Legislature(2017 - 2018)HOUSE FINANCE 519

02/06/2018 01:30 PM FINANCE

Note: the audio and video recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.

Download Mp3. <- Right click and save file as

* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
-- Public Testimony --
Heard & Held
-- Public Testimony --
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled TELECONFERENCED
HOUSE BILL NO. 275                                                                                                            
     "An Act extending the termination date of the Board of                                                                     
     Massage Therapists; and providing for an effective                                                                         
REPRESENTATIVE SAM  KITO, SPONSOR,  reported that  the board                                                                    
was  recently  created  and was  operating  effectively.  He                                                                    
believed  extending   the  Board  of  Massage   Therapy  was                                                                    
Co-Chair Foster invited Ms. Curtis to the table.                                                                                
KRIS  CURTIS,   LEGISLATIVE  AUDITOR,  ALASKA   DIVISION  OF                                                                    
LEGISLATIVE AUDIT, reported that the  board was new, and the                                                                    
audit was the  board's first sunset. She  read directly from                                                                    
the audit:                                                                                                                      
     In  all areas  except  licensing, the  audit found  the                                                                    
     board  was  operating  in  the  public's  interest.  In                                                                    
     general,    meetings   were    conducted   effectively,                                                                    
     investigations  were appropriately  processed, and  the                                                                    
     board  actively   issued  or  changed   regulations  to                                                                    
     improve  the industry  and better  protect the  public.                                                                    
     The audit  concluded the board  and DCBPL  staff should                                                                    
     improve  its licensing  procedures. Testing  found that                                                                    
     applicants  were not  consistently  issued licenses  in                                                                    
     accordance    with   statutes,    regulations,   and/or                                                                    
     procedures.  Additionally, improvements  are needed  to                                                                    
     comply  with   the  federal  standards   over  criminal                                                                    
     history  record information  obtained  as  part of  the                                                                    
     licensing process.                                                                                                         
Ms. Curtis offered that the  Federal Bureau of Investigation                                                                    
(FBI) audit  discovered the deficiency in  federal standards                                                                    
over criminal history records. She  highlighted that page 11                                                                    
contained the  scheduled licensing  activity in the  table "                                                                    
Exhibit 2" and  reported that from July  2016 through August                                                                    
2017, the  board issued 1,186  new licenses. The  number was                                                                    
almost  double  the  600   licenses  that  DCBPL  management                                                                    
expected.  She  moved  to  the   Schedule  of  Revenues  and                                                                    
Expenditures  in "Exhibit  3" on  page 14.  The board  had a                                                                    
surplus  of $265,128  thousand at  the  end of  FY 2017  and                                                                    
license  fees were  lowered in  FY 2018.  She turned  to the                                                                    
audit's   three  recommendations   beginning  on   page  17.                                                                    
Recommendation 1,  "Division of Corporations,  Business, and                                                                    
Professional Licensing's  (DCBPL) director,  in consultation                                                                    
with the  Board of  Massage Therapists (board),  should take                                                                    
action   to   improve   procedures   to   ensure   licensure                                                                    
requirements are met."  She elaborated that 3  of 31 license                                                                    
applications  tested  as part  of  the  audit were  licensed                                                                    
without adequate supporting  documentation. She reviewed the                                                                    
findings on page 17 and read the following excerpts:                                                                            
     A  background check  report for  one initial  applicant                                                                    
     was  not completed.  Th e  licensee operated  without a                                                                    
     background   check  report   from  licensure   date  of                                                                    
     September 2015 through receipt  of the background check                                                                    
     report July  2017 during  the license  renewal process.                                                                    
     Regulation6    requires    applicants   submit    their                                                                    
     fingerprints for a background  check report in order to                                                                    
     obtain  a  license  to practice  massage  therapy.  Per                                                                    
     regulation,7 licenses can be  issued to applicants even                                                                    
     though  a   background  check   report  has   not  been                                                                    
     received.   However,  DCBPL   staff  must   ensure  the                                                                    
     background check is completed  timely. Th e applicant's                                                                    
     fingerprint card  was sent back  multiple times  due to                                                                    
     incomplete  information. DCBPL  staff  did not  perform                                                                    
