RULES AND REGULATIONS
Title 49--PROFESSIONAL AND VOCATIONAL STANDARDS
STATE BOARD OF COSMETOLOGY
[49 PA. CODE CH. 7]
Biennial Renewal Fee Increase
[35 Pa.B. 6520] The State Board of Cosmetology (Board) amends § 7.2 (relating to fees). The final-form rulemaking increases the biennial license renewal fee for all classes of licenses issued by the Board.
A. Effective Date
The final-form rulemaking will be effective upon publication in the Pennsylvania Bulletin. The new fees will take effect for the biennial period beginning February 1, 2006.
B. Statutory Authority
The final-form rulemaking is authorized under section 16 of the act of May 3, 1933 (P. L. 242, No. 86) (Act 86) (63 P. S. § 522) which requires the Board to fix fees by regulation for the biennial renewal of licenses and to increase fees by regulation to meet or exceed projected expenditures if the revenues raised by fees, fines and civil penalties are not sufficient to meet Board expenditures.
C. Background and Purpose
The Board is required by law to support its operations from the revenue it generates from fees, fines and civil penalties. In accordance with section 16(c) of Act 86, if the revenue raised by fees, fines and civil penalties is not sufficient to meet expenditures over a 2-year period, the Board must increase fees by regulation so that its projected revenues will meet or exceed projected expenditures.
The Board raises virtually all of its operating revenue (except application and services fees) through biennial renewal fees. The biennial license renewal fee is the most substantial revenue-generating fee of all the fees charged by the Board. The Board's current biennial license renewal fees for cosmetologists, manicurists, teachers, cosmetology shops and cosmetology schools were established by regulation in 1986, while the current biennial renewal fees for cosmeticians and cosmetician or manicurist shops were established by regulation in 1991.
At the Board's December 6, 2004, meeting, the Bureau of Finance and Operations (BFO) presented a summary of the Board's revenue and expenses for Fiscal Year (FY) 2001-2002 through FY 2003-2004 and projected revenue and expenses for FY 2004-2005 through FY 2010-2011. The summary, presented in the following table, demonstrated that the Board must raise fees to meet or exceed projected expenditures to comply with section 16 of Act 86. The BFO projected a deficit of $286,531.06 in FY 2007-2008, a deficit of $1,073,531.06 in FY 2008-2009, a deficit of $1,662,531.06 in FY 2009-2010 and a deficit of $2,606,531.06 in FY 2010-2011. Therefore, the BFO recommended that the Board raise fees to meet projected expenditures, in compliance with section 16 of the act.
2001-2002 beginning balance 1,718,075.05 FY 01-02 revenue 2,229,690.06 Prior year returned funds 146,300.49 FY 01-02 expenses 2,376,000.00 Remaining balance 1,718,065.60 2002-2003 beginning balance 1,718,065.60 FY 02-03 revenue 1,959,902.11 Prior year returned funds 0.00 FY 02-03 expenses 2,583,000.00 Remaining balance 1,094,967.71 2003-2004 beginning balance 1,094,967.71 FY 03-04 revenue 2,199,623.23 Prior year returned funds 0.00 FY 03-04 expenses 2,533,000.00 Remaining balance 761,590.94 2004-2005 beginning balance 761,590.94 FY 04-05 projected revenue 1,950,000.00 Prior year returned funds (estimated) 902,878.00 FY 04-05 projected expenses 2,569,000.00 Remaining balance 1,045,468.94 2005-2006 beginning balance 1,045,468.94 FY 05-06 projected revenue 2,230,000.00 FY 05-06 projected expenses 2,505,000.00 Remaining balance 770,468.94 2006-2007 beginning balance 770,468.94 FY 06-07 projected revenue 1,950,000.00 FY 06-07 projected expenses 2,580,000.00 Remaining balance 140,468.94 2007-2008 beginning balance 140,468.94 FY 07-08 projected revenue 2,230,000.00 FY 07-08 projected expenses 2,657,000.00 Remaining balance (286,531.06) 2008-2009 beginning balance (286,531.06) FY 08-09 projected revenue 1,950,000.00 FY 08-09 projected expenses 2,737,000.00 Remaining balance (1,073,531.06) 2009-2010 beginning balance (1,073,531.06) FY 09-10 projected revenue 2,230,000.00 FY 09-10 projected expenses 2,819,000.00 Remaining balance (1,662,531.06) 2010-2011 beginning balance (1,662,531.06) FY 10-11 projected revenue 1,950,000.00 FY 10-11 projected expenses 2,904,000.00 Remaining balance (2,616,531.06) As the previous table indicates, the BFO estimates that at the close of FY 2007-2008, the Board's expenses will exceed its revenues by $286,531.06. The BFO anticipates that in subsequent fiscal years, the deficit will increase proportionally. Without an increase, the projected deficit in FY 2010-2011 would be $2,616,531.06.
The increases in the Board's biennial expenses occurred primarily in the area of investigative and inspection costs, attributable to increased numbers of complaints being filed and the accompanying increased number of investigations and enforcement actions (citations for minor violations under the act of July 2, 1993 (P. L. 345, No. 48)) initiated by inspectors and investigators on behalf of the Board. For example, investigative expenditures increased from $808,769.05 in FY 2002-2003 to approximately $977,912.05 in FY 2003-2004. Because investigative and inspection costs are largely driven by the number of complaints received and the number of inspections performed (a number dependent in part on the number of new applications filed with the Board), the Board has little control over these expenses.
There were also increases in Legal Office costs, related to prosecuting and adjudicating many more cases than in prior years, which contribute to the need to raise biennial renewal fees. In FY 2003-2004, the Board imposed 632 disciplinary sanctions, which was significantly more than in any prior fiscal year. The FY 2003-2004 figure is in comparison to 386 disciplinary sanctions imposed in FY 2002-2003, 370 in FY 2001-2002, 393 in FY 2000-2001 and 310 in FY 1999-2000. Additionally, the Board imposed more serious sanctions than in any prior year, 17 in FY 2003-2004, as opposed to 9 in FY 2002-2003, 11 in FY 2001-2002, 3 in FY 2000-2001 and 3 in FY 1999-2000. Finally, the Board closed more cases in FY 2003-2004 than in any prior year, closing 962 cases as compared with 580 cases in FY 2002-2003, 675 in FY 2001-2002, 740 in FY 2000-2001 and 529 in FY 1999-2000. As of December 9, 2004, there were 395 cases currently open, as opposed to 220 cases open as of December 9, 2003.
The Board carefully reviewed several options in fee increases to ensure the most reasonable fee increase possible while keeping the Board out of a long run deficit. Additionally, in developing this final-form rulemaking, the Board reviewed fees of other states. It found that the proposed fees are comparable to the renewal fees charged in surrounding states and should cause no competitive disadvantage to the Commonwealth. The Board also determined that making fees uniform across comparable license classes would be more equitable and would promote ease of administration. Consequently, the Board made the renewal fees for all individual license classes equal, with the exception of cosmetology teacher licenses, as it did with the renewal fees for the various shop licenses.
D. Description of Amendments
Based upon the previous expense and revenue estimates provided to the Board, the Board is amending its fee schedule in § 7.2(c) to increase the fee for biennial renewal of licenses for cosmeticians from $21 to $35; for cosmetologists from $23 to $35; for cosmetology teachers from $36 to $55; for manicurists from $21 to $35; for cosmetician shops from $25 to $60; for cosmetology shops from $41 to $60; for manicurist shops from $25 to $60; and for cosmetology schools from $66 to $150.
The amendment also deletes reference in § 7.2 to a cosmetology manager's license, based on the amendments to Act 86 made by section 3 of the act of June 29, 2002 (P. L. 645, No. 98) (63 P. S. § 510.4) (Act 98), which removed the requirement that a cosmetology shop owner employ a licensed manager if the owner does not manage the shop.
E. Summary of Comments and Responses to Proposed Rulemaking
The proposed rulemaking was published at 35 Pa.B. 2400 (April 23, 2005) followed by a 30-day public comment period. The Board did not receive any comments from the general public or the Senate Consumer Protection and Professional Licensure Committee (SCP/PLC). However, the Board received comments from the House Professional Licensure Committee (HPLC) and the Independent Regulatory Review Commission (IRRC).
