Legislature(2015 - 2016)HOUSE FINANCE 519

02/24/2015 01:30 PM FINANCE

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01:32:00 PM Start
01:32:52 PM Confirmation Hearing: Department of Revenue, Randall Hoffbeck, Commissioner Designee
02:39:44 PM HB26
03:17:52 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Confirmation Hearing: TELECONFERENCED
Commissioner of Dept. of Revenue, Randall
Heard & Held
Scheduled but Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 26                                                                                                             
     "An Act extending the termination  date of the Board of                                                                    
     Certified Direct-Entry  Midwives; and providing  for an                                                                    
     effective date."                                                                                                           
2:39:44 PM                                                                                                                    
LAURA  STIDOLPH, STAFF,  REPRESENTATIVE KURT  OLSON, read  a                                                                    
statement to the committee:                                                                                                     
     Before you today is HB26,  this legislation extends the                                                                    
     termination  date for  the Board  of Certified  Direct-                                                                    
     Entry Midwives to June 30, 2017.                                                                                           
     Each  year the  Division of  Legislative Audit  reviews                                                                    
     state  boards  and  commissions to  determine  if  they                                                                    
     should be  reestablished per AS 24.44.  The Division of                                                                    
     Legislative Audit reviewed the  activities of the Board                                                                    
     of  Certified  Direct-Entry  Midwives. The  purpose  of                                                                    
     this  audit  was  to  determine   whether  there  is  a                                                                    
     demonstrated  public  need  for the  board's  continued                                                                    
     existence  and  whether it  has  been  operating in  an                                                                    
     effective manner.                                                                                                          
     As the  members noted in  their review of the  audit in                                                                    
     their packets,  it is  the opinion  of the  Division of                                                                    
     Legislative Audit that the board  be extended two years                                                                    
     to June  30, 2017. You saw  that in the opinion  of our                                                                    
     auditors, the  board is  serving the  public's interest                                                                    
     by   effectively   licensing   certified   direct-entry                                                                    
     midwives  and apprentices.  Additionally, it  was found                                                                    
     that the  board continues to improve  the profession by                                                                    
     modifying   and  adopting   midwifery  regulations   to                                                                    
     conform to current standards of care.                                                                                      
     As  the members  also may  have noted  from the  audit,                                                                    
     there   were   four   findings   and   recommendations,                                                                    
     including  having  the Department  pursue  disciplinary                                                                    
     cases,  increasing  licensing  fees  to  eliminate  the                                                                    
     board's   operating    deficit,   having    the   board                                                                    
     communicate  certificate   requirements  to  continuing                                                                    
     education  providers, as  well as  approving apprentice                                                                    
     applications in  accordance with statutes. To  speak to                                                                    
     the recommendations,  Kris Kurtis of  Legislative Audit                                                                    
     and  Sara Chambers  of the  Department of  Commerce are                                                                    
     here, and  Cheryl Corrick,  the CDM  Board Chair  is on                                                                    
     line from Anchorage.                                                                                                       
     In  closing,   the  Board  of   Certified  Direct-Entry                                                                    
     Midwives  serves an  important role  in protecting  the                                                                    
     well-being of  Alaskans by identifying  individuals who                                                                    
     are  willing  to  pursue technical  training  and  meet                                                                    
     specified   technical   qualifications  necessary   for                                                                    
     license as midwives. The continuation  of this board is                                                                    
     very  important to  the health  and safety  of Alaska's                                                                    
     women and children.                                                                                                        
     Thank you for your support of this legislation.                                                                            
KRIS  CURTIS,   LEGISLATIVE  AUDITOR,  ALASKA   DIVISION  OF                                                                    
LEGISLATIVE AUDIT,  relayed that the division  had conducted                                                                    
a sunset  audit and concluded  that the board  was operating                                                                    
in the public's interest. However,  the audit had found that                                                                    
the  Division  of  Corporations, Business  and  Professional                                                                    
Licensing  (DCBPL), Department  of  Commerce, Community  and                                                                    
Economic  Development (DCCED)  failed  to  carry out  timely                                                                    
disciplinary    sanctions    related   to    four    midwife                                                                    
investigations. Therefore,  the division only  recommended a                                                                    
two    year   extension.    The    audit   contained    four                                                                    
recommendations;   the   most   serious   was   to   DCCED's                                                                    
commissioner   to   "take   immediate   action   to   pursue                                                                    
disciplinary sanctions  for certified  direct-entry midwives                                                                    
(CDM) cases when warranted."  She detailed that disciplinary                                                                    
