Legislature(2015 - 2016)HOUSE FINANCE 519

03/16/2015 01:30 PM House FINANCE

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Moved HB 26 Out of Committee
+ 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."                                                                                                           
2:24:35 PM                                                                                                                    
LAURA  STIDOLPH, STAFF,  REPRESENTATIVE KURT  OLSON, relayed                                                                    
that  the bill  would extend  the sunset  date of  certified                                                                    
direct  entry   midwives  to  June  30,   2017;  a  two-year                                                                    
extension.  She noted  that the  board's  deficit and  audit                                                                    
issues  had been  discussed during  a  previous hearing  and                                                                    
that there  were people on  hand to speak to  those specific                                                                    
2:25:59 PM                                                                                                                    
Co-Chair  Thompson relayed  that the  fiscal note  reflected                                                                    
$5,500 of  expenditures for board travel  and advertising of                                                                    
meetings.  He related  that  in FY  14  the board's  revenue                                                                    
total  was  $3,990,  while   expenditures  were  $55,795;  a                                                                    
deficit of  $51,805. He  said that the  board had  a current                                                                    
operating deficit of over $115,000,  and had been in deficit                                                                    
spending  since  2008. He  shared  that  licensing fees  had                                                                    
increased,  and  were due  for  another  increase in  spring                                                                    
2014, but with the limited  number of midwives in the state,                                                                    
how  the  board   would  catch  up  with   the  deficit  was                                                                    
Ms.  Stidolph  answered  that with  the  board  bearing  the                                                                    
burden  of  the  large  cost   of  investigations,  even  an                                                                    
increase in  the board's fees  would not cover  the deficit.                                                                    
She  deferred the  question to  the  department for  further                                                                    
Co-Chair  Thompson understood  that  Legislative Budget  and                                                                    
Audit (LB&A)  had been tasked  with reviewing the  board and                                                                    
would be coming forward with recommendations.                                                                                   
SARA CHAMBERS, DIRECTOR,  DIVISION OF CORPORATIONS, BUSINESS                                                                    
AND   PROFESSIONAL   LICENSING,  DEPARTMENT   OF   COMMERCE,                                                                    
COMMUNITY AND  ECONOMIC DEVELOPMENT, stated that  the fiscal                                                                    
note  spoke to  the  expenses that  were  particular to  the                                                                    
board;  if  the board  were  to  sunset the  division  would                                                                    
continue to license midwives and  would relieve licensees of                                                                    
the expense of  board travel, which was  the only isolatable                                                                    
expense in regard  to the board itself. She  agreed that the                                                                    
board had  been in a  deficit position and had  been working                                                                    
toward  an  assertive  and meaningful  to  the  budget.  She                                                                    
relayed that fees  had been increased for  both midwives and                                                                    
apprentices;  midwives now  paid the  highest licensing  fee                                                                    
charges by the  division: $1,750 every two  years. She added                                                                    
that the  apprentice fees had  risen from over $100  to over                                                                    
$900  in 2013.  She noted  that it  would take  several more                                                                    
increases  and continued  attempts to  rein in  spending and                                                                    
get  out of  the  deficit  positon, but  with  a very  small                                                                    
number  of  licensees  that  could  take  several  licensing                                                                    
Co-Chair Thompson observed that most  of the deficit was due                                                                    
to investigations. Ms. Chambers  replied in the affirmative.                                                                    
She  added that  investigations figured  prominently in  the                                                                    
legislative audit findings.                                                                                                     
Co-Chair  Thompson highlighted  the  LB&A  criticism of  the                                                                    
department for not pursuing 4 different midwifery cases.                                                                        
Ms. Chambers  responded that there  were several  cases that                                                                    
had  been referred  to  the Department  of  Law's Office  of                                                                    
Special Prosecutions and Appeals  that had not been followed                                                                    
up on and  had been deemed a low priority.  She said that at                                                                    
the  time the  agency  had  not done  its  due diligence  to                                                                    
follow up  on the  cases, but that  since had  corrected the                                                                    
issue  putting new  safeguards into  place  to double  check                                                                    
files sent over  to sister agencies; in  addition, an expert                                                                    