     additional follow-up to  obtain a completed fingerprint                                                                    
     card because staff failed to  list the applicant on the                                                                    
     DCBPL   spreadsheet   used  for   tracking   background                                                                    
     One applicant answered "yes"  to a professional fitness                                                                    
     question,  however  no  evidence could  be  located  to                                                                    
     demonstrate    that   the    applicant   provided    an                                                                    
     explanation.  Furthermore, it  is  unclear whether  the                                                                    
    board considered an explanation prior to licensing.                                                                         
     One applicant answered "yes"  to a professional fitness                                                                    
     question  and provided  an  explanation which  included                                                                    
     evidence of a permanent  revocation of a national board                                                                    
     certification  for  violating  the respective  code  of                                                                    
     ethics and  standards of practice. DCBPL  staff and the                                                                    
     board   did  not   forward  the   application  to   the                                                                    
     investigative  section   for  review.  A   license  was                                                                    
     granted with  the requirement that the  individual take                                                                    
     a two-credit  ethics course.  The background  check did                                                                    
     not show  any convictions,  and according to  the board                                                                    
     chair, the board  believed that a license  could not be                                                                    
     denied based  on the revocation of  a national certifi-                                                                    
     cate.   However,  DCBPL   procedures  called   for  the                                                                    
     application  to  be  forwarded  to  investigations  for                                                                    
     further review.                                                                                                            
3:03:30 PM                                                                                                                    
Ms.  Curtis addressed  Recommendation  2, "DCBPL's  director                                                                    
should address  the Federal  Bureau of  Investigations (FBI)                                                                    
audit findings and concerns." She  reviewed the findings and                                                                    
read the following:                                                                                                             
     DCBPL  did  not  comply  with  federal  standards  over                                                                    
     criminal  history  record  information. The  FBI  audit                                                                    
     conducted  in  April  2017 found  DCBPL  did  not  have                                                                    
     secure   channels   of   communication.   Additionally,                                                                    
     applicants  were not  notified  in  writing that  their                                                                    
     fingerprints  were to  be used  for  an FBI  background                                                                    
     check  and  were  not advised  of  the  procedures  for                                                                    
     obtaining,  changing, correcting,  or  updating an  FBI                                                                    
     identification record. Additionally,  the federal audit                                                                    
     found  inadequate  chain  of  custody  for  fingerprint                                                                    
     cards. A chain of custody  ensures the integrity of the                                                                    
     applicant/fingerprint process.  DCBPL addressed  one of                                                                    
     the findings  by including verbiage in  the application                                                                    
     that  submitted fingerprints  will be  sent to  the FBI                                                                    
     for a federal background  check. However, as of October                                                                    
     2017, the other issues remain outstanding.                                                                                 
Ms.  Curtis pointed  to Recommendation  3, "The  director of                                                                    
the Office  of the  Governor, Boards and  Commissions should                                                                    
work  to fill  the  public member  position."  She read  the                                                                    
following finding:                                                                                                              
     The public  member position on the  board became vacant                                                                    
     March 2017 and remained vacant  as of October 2017. Per                                                                    
     AS  08.61.010, the  board  is  statutorily required  to                                                                    
     consist of five members  appointed by the governor, one                                                                    
     of  which is  a public  member  who is  not a  licensed                                                                    
     health  care  provider, employee  of  the  State, or  a                                                                    
     current   or  former   member  of   another  occupation                                                                    
     licensing  board. According  to Boards  and Commissions                                                                    
     staff,  stringent  requirements  make it  difficult  to                                                                    
     find interested applicants.                                                                                                
3:04:20 PM                                                                                                                    
Ms.   Curtis   noted   that   the   response   relating   to                                                                    
Recommendation 3 from  the Office of the  Governor was found                                                                    
on  page  29.  The  office  concurred  with  the  audit  and                                                                    
recommended  a legislative  solution. She  offered that  the                                                                    
agency   response   was  on   page   31   and  agreed   with                                                                    
Recommendation  1  but   felt  that  additional  supervisory                                                                    
resources  were necessary  to ensure  the license  files met                                                                    
the standards.  The department stated that  the division had                                                                    
been unaware of the issue  until recently and was responding                                                                    
quickly to address the finding.  The board's response was on                                                                    
page 33 and concurred with the audit conclusions.                                                                               
Representative Guttenberg  asked what  other boards  had the                                                                    
same  licensing requirement  on  fingerprinting and  whether                                                                    
the FBI audited the other  boards and what the results were.                                                                    
Ms. Curtis deferred the question to the department.                                                                             
3:06:39 PM                                                                                                                    
Representative  Pruitt  asked  if  Ms.  Curtis  thought  the                                                                    
faults  of   the  department   were  systemic   and  enabled                                                                    
unqualified applicants  to become licensed or  was unique to                                                                    
a few applications. Ms. Curtis  responded that for the first                                                                    
recommendation the  audit discovered  3 out of  31 licensing                                                                    
errors. The  division felt it  was a  "significant problem."                                                                    
The  audit   discovered  an  issue   with  staff   that  was                                                                    
corrected.  She  characterized  the issue  as  the  "growing                                                                    
pains" of a new inexperienced board.                                                                                            
Co-Chair Foster OPENED Public Testimony.                                                                                        
Co-Chair Foster CLOSED Public Testimony.                                                                                        
3:08:55 PM                                                                                                                    
Co-Chair Seaton asked if the  chair of the massage board was                                                                    
available.   He  understood   there  was   a  concern   with                                                                    
background  checks.  He asked  for  the  boards position  on                                                                    
background checks.                                                                                                              
DAVID  EDWARDS-SMITH, CHAIR,  BOARD  OF MASSAGE  THERAPISTS,                                                                    
answered  that the  board felt  that  the initial  licensure                                                                    
should  require a  background  check.  However, the  board's                                                                    
official  position was  to reduce  the burden  on applicants                                                                    
and  lessen the  requirement  to every  third renewal  cycle                                                                    
rather  than every  cycle. Co-Chair  Seaton  asked what  the                                                                    
cost  of the  background checks  were and  who paid  for the                                                                    
checks.  Mr. Smith  answered that  the background  check was                                                                    
approximately $80. The burden was placed on the licensee.                                                                       
Co-Chair  Foster  asked Ms.  Chambers  to  walk through  the                                                                    
fiscal note.                                                                                                                    
3:10:09 PM                                                                                                                    
Ms.  Chambers  spoke  to  the  previously  published  fiscal                                                                    
impact note from  DCCED FN1 (CED) and  noted  that the total                                                                    
cost of  the board  was $21.4  thousand. She  explained that                                                                    
$19.9 thousand was  allocated for travel costs  and that the                                                                    
board  was trying  to keep  its travel  costs down  by using                                                                    
teleconferencing capabilities when  possible. She added that                                                                    
the  remaining  $1.5 thousand  was  allocated  for $400  for                                                                    
public notice  of board meetings,  $1 thousand  for training                                                                    
and conference fees, and $100 for meeting per diem.                                                                             
Representative   Pruitt  referred   to  the   commissioner's                                                                    
response to recommendation 1 and  read "with over 13,000 new                                                                    
licenses issued  in FY 17, additional  supervisory resources                                                                    
are needed to ensure that  all license files are reviewed to                                                                    
meet  this  standard."  He asked  if  additional  staff  was                                                                    
necessary. He wondered  how the fees would  be spread across                                                                    
all  the  various boards.  Ms.  Chambers  commented that  at                                                                    
present the  board was not requesting  additional personnel.                                                                    
The division  was assessing the information  provided in the                                                                    
audit to determine  whether some of the  challenges were due                                                                    
to  the   startup  of  a   new  board  and   the  unexpected                                                                    