sanctions  were  not  actively   pursued  for  four  related                                                                    
investigations   involving  two   people,  which   supported                                                                    
disciplinary  sanctions.  She  continued to  read  from  the                                                                    
audit report:                                                                                                                   
     In all four CDM cases,  the respondents refused to sign                                                                    
     a  CA. Rather  than file  an accusation  and pursue  an                                                                    
     administrative hearing, DCBPL  staff followed alternate                                                                    
     procedures.  Two of  the four  cases were  forwarded to                                                                    
     the  Department  of  Law's   (DOL)  Office  of  Special                                                                    
     Prosecutions and  Appeals (OSPA) without  a sufficiency                                                                    
     of evidence  review by an  AAG. A year after  the cases                                                                    
     were  forwarded  to OSPA,  no  action  had been  taken.                                                                    
     According  to OSPA,  the cases  represent their  lowest                                                                    
     priority as  the related  offenses were  categorized as                                                                    
     Class B misdemeanors….                                                                                                     
     Due to  staff turnover, it  is unclear why  DCBPL staff                                                                    
     did not pursue a civil  licensing action as required by                                                                    
     standard operating procedures. At a minimum, licensing                                                                     
     action  should be  pursued concurrently  to ensure  the                                                                    
     public  is protected  from  incompetent, negligent,  or                                                                    
     unlicensed  practitioners.  By not  pursuing  licensing                                                                    
     action,  the  respondents   were  allowed  to  continue                                                                    
     practicing,  and  the  public's safety  was  placed  at                                                                    
Ms. Curtis  noted that the other  three recommendations were                                                                    
Co-Chair  Neuman surmised  that the  board had  done a  very                                                                    
good job. He observed that  the members had worked to modify                                                                    
and  adopt regulations  to conform  to current  standards of                                                                    
care. He  felt that the  fault lied with DCBPL.  He wondered                                                                    
why  the audit  recommendation only  extended the  board for                                                                    
two  years  when  it  was  the  department  that  failed  in                                                                    
carrying out its duties.                                                                                                        
Ms.  Curtis  replied that  typically  when  the division  of                                                                    
audit identified issues within  DCBPL that needed correction                                                                    
audit followed  up the following year  especially related to                                                                    
a  system  or procedure  that  was  central  to all  of  the                                                                    
occupations. She  elaborated that  specific to  the midwives                                                                    
case  the  investigations  were  related  to  the  midwifery                                                                    
board. The sunset mechanism was  the only mechanism that was                                                                    
available for  follow up and  due to the seriousness  of the                                                                    
deficiency  a   shorter  period  was  warranted   to  ensure                                                                    
correction. She agreed  that the board was  operating in the                                                                    
public's  interest. Two  of the  audit's recommendations  to                                                                    
the board were simple  housekeeping recommendations that did                                                                    
not   warrant   an   extension   change.   The   other   two                                                                    
recommendations were directed at the department.                                                                                
Co-Chair  Neuman wondered  whether  it  was common  practice                                                                    
that DCBPL was not getting  its job done. Ms. Curtis replied                                                                    
that  it  was fairly  unusual  and  did  not find  that  the                                                                    
deficiency was characteristic of DCBPL.                                                                                         
Vice-Chair   Saddler  asked   whether  DCCED   responded  to                                                                    
recommendation  number  one.  Ms. Curtis  replied  that  the                                                                    
responses were included at the  back of the audit; DCCED had                                                                    
concurred  with  the   recommendations.  Vice-Chair  Saddler                                                                    
asked  about recommendation  number two  related to  license                                                                    
fee  changes and  noted the  board carried  a deficit  since                                                                    
2010. He asked what the reason for the deficit was.                                                                             
2:48:55 PM                                                                                                                    
Ms.  Curtis could  not  speak to  the  deficit directly  but                                                                    
offered some  perspectives. During  the last audit  in 2006,                                                                    
the auditor  had found that  the board was suffering  from a                                                                    
deficit  and  at  that  point  the  board  had  the  highest                                                                    
occupational fees of  over $2 thousand. The  deficit was not                                                                    
a  new problem  for the  board. The  board had  had incurred                                                                    
high  investigation costs  and had  only a  small number  of                                                                    
Representative     Guttenberg    wondered     whether    the                                                                    
investigation  expenses came  as a  result of  investigating                                                                    
people that  were not licensed.  He detailed that  the board                                                                    