Both the HPLC and IRRC noted that Act 98 deleted the requirement that a cosmetology shop be under the direction of a manager and that this amendment to § 7.2 deletes the fee for a cosmetology shop manager license, but that elsewhere in Chapter 7 references to a cosmetology shop manager remain. Accordingly, the HPLC and the IRRC commented that the Board should review its regulations and delete all references to a cosmetology shop manager's license wherever they appear so that the regulations are consistent with the existing statute and with amended § 7.2. IRRC specifically stated that the Board should delete all references to a cosmetology shop manager's license from Chapter 7 when the Board submits the final-form rulemaking.
The Board is currently in the process of amending Chapter 7 to delete all references to a cosmetology shop manager and intends to send out an exposure draft to stakeholders and interested parties for comment before engaging in proposed rulemaking on the subject. Because Act 98 changed the requirements for management of cosmetology shops from a licensed cosmetology shop manager to a ''designated person in charge,'' the Board believes that amendment of Chapter 7 simply by deleting all references to ''cosmetology shop manager'' is not sufficient. The Board must also make some substantive changes to its regulations that address shop management. Accordingly, the Board does not believe that the amendment should be made through this final-form rulemaking, and will, instead, proceed with amending its regulations related to shop management through a separate rulemaking.
F. Fiscal Impact and Paperwork Requirements
The final-form rulemaking will increase the biennial renewal fee for all classes of Board licensees. The final-form rulemaking should have no other fiscal impact on the private sector, the general public or political subdivisions. The final-form rulemaking will require the Board to alter some of its forms to reflect the new biennial renewal fees. However, the final-form rulemaking should not create additional paperwork for the private sector.
G. Sunset Date
Act 86 requires that the Board monitor its revenue and expenses on a fiscal year and biennial basis. Therefore, no sunset date has been assigned.
H. Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on April 23, 2005, the Board submitted a copy of the notice of proposed rulemaking, published at 35 Pa.B. 2400, to the IRRC and the Chairpersons of the HPLC and the SCP/PLC for review and comment.
Under section 5(c) of the Regulatory Review Act, IRRC, the HPLC and the SCP/PLC were provided with copies of the comments received during the public comment period, as well as other documents when requested. In preparing the final-form rulemaking, the Board has considered all comments from IRRC, the HPLC, the SCP/PLC and the public.
Under section 5.1(j.2) of the Regulatory Review Act (71 P. S. § 745.5a(j.2)), on October 18, 2005, the final-form rulemaking was approved by the HPLC. On November 2, 2005, the final-form rulemaking was deemed approved by the SCP/PLC. Under section 5.1(e) of the Regulatory Review Act, IRRC met on November 3, 2005, and approved the final-form rulemaking.
I. Contact Person
Further information may be obtained by contacting Hilarene Staller, Board Administrator, State Board of Cosmetology, P. O. Box 2649, Harrisburg, PA 17105-2649, (717) 783-7130.
J. Findings
The Board finds that:
(1) Public notice of the proposed rulemaking was given under sections 201 and 202 of the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. §§ 1201 and 1202) and the regulations promulgated thereunder, 1 Pa. Code §§ 7.1 and 7.2.
(2) A public comment period was provided as required by law and all comments were considered.
(3) The amendment does not enlarge the purpose of the proposed rulemaking published at 35 Pa.B. 2400.
(4) The amendment is necessary and appropriate for administration and enforcement of the authorizing act identified in Part B of this preamble.
K. Order
The Board, acting under its authorizing statute, orders that:
(a) The regulations of the Board, 49 Pa. Code Chapter 7, are amended by amending § 7.2 to read as set forth at 35 Pa.B. 2400.
(b) The Board shall submit this order and 35 Pa.B. 2400 to the Office of General Counsel and to the Office of the Attorney General as required by law.
(c) The Board shall certify this order and 35 Pa.B. 2400 and deposit them with the Legislative Reference Bureau as required by law.
(d) This order shall take effect upon publication in the Pennsylvania Bulletin.
SUSAN E. RINEER,
Chairperson(Editor's Note: For the text of the order of the Independent Regulatory Review Commission, relating to this document, see 35 Pa.B. 6390 (November 19, 2005).)
Fiscal Note: Fiscal Note 16A-4512 remains valid for the final adoption of the subject regulation.
[Pa.B. Doc. No. 05-2199. Filed for public inspection December 2, 2005, 9:00 a.m.]
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