witness had been  retained to review the  cases to determine                                                                    
which of  the agencies was  most appropriate for  each case.                                                                    
She explained  that the licensees  involved in the  cases in                                                                    
question  had  refused  to sign  a  consent  agreement.  She                                                                    
assured  the  committee  that   the  division  was  actively                                                                    
pursuing remedies to the problems.                                                                                              
Co-Chair  Thompson   asked  if  there  was   any  chance  of                                                                    
recouping the investigation expenditures.                                                                                       
2:32:14 PM                                                                                                                    
Ms.  Chambers  answered no.  She  shared  that there  was  a                                                                    
proposal in  the budget  that would give  the board  and the                                                                    
division the opportunity recoup  fines to help mitigate some                                                                    
of the expenses.                                                                                                                
Co-Chair Thompson observed terminating  the board would cost                                                                    
the state more money than renewing the sunset date.                                                                             
Ms.  Chambers replied  that she  was not  familiar with  the                                                                    
Representative   Wilson  queried   the  difference   between                                                                    
retaining  the  board,  and  allowing  the  licenses  to  be                                                                    
handled by the department.                                                                                                      
Ms.  Chambers  replied  that the  board  currently  had  the                                                                    
ability to  review and approve licenses,  which would revert                                                                    
back to the  division. She said that the  board handled most                                                                    
of  the  administrative elements,  including  investigative,                                                                    
which  allowed for  public deliberation  that  would not  be                                                                    
allowed under the department.                                                                                                   
Representative  Wilson  expressed  concern that  the  fiscal                                                                    
note did  not reflect  the $115,000  deficit. She  asked who                                                                    
paid the $115,000 when it was not being paid by the board.                                                                      
Ms. Chambers  answered that  the division  had appropriation                                                                    
authority. She added  that board was in  a deficit position,                                                                    
which department  was working actively  to correct,  and the                                                                    
appropriation  authority was  being covered  by boards  that                                                                    
were  in  a surplus  position.  She  stated that  that  this                                                                    
happened on an annual basis  by nature because there was one                                                                    
time, every  two years that  a board would bring  in revenue                                                                    
that was  meaningful during their renewal  period and offset                                                                    
the  programs that  had opposing  biennial revenue  periods.                                                                    
She stated that  the funds were not mixed in  the sense that                                                                    
the operations  were being  paid for  by another  because of                                                                    
the  carry forward,  but at  the higher  appropriation level                                                                    
all of  the licensing  programs were able  to be  solvent to                                                                    
stay in the black.                                                                                                              
2:36:24 PM                                                                                                                    
Representative  Wilson wondered  if another  audit when  the                                                                    
bill would be up again for sunset in two years.                                                                                 
Ms.  Chambers  deferred  the question  to  the  Division  of                                                                    
Legislative Audit.                                                                                                              
KRIS  CURTIS,   LEGISLATIVE  AUDITOR,  ALASKA   DIVISION  OF                                                                    
LEGISLATIVE  AUDIT  (via  teleconference),  replied  if  the                                                                    
board received an extension, another  sunset review would be                                                                    
triggered  by   statute.  She  said  that   given  the  sort                                                                    
timeframe since the  last audit she expected  the field work                                                                    
would take less time, but another audit would be conducted.                                                                     
Co-Chair Thompson  understood that  LB&A planned  to examine                                                                    
the board and make a recommendation.                                                                                            
Ms.  Curtis  answered  that  the   current  review  by  that                                                                    
committee had not factored into the suggested sunset date.                                                                      
Representative Wilson  asked how much the  most recent audit                                                                    
had  cost. Ms.  Curtis  replied that  the  division did  not                                                                    
track the cost of audits. She  shared that an hourly rate of                                                                    
approximately  $67 per  hour had  been  calculated, so  that                                                                    
could be  multiplied by the  1,100 hours it took  to conduct                                                                    
the audit. She explained  that a typical sunset occupational                                                                    
board  audit   took  approximately  500  to   600  hours  to                                                                    
complete. She relayed that this  particular board audit took                                                                    
longer  because of  the  nature of  the  problems that  were                                                                    
found and because it had been done by a new auditor.                                                                            
2:39:30 PM                                                                                                                    
Representative Gattis  felt that not hearing  from the board                                                                    
was limiting  the conversation. She  queried the  purpose of                                                                    
the board.  She asserted that  she was pro-midwife,  but she                                                                    
believed the board had struggled.  She relayed that she took                                                                    
issue with extending the board another two years.                                                                               
Ms.  Chambers  noted that  the  department  had invited  the                                                                    
board to  address the  committee. She  believed it  would be                                                                    
appropriate for the board to  provide input during committee                                                                    
Co-Chair Thompson  asked whether the increase  in fees would                                                                    
affect  the number  of midwives  paying  into the  licensing                                                                    
Ms. Chambers  replied that  it was  a possibility.  She said                                                                    
that it  was always  a concern,  not specific  to midwifery,                                                                    
that  a rise  in  fees would  cause people  to  drop out  of                                                                    
2:41:55 PM                                                                                                                    
Representative Guttenberg  pointed out that the  audit cited                                                                    
a  division  failure for  some  of  the board's  issues.  He                                                                    
wondered how  much of  the financial  problems of  the board                                                                    
could be attributed to the department.                                                                                          
Ms. Curtis  answered that 100  percent of the cause  for the                                                                    
reduced  extension  was due  to  the  division and  not  the                                                                    
board. She  related that areas for  improvement would always                                                                    
be found;  but in regards  to the severity of  the problems,                                                                    
the majority were at the division level.                                                                                        
Representative  Gara  surmised  that   the  board  had  done                                                                    
nothing  wrong,  and  queried   the  logic  of  the  limited                                                                    
Ms. Curtis did not view  the recommendation as a punishment.                                                                    
She  asserted that  legislative audit  was the  legislatures                                                                    
monitoring  mechanism;  the  two-year  extension  was  given                                                                    
because the issues  were so important and worth  the cost to                                                                    
come  back  to  the  table   to  ensure  that  the  problems                                                                    
recognized in the audit were handled.                                                                                           
2:45:14 PM                                                                                                                    
Representative  Gara  argued  that the  audit  punished  the                                                                    
board  by  creating  uncertainty.  He  did  not  think  that                                                                    
threatening  the  board  was  the  proper  way  to  get  the                                                                    
department to do its job.                                                                                                       
Ms.  Curtis relied  that  it was  difficult  to explain  the                                                                    
reasoning  pertaining   to  board  action   versus  division                                                                    
action,  and  how  that  factored  into  an  extension.  She                                                                    
reminded the  committee that it  was only  a recommendation;                                                                    
she would present the report  and provide information but it                                                                    
would be up to policy makers to make the final decision.                                                                        
Representative Gara  recommended that  the board be  given a                                                                    
full extension. He asked if  fee increases were the only way                                                                    
that the board could maintain its finances.                                                                                     
Ms.  Chambers  answered that  the  department  was fully  in                                                                    
compliance  with  legislative  audit's  recommendations  and                                                                    
took  full responsibility  in the  areas of  deficiency. She                                                                    
stated that the division would  set fees with the advice and                                                                    
input  of  the   board.  She  believed  that   some  of  the                                                                    