assumed   costs  for   unlicensed   practitioners  and   the                                                                    
licensees  acting  within  the  law bore  the  cost  of  the                                                                    
investigations. He asked whether  the expense was related to                                                                    
dealing with people who were not licensed.                                                                                      
Ms. Curtis responded that  the investigation information was                                                                    
not pubic. She elaborated that  in general it was common for                                                                    
audit to find investigations  related to unlicensed activity                                                                    
on occupational boards.                                                                                                         
Representative  Guttenberg reiterated  his question  whether                                                                    
the  investigation expense  was related  to people  who were                                                                    
not licensed. Ms. Curtis responded in the affirmative.                                                                          
Representative Wilson  referenced recommendation  number two                                                                    
and asked  whether the deficit  was expected to grow  in the                                                                    
next ten  years. Ms.  Curtis cited  pages 14  and 15  of the                                                                    
audit  that  contained  the  board's  financial  information                                                                    
since  2010.  She noted  the  board's  deficit in  2006  was                                                                    
"significant" and  the fee was  over $2 thousand.  She found                                                                    
it unusual  that the certification  fee in 2010  was lowered                                                                    
to $500. The  low fee could have driven the  deficit as well                                                                    
as four significant investigations.                                                                                             
Representative  Wilson   pointed  to  the  FY   2010  direct                                                                    
expenditures  of $22,600.  She  understood  why the  deficit                                                                    
happened but  noted the growth of  expenditures. She deduced                                                                    
that  even if  fees  were increased  to  $2,000 the  deficit                                                                    
would still  continue to  grow. Ms.  Curtis deferred  to the                                                                    
department  for a  more detailed  answer. She  revealed that                                                                    
investigations   or   regulatory  projects   drove   board's                                                                    
personal services costs.                                                                                                        
Representative Wilson  wondered how much the  audit cost for                                                                    
the board were. She wondered  why the audit charges were not                                                                    
charged  back to  the  board. Ms.  Curtis  replied that  the                                                                    
Division  of  Legislative  Budget  and  Audit  (LBA)  had  a                                                                    
personal  services  allocation  to  perform  its  work.  She                                                                    
offered  that  LBA's  work  encompassed  financial,  sunset,                                                                    
special   request,  and   federal  compliance   audits.  She                                                                    
reported that  there had  never been  an attempt  to recover                                                                    
the costs from the boards.                                                                                                      
SARA  CHAMBERS, ACTING  DIRECTOR, DIVISION  OF CORPORATIONS,                                                                    
BUSINESS   AND   PROFESSIONAL   LICENSING,   DEPARTMENT   OF                                                                    
COMMERCE, COMMUNITY  AND ECONOMIC DEVELOPMENT,  related that                                                                    
the  division   concurred  with  the  audit   findings.  The                                                                    
department  agreed  that  there   was  a  serious  need  for                                                                    
improvement  within  the  department.  She  delineated  that                                                                    
within the  past year the  division incorporated  changes to                                                                    
the  structure  of  its  investigative  unit.  The  division                                                                    
currently worked "more closely" with  DOL and OSPA to ensure                                                                    
"the processes were codified" and  the cases were recognized                                                                    
as  a  priority  when  sent to  DOL.  The  division's  chief                                                                    
investigator had set up a meeting  every 30 days with DOL to                                                                    
confirm  that cases  were  acted upon.  She  added that  the                                                                    
division  was "closing  in on  definitive action"  regarding                                                                    
the cases identified in the audit.                                                                                              
2:55:51 PM                                                                                                                    
Co-Chair Thompson  asked how many registered  midwives there                                                                    
were  in  Alaska.  Ms. Chambers  answered  that  there  were                                                                    
approximately 50 registered  midwives including apprentices.                                                                    
Co-Chair  Thompson  pointed  to  the  $115,000  deficit;  he                                                                    
wondered whether it was possible  for the board to catch up.                                                                    
Ms. Chambers  replied that  the board  and the  division had                                                                    
been working  over the  past several years  to chip  away at                                                                    
the deficit. She detailed that  an increase to a $4 thousand                                                                    
to  $5 thousand  licensing  fee would  be unsustainable  for                                                                    
midwives. She  anticipated that the  deficit costs  could be                                                                    
recovered  over a  period  of time.  The  division with  the                                                                    
board's concurrence  increased licensing fees over  the last                                                                    
two previous licensing  cycles and would continue  to do so.                                                                    
She continued that  prior to 2010 the  division had provided                                                                    
incorrect  information to  boards that  "was not  reconciled                                                                    
