RULES AND REGULATIONS
Title 49—PROFESSIONAL AND VOCATIONAL STANDARDS
STATE BOARD OF FUNERAL DIRECTORS
[ 49 PA. CODE CH. 13 ]
Fees
[43 Pa.B. 7277]
[Saturday, December 14, 2013]The State Board of Funeral Directors (Board) amends § 13.12 (relating to fees).
Effective Date
This final-form rulemaking will be effective upon publication in the Pennsylvania Bulletin. It is anticipated that the increased biennial renewal fees will be implemented with the January 31, 2014, biennial renewal.
Statutory Authority
Section 18.1 of the Funeral Director Law (act) (63 P. S. § 479.18.1) requires the Board 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 expenditures over a 2-year period.
Background and Need for Amendment
Under section 18.1 of the act, the Board is required by law to support its operations from the revenue it generates from fees, fines and civil penalties. In addition, the act provides that the Board must increase fees if the revenue raised by fees, fines and civil penalties is not sufficient to meet expenditures over a 2-year period. The Board raises the majority of its revenue through biennial renewal fees. A small percentage of its revenue comes from other fees, fines and civil penalties. In 2006, facing rising deficits for the foreseeable future, the Board undertook a proposed rulemaking to implement a fee increase in an attempt to avoid continued deficits and restore the Board's fiscal integrity. At the time, it was anticipated that the increase would be implemented in time for the 2008 biennial renewal. See 37 Pa.B. 1868 (April 21, 2007). Unfortunