  
          reimbursements, the DBC emphasizes that its fund should be able  
          to sustain expenditures without relying on estimated savings or  
          reimbursements.  


          Based on data from the past five fiscal years, the DBC  
          calculated that the Dentistry Fund will be able to sustain  
          expenditures into FY 2017-18 before facing a deficit.  The DBC  
          projects it will only have 0.5 months in reserve in FY 2016-17,  
          and underwent a fee rate audit to determine the appropriate fee  
          amounts to assess and to project fee levels into the future.   
          The DBC has shared its recent fee audit, which discovered that  
          in addition to the DBC's operational imbalance, it is limited in  
          its ability to recover the true cost of licensure and regulation  
          for dentists and dental assistants based on many of the set  
          fees, which do not cover the actual costs.  In light of this fee  
          audit, the DBC is requesting an increase in all statutory fee  
          caps relating to dentists and dental assistants, including, but  
          not limited to, those fees relating to licensure, permits, and  
          examinations.  


          While some of these fee increases are dramatic, they reflect the  
          fact that many of these fee caps have not been raised in nearly  
          up to two decades.  The DBC's intent is for this large increase  
          in statutory fee caps to cover its potential need to increase  








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          fees over a period of many years, including beyond the next  
          sunset period.  The DBC would have to raise any fees through the  
          regulatory process, however, ensuring that there will be  
          additional time and robust opportunity for public participation  
          prior to the increase of any fee. 


          RDA Practical Examination.  The pass rates for the RDA Practical  
          Exam averaged roughly 83% over the past four fiscal years.   
          However, in 2014, pass rates dropped dramatically.  Passage  
          rates declined from an over 80% average to a 38% pass rate in  
          August 2014, 19% in November 2014, to 33% in February 2015.  The  
          sharp declines occurred after the practical examinations were  
          recalibrated.  In addition, recent examination scores from the  
          February 2015 examination indicate that these rates continue to  
          be very low.  The DBC is conducting an occupational analysis to  
          determine the best way to measure competency of RDAs.  This bill  
          would authorize the DBC to suspend, until July 1, 2017, the  
          practical examination if the occupation analysis concludes that  
          the examination is unnecessary or does not accurately measure  
          the competency of RDAs.  Applicants for licensure would still  
          need to meet all other existing requirements for licensure,  
          including passing the written examination.


          BVNPT Fund Merger.  Both the Licensed Vocational Nurse (LVN) and  
          Psychiatric Technician (PT) programs are at the statutory  
          maximums for the fees they charge licensees. In July of 2012,  
          the Board submitted a Budget Change Proposal (BCP) requesting  
          the merger of the LVN and PT funds. The BCP was denied as the  
          PTs fund condition was expected to remain solvent through FY  
          2015-16.  The Board was advised to seek a statutory proposal to  
          merge the funds versus a BCP. 


          According to the Board, current budget projections indicate that  
          the LVN program fund reserve will remain solvent past FY  
          2020-21.  The PTs program fund reserve will be exhausted by  
          2017-18. On February 13, 2012, the Board approved a merger of  
          the funds as an alternative to a statutory amendment to raise  
          the PTs fee ranges. The Board has been advised by the DCA Budget  
          Office that the merger would delay a deficit and the need to  








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          increase fees for three to four years. This bill will merge the  
          LVN and PT funds.


          BVNPT Sunset Date.  A review of the issues raised during the  
          last review of the Board in 2011 reveals that the Board has made  
          some strides towards meaningful change. However, the outstanding  
          issues also reveal that the Board has experienced some  
          significant problems that have impacted its overall functioning,  
          the oversight of licensees and protection of the public. As  
          highlighted above, the Board has shown deficiencies and  
          discrepancies in the areas of enforcement and management of  
          funds. Due to these continuing problems as well as potential  
          issues concerning the management and operations of the Board, it  
          appears that this Board requires additional oversight and  
          direction.  This bill will extend the BVNPT's sunset date to  
          January 1, 2018.


          BVNPT Management.  Since the inception of the Sunset Review  
          Oversight process, there have been occasions when the operations  
          of a licensing entity are called into question and require  
          additional scrutiny.  This is typically in response to  
          information that is presented to the Legislature that warrants  
          further investigation.  The Assembly Business and Professions  
          Committee staff believes that this is the case with the BVNPT  
          Board.  As a result, this bill will enlist the support of the  
          DCA's Internal Audit Office and will place an enforcement  
          monitor within the BVNPT to observe the activities for two  
          years. 


          Analysis Prepared by:                                             
                          Eunie Linden / B. & P. / (916) 319-3301  FN:  
          0002358















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