responsibility  lay with  the board  continuing  to rein  in                                                                    
spending and  refining decision  making processes  to reduce                                                                    
2:49:19 PM                                                                                                                    
Representative Pruitt  read from  the letter from  the Board                                                                    
of  Direct-Entry  Midwives  chair, Cheryl  Corrick,  located                                                                    
within the audit:                                                                                                               
     "Recommendation No. 2:                                                                                                     
     I concur  with this recommendation,  with reservations.                                                                    
     The  Board  has  requested  that, in  addition  to  the                                                                    
     proposed  increases in  licensing  fees  for CDMs,  the                                                                    
    Division also increase apprentice licensing fees to                                                                         
     50% of CDM fees. The Board sees this as a potential                                                                        
     way to help meet the shortfall. So far, the Board's                                                                        
     request has been denied over the past two years."                                                                          
Representative  Pruitt wondered  why the  board's suggestion                                                                    
had not been considered.                                                                                                        
Ms.   Chambers  answered   that   the   increase  had   been                                                                    
implemented  but   that  it  affected  a   small  number  of                                                                    
midwives.  She said  that fees  would need  to be  increased                                                                    
again  in order  to  keep  up with  rate  of spending  while                                                                    
trying to chip away at the negative carry forward.                                                                              
Representative Pruitt wondered whether  the division had the                                                                    
ability  to   recoup  costs   of  the   investigations  from                                                                    
individuals  found to  be  at fault.  He  asked whether  the                                                                    
department had, or should have,  the ability to recoup costs                                                                    
of investigations involving unlicensed individuals.                                                                             
Ms. Chambers  answered that the  division did  not currently                                                                    
have  the   ability  to  recoup   costs  from   licensed  or                                                                    
unlicensed  individuals;   it  would  require   a  statutory                                                                    
Representative Pruitt asked whether  the challenges found by                                                                    
the audit were related to the board or the department.                                                                          
Ms. Curtis  replied that most  of the problems  stemmed from                                                                    
the department.                                                                                                                 
Representative Pruitt asked  whether similar challenges were                                                                    
faced  by  other  boards.   He  requested  suggestions  from                                                                    
legislative audit on how to fix the problem.                                                                                    
Ms. Curtis  replied that the  extension reduction  was being                                                                    
driven by  the investigative  problems, which  were specific                                                                    
to the  midwife cases  and were not  found in  other boards;                                                                    
this  was not  a  division-wide problem.  She  spoke to  fee                                                                    
setting. She relayed that if  a board was significantly in a                                                                    
deficit, legislative audit would  make a recommendation that                                                                    
the board work with the  division to set fees appropriately.                                                                    
She pointed out  to the committee that a  fee schedule could                                                                    
be found  in the  audit. She said  that deficits  could vary                                                                    
widely and that  the situation could be  tricky when setting                                                                    
fees  as  a  response  to   a  spike  in  expenditures.  She                                                                    
furthered that the  audit performed in FY 06,  had an annual                                                                    
licensing fee  of over $2,000 biannually.  She stressed that                                                                    
this was not a new problem for the board.                                                                                       
2:55:27 PM                                                                                                                    
Representative Wilson pointed to page  2 of the fiscal note.                                                                    
She wondered what the licenses  would cost if the board were                                                                    
to dissolve.                                                                                                                    
Ms. Chambers  answered that the  numbers in the  fiscal note                                                                    
would  be  different if  the  division  were to  manage  the                                                                    
licensing program differently.                                                                                                  
Representative  Wilson  wondered  who   would  pay  for  the                                                                    
investigations if the board were dissolved.                                                                                     