significant increase in  estimated applications. She thought                                                                    
that  the  process  would stabilize.  She  stated  that  the                                                                    
boards were  "constantly" growing,  and the  division wanted                                                                    
to ensure the resources were  available to meet the public's                                                                    
expectations. Representative  Pruitt asked if  enough notice                                                                    
would be provided  to the boards of the  need for additional                                                                    
staff, so  fees could  be increased to  avoid any  impact on                                                                    
UGF.  Ms.  Chambers  reported  that  the  division  was  not                                                                    
authorized  to  accept UGF  and  was  entirely supported  by                                                                    
licensing fees. The staff  maintained positive time keeping.                                                                    
The license programs were only  being charged the amount the                                                                    
staff worked  on their program. She  commented that managers                                                                    
and   certain   administrative   staff  dealing   with   all                                                                    
licensures  charged   their  time  to  a   general  indirect                                                                    
category that involved a  specific methodology. However, the                                                                    
lion's share  of the staff  and costs were  being accurately                                                                    
assessed  to each  board for  the amount  it cost  to manage                                                                    
them. If the division expected  a dramatic increase in staff                                                                    
time  for a  board. it  would  discuss the  matter with  the                                                                    
board and  put the  licensees on notice  of a  potential fee                                                                    
3:16:13 PM                                                                                                                    
Co-Chair  Seaton referred  to the  first page  of the  audit                                                                    
relating  to improving  licensing  procedures.  He read  the                                                                    
following:   "?comply  with   the  federal   standards  over                                                                    
criminal history record information  obtained as part of the                                                                    
licensing process."  He asked whether  the conclusion  was a                                                                    
department issue  or a board  matter. Ms.  Chambers reported                                                                    
that  the FBI  findings  "were specifically  administrative"                                                                    
and lied  with the  division. She  explained that  the issue                                                                    
was "new  information" that was received  immediately before                                                                    
the  audit started.  The division  resolved two  out of  the                                                                    
three issues. The unaddressed issue  dealt with the chain of                                                                    
custody  and  the division  worked  with  the Department  of                                                                    
Public  Safety   (DPS)  to  help  find   a  resolution.  The                                                                    
department  confirmed   that  no  legal  mechanism   in  the                                                                    
division's   statutes  addressed   chain  of   custody.  The                                                                    
division was  looking into "alternative  plans" to  ensure a                                                                    
proper chain of custody was  in place. Co-Chair Seaton asked                                                                    
if there was  any fallout from not  maintaining the required                                                                    
chain of  custody. Ms.  Chambers informed  committee members                                                                    
that the division  was audited by the FBI  every three years                                                                    
for    the   five    licensing   programs    that   required                                                                    
fingerprinting.   She   was    unaware   of   any   negative                                                                    
repercussions to the licensees  and acknowledged that it was                                                                    
the divisions responsibility to resolve the issue.                                                                              
Representative Guttenberg  wondered whether the  FBI's audit                                                                    
findings  were  the same  for  the  5 boards  that  required                                                                    
fingerprinting  and  if  the  division  was  addressing  the                                                                    
problem  for all  5 boards.  Ms. Chambers  responded in  the                                                                    
Representative  Wilson  asked  whether four  years  was  the                                                                    
proper  amount of  time  for  an extension  or  if a  longer                                                                    
period  worked. Ms.  Chambers had  not questioned  the audit                                                                    
recommendations  and was  unable to  offer an  opinion about                                                                    
the sunset.  She was working  with the board to  address its                                                                    
growing pains and felt confident  that within four years all                                                                    
the  findings  would  be  addressed.  Representative  Wilson                                                                    
asked what  the cost of  the audit  for each board  was. Ms.                                                                    
Chambers deferred  to Ms. Curtis  for the answer.  She noted                                                                    
that the cost  was not born by  the division. Representative                                                                    
Wilson ascertained  that the boards  also did not  pay audit                                                                    
costs and  the costs  were assumed  by the  legislature. Ms.                                                                    
Chambers  responded  that  she was  correct.  Representative                                                                    