with the  state accounting system." The  midwifery board was                                                                    
given incorrect information and  based on the misinformation                                                                    
set  the  fee  too  low.  She  revealed  that  the  division                                                                    
discovered the  mistake which affected several  other boards                                                                    
that incurred large deficits.                                                                                                   
Co-Chair  Thompson  asked  if  there   was  a  fear  that  a                                                                    
continual  increase  in  fees would  reduce  the  number  of                                                                    
midwives.  Ms.  Chambers  replied in  the  affirmative.  She                                                                    
stated that  however, as long  as the fees were  mandated to                                                                    
cover  all of  a board's  expenses including  investigations                                                                    
she believed that "it was a cost of doing business."                                                                            
Representative  Wilson surmised  that  according to  statute                                                                    
there  was  not  a  choice  "to  chip  away"  at  a  board's                                                                    
deficits. She wondered what gave  the division the authority                                                                    
to not collect  the full deficit amount in fees  by the next                                                                    
licensing  cycle. Ms.  Chambers answered  that the  division                                                                    
attempted  to clarify  the issue  since 2011.  She indicated                                                                    
that the Division  of Legislative Audit and  the Division of                                                                    
Legislative  Finance  (LFD)  interpreted AS.08.01.065  as  a                                                                    
requirement for the  division to analyze fees  each year but                                                                    
not  necessarily  increase fees  each  year  to recover  the                                                                    
Representative  Wilson asked  why  the midwifery  "industry"                                                                    
would  not  be safe  without  a  board since  the  licensing                                                                    
requirements would still be mandated.                                                                                           
3:00:23 PM                                                                                                                    
Ms.  Chambers replied  that the  division maintained  safety                                                                    
standards  with  or  without boards.  A  professional  board                                                                    
ensured  timely information  on  regulatory  issues to  keep                                                                    
current  with standards  of practice.  Representative Wilson                                                                    
asked whether  not only  the midwifery  board but  any board                                                                    
could   regulate  itself   voluntarily.  She   restated  her                                                                    
skepticism that  the board could  recover costs and  pay for                                                                    
itself with  only 50 licensees.  Ms. Chambers  answered that                                                                    
the model often used  in professions without boards employed                                                                    
"quite a  bit of input  from the professional  community and                                                                    
associations."  Those   professions  lacked   the  statutory                                                                    
authority  to take  action  therefore;  a volunteer  board's                                                                    
meetings  would have  to be  subject to  open meetings  laws                                                                    
regarding  drafting   regulations.  She  thought   that  the                                                                    
board's  value  was  "in  keeping  current  with  continuing                                                                    
education." She related that  the division's licensing staff                                                                    
may not  be aware of  nuanced information that  could affect                                                                    
regulation without a board. She  remarked that a possibility                                                                    
existed  that  the  midwifery board's  activities  could  be                                                                    
assumed by another board.                                                                                                       
Vice-Chair Saddler  asked what the standard  board extension                                                                    
was.  Ms.  Chambers  replied that  legislative  audit  could                                                                    
extend a  board for  up to  eight years.  Vice-Chair Saddler                                                                    
asked  how long  the midwifery  board was  in existence  and                                                                    
what percentage of  births were assisted by  midwives in the                                                                    
state. Ms. Chambers deferred the question to the board.                                                                         
Representative Guttenberg commented that  the issue was part                                                                    
of  a "larger  structural issue"  that had  been encountered                                                                    
before.  He pondered  how many  of the  professional boards'                                                                    
costs  resulted  from  dealing  with  people  who  were  not                                                                    
licensed.  He wondered  how many  boards  were in  financial                                                                    
trouble due to investigations  of unlicensed people who were                                                                    
outside  of a  board's  regulatory  authority. He  suggested                                                                    
that  perusing   unlicensed  individuals  was   the  state's                                                                    
responsibility  instead  of  putting  the  burden  onto  the                                                                    
licensed  professional acting  within the  law. He  believed                                                                    
that scenario was the "larger issue."                                                                                           
Ms.  Chambers answered  that  the division  did  not have  a                                                                    
specific statistic to offer. She  stressed that according to                                                                    
statute,  each  board  was  mandated  to  pursue  unlicensed                                                                    
individuals  if discovered  by the  division's investigative                                                                    
3:07:32 PM                                                                                                                    
Co-Chair Thompson  redirected the  conversation back  to the                                                                    
midwifery board.                                                                                                                
Representative Pruitt wondered whether  the division had the                                                                    
authority  to  recoup  the   investigative  costs  from  the                                                                    
unlicensed individual,  which would help limit  the costs to                                                                    
the  midwives. Ms.  Chambers replied  in  the negative.  She                                                                    
delineated that all fines collected  were deposited into the                                                                    
general fund. Licensees with or  without a board covered the                                                                    
investigative   costs.  The   division   had  requested   an                                                                    
attorney's opinion on whether  the division could "bill" the                                                                    
individual  for   the  investigative   costs  but   did  not                                                                    
currently possess the authority.                                                                                                
Representative  Kawasaki  noted  that  the  board  requested                                                                    
increased fees  for certified  midwifes and  apprentices but                                                                    
that  the   division  denied  the  increase.   He  requested                                                                    
clarity. Ms.  Chambers answered that the  issue had recently                                                                    
been resolved and all of the fees were increased.                                                                               
Representative  Gattis wondered  what  would  happen if  the                                                                    
board was allowed  to sunset. Ms. Chambers  replied that the                                                                    
board would sunset but the  licensing program would continue                                                                    
and deferred to Ms. Curtis for technical answers.                                                                               
CHERYL  CORRICK,  CHAIR,  BOARD  OF  CERTIFIED  DIRECT-ENTRY                                                                    
MIDWIVES  (via  teleconference),  provided a  statement  and                                                                    
addressed members  questions. She stated that  the board was                                                                    
an important  part of the  profession and  worked tirelessly                                                                    
to  regulate   and  update  midwifery  in   the  state.  She                                                                    
elaborated that  the board was working  arduously to improve                                                                    
its budget  and investigation  issues. She relayed  that the                                                                    
division was  restructuring its investigative  procedures to                                                                    
address   the  board's   concerns.  Previous   investigative                                                                    
practices had  increased the public's  risk. She  added that                                                                    
the division  was working with  the board to  implement cost                                                                    
saving  measures  including   administrative  overhead.  She                                                                    
planned   to  eliminate   the  deficit   through  increasing                                                                    
licensing fees over several  licensing cycles. She addressed                                                                    
the $500  licensing fee  in FY  2010. She  communicated that                                                                    
she was a  member of the board at the  time and recalled the                                                                    
collective  concern from  the licensees  and board  over the                                                                    
low fee. The  board's request for an increase  was denied by                                                                    
the division.                                                                                                                   
Ms. Corrick informed  the committee that the  board had been                                                                    
in existence  since 1988 and  that approximately  10 percent                                                                    
of the  births in  the state were  attended by  midwives. In                                                                    
reference  to  questions   concerning  the  public's  safety                                                                    
without  a  board, she  added  that  an obstetrician  and  a                                                                    
certified nurse  midwife were  board members.  She discussed                                                                    
that  the  team  worked  hard  to  ensure  regulations  were                                                                    
updated to national  standards. She deemed that  the cost of                                                                    
the  board  was  minimal  and that  the  higher  costs  were                                                                    
associated with administration and investigations.                                                                              
3:15:20 PM                                                                                                                    
Representative  Munoz  wondered  whether  the  four  ongoing                                                                    
investigations  were related  to  uncertified activity.  Ms.                                                                    
Corrick  replied  that two  of  the  cases were  related  to                                                                    
uncertified  activity.  Representative  Munoz  wondered  how                                                                    
many  uncertified midwives  were  operating  in Alaska.  Ms.                                                                    
Corrick guessed that there were two.                                                                                            
Vice-Chair  Saddler  referred  to Ms.  Corrick's  letter  in                                                                    
response to  the audit's recommendations. He  noted that the                                                                    
board  was researching  the possibility  of a  legal defense                                                                    
fund  to help  smaller boards  with investigative  costs. He                                                                    
requested more information.                                                                                                     
Ms. Corrick  responded that the midwives  were interested in                                                                    
working with  other professions regarding the  idea but that                                                                    
no action had been taken to date.                                                                                               
HB  26  was   HEARD  and  HELD  in   committee  for  further                                                                    

Document Name Date/Time Subjects
HB26 Supporting Documents-Legislative Audit 6-30-2014.pdf HFIN 2/24/2015 1:30:00 PM
HB 26
HB26 Sponsor Statement.pdf HFIN 2/24/2015 1:30:00 PM
HB 26
Commissioner DOR - Hoffbeck #3.pdf HFIN 2/24/2015 1:30:00 PM
Confirmation HFIN Hoffbeck DOR