Ms.  Chambers replied  that  licensees  always recouped  the                                                                    
costs of  investigations, the existence  of the  board would                                                                    
not change the licensing structure.                                                                                             
Representative  Wilson surmised  that  no  matter what,  the                                                                    
licensees  would have  to  pay  the fee  if  they wanted  to                                                                    
remain legally licensed.                                                                                                        
Ms. Chambers replied in the affirmative.                                                                                        
Representative   Wilson  expressed   unhappiness  with   the                                                                    
problems faced  by the midwives.  She worried  that midwives                                                                    
would  end  up  with  licensing fees  that  they  could  not                                                                    
Representative Pruitt  clarified that licensing  would still                                                                    
exist  even  if  the  board  disbanded.  He  felt  that  the                                                                    
midwives would be  penalized if the bill did  not go forward                                                                    
in the process. He  thought that the legislation highlighted                                                                    
that  something was  broken within  the  department and  not                                                                    
with the board or the midwives.                                                                                                 
2:59:30 PM                                                                                                                    
Representative  Gattis  reiterated   her  concern  that  the                                                                    
committee  had  not  heard  from  the  board.  She  strongly                                                                    
believed input from the board was needed.                                                                                       
Ms. Stidolph  agreed that  a board  member's input  would be                                                                    
Co-Chair  Thompson believed  the board  needed to  exist. He                                                                    
expressed concern at the cost of  the audit for a board that                                                                    
oversaw few  licensees. He felt  that the problem  should be                                                                    
reexamined  in  2 years  after  the  legislature received  a                                                                    
recommendation  from   Legislative  Budget  and   Audit.  He                                                                    
thought that  passing the legislation would  allow the board                                                                    
to  continue to  be involved  in the  ongoing education  and                                                                    
certification of midwives.                                                                                                      
Representative  Wilson  reiterated  concern  of  what  could                                                                    
happen if the committee immediately did nothing.                                                                                
Representative Gara  requested clarification on the  cost of                                                                    
the audit.                                                                                                                      
Co-Chair  Thompson  explained  that  the  audit  took  1,100                                                                    
hours,   billed  out   at  $67   per   hour,  resulting   in                                                                    
approximately $74,000 total.                                                                                                    
Representative Gara  moved a conceptual amendment  to extend                                                                    
the termination date to 3-years.                                                                                                
Co-Chair Thompson said  that the problem was  that the costs                                                                    
of investigations were being placed  on boards that were not                                                                    
responsible   for  the   problems  being   investigated.  He                                                                    
reiterated  that  it  would  be  prudent  to  wait  for  the                                                                    
recommendations that LB&A would provide in 2 years.                                                                             
3:04:57 PM                                                                                                                    
Representative Gara withdrew the conceptual amendment.                                                                          
Co-Chair Neuman MOVED to REPORT  HB 26 out of committee with                                                                    
individual  recommendations  and   the  accompanying  fiscal                                                                    
note. There being NO OBJECTION, it was so ordered.                                                                              
HB   26  was   REPORTED  out   of  committee   with  a   "no                                                                    
recommendation"  recommendation  and   with  one  previously                                                                    
published fiscal impact note: FN1 (CED).                                                                                        
Co-Chair  Thompson discussed  the agenda  for the  following                                                                    

Document Name Date/Time Subjects
AS 38.05.125.pdf HFIN 3/16/2015 1:30:00 PM
HB 115
BLM-Alaska Conveys 729,000 Acres to State of Alaska.pdf HFIN 3/16/2015 1:30:00 PM
HB 115
Draft A Legal Memo-HB 115.pdf HFIN 3/16/2015 1:30:00 PM
HB 115
Leg Research-State Lands.pdf HFIN 3/16/2015 1:30:00 PM
HB 115
MyliusPresentationonLands-2013.pdf HFIN 3/16/2015 1:30:00 PM
HB 115
South Carolina Resolution.pdf HFIN 3/16/2015 1:30:00 PM
HB 115
State asks feds for transfer of 19,322 disputed acres on North Slope.pdf HFIN 3/16/2015 1:30:00 PM
HB 115
PL85-508.pdf HFIN 3/16/2015 1:30:00 PM
HB 115
US Constitution-9th and 10th Amendments.pdf HFIN 3/16/2015 1:30:00 PM
HB 115
USCODE-2011-title43-chap33A-sec1635.pdf HFIN 3/16/2015 1:30:00 PM
HB 115
Utah HB148.pdf HFIN 3/16/2015 1:30:00 PM
HB 115
CSHB 115 (RES)-Sponsor Statement.pdf HFIN 3/16/2015 1:30:00 PM
HB 115
HB 115 AK Miners Assoc Support.pdf HFIN 3/16/2015 1:30:00 PM
HB 115