Wilson asked for the information.                                                                                               
Co-Chair  Foster  requested  that  Ms.  Curtis  provide  the                                                                    
Ms.  Curtis  had  anticipated  the  question.  She  did  not                                                                    
currently have  the information.  She had  asked Ms.  Day to                                                                    
compile the number  of hours an audit took  to complete. She                                                                    
informed committee members that the  rate was $77. per hour.                                                                    
She deferred to Ms. Day.                                                                                                        
3:20:57 PM                                                                                                                    
LINDA DAY,  AUDIT MANAGER,  LEGISLATIVE AUDIT  DIVISION (via                                                                    
teleconference), did not  have the number of  hours in front                                                                    
of her and offered to provide the information quickly.                                                                          
3:21:15 PM                                                                                                                    
Representative Pruitt  asked about the concern  over filling                                                                    
the vacant board  seat. He concurred that  the criteria were                                                                    
challenging and noted the requirement  that the board member                                                                    
was not  a former  member of another  occupational licensing                                                                    
board. He  wondered whether  removing the  requirement would                                                                    
facilitate finding the public  board member more easily. Ms.                                                                    
Chambers  responded that  the appointment  of board  members                                                                    
was  managed through  the  governor's  office. She  reported                                                                    
that  she  worked closely  with  the  Board and  Commissions                                                                    
director,  Shirley  Marquardt.  She knew  that  the  varying                                                                    
board requirements  made it prohibitive and  she wanted more                                                                    
people to  apply for board  seats. Her general  response was                                                                    
in favor  of removing  restrictions for  people to  serve on                                                                    
boards.  She  deferred  to  Ms.  Marquardt  to  provide  the                                                                    
specific  answer. Representative  Pruitt  clarified that  he                                                                    
was only  asking for the  specific board. He  asked Director                                                                    
Marquardt to  contact the committee if  his suggestion would                                                                    
be helpful without creating additional issues.                                                                                  
Co-Chair Seaton was trying to  determine the licensing fees.                                                                    
Ms. Curtis reminded the committee  that the fee schedule was                                                                    
on page  15 of the audit.  She relayed that the  renewal few                                                                    
was $290  plus $60 totaling  $350. Co-Chair Seaton  asked if                                                                    
the $60 was for a background check.                                                                                             
Ms. Chambers  interjected that there were  costs incurred by                                                                    
the  licensees for  fingerprinting. She  concurred that  the                                                                    
fess were $290  every two years to renew the  license and an                                                                    
additional  $60 for  DPS to  process  the fingerprints.  Co-                                                                    
Chair  Seaton  asked  whether  it  was  typical  to  require                                                                    
fingerprinting  and  background  checks with  every  renewal                                                                    
cycle.  Ms. Chambers  replied  that it  was  the only  board                                                                    
where  subsequent fingerprinting  was required.  She related                                                                    
that  the  board had  recently  tried  to strike  a  balance                                                                    
between  too  frequently  and not  enough.  Co-Chair  Seaton                                                                    
asked if  she knew  the approximate cost  of fingerprinting.                                                                    
Ms. Chambers answered in the negative.                                                                                          
3:27:15 PM                                                                                                                    
Representative Guttenberg asked  why repeated fingerprinting                                                                    
was  necessary.  Ms.  Chambers   responded  that  the  chief                                                                    
investigator  and DPS  was looking  into the  possibility of                                                                    
renewing the requirement without additional fingerprinting.                                                                     
Co-Chair Foster indicated amendments were due on Friday,                                                                        
February 9, 2018 by 5:00 pm.                                                                                                    
HB 275 was HEARD and HELD in committee for further                                                                              
Co-Chair Foster reviewed the agenda for the following day.                                                                      

Document Name Date/Time Subjects
HB273 Support letters 1.19.18.pdf HFIN 2/6/2018 1:30:00 PM
HB 273
HB273 Sponsor Statement 01.19.18.pdf HFIN 2/6/2018 1:30:00 PM
HB 273
HB273 Legislative Audit 01.19.18.pdf HFIN 2/6/2018 1:30:00 PM
HB 273
HB274 Sponsor Statement 1.29.18.pdf HFIN 2/6/2018 1:30:00 PM
HB 274
HB274 Supporting Document - 2017 Legislative Audit 1.29.18.pdf HFIN 2/6/2018 1:30:00 PM
HB 274
HB275 Sponsor Statement 01.19.18.pdf HFIN 2/6/2018 1:30:00 PM
HB 275
HB275 Legislative Audit 10.11.17.pdf HFIN 2/6/2018 1:30:00 PM
HB 275
HB275 letter of support.pdf HFIN 2/6/2018 1:30:00 PM
HB 275
HB 275 letter of support HFIN.pdf HFIN 2/6/2018 1:30:00 PM
HB 275
HB 275 Board of Massage Audit Followup Memo.pdf HFIN 2/6/2018 1:30:00 PM
HB 275