BILL ANALYSIS Ó AB 179 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 179 (Bonilla) As Amended September 4, 2015 Majority vote -------------------------------------------------------------------- |ASSEMBLY: | | (June 1, |SENATE: |32-5 | (September 10, | | |60-17 |2015) | | |2015) | | | | | | | | | | | | | | | -------------------------------------------------------------------- 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. AB 179 Page 2 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. AB 179 Page 3 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 AB 179 Page 4 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 AB 179 Page 5 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 AB 179 Page 6 (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 AB 179 Page 7 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 AB 179 Page 8 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 AB 179 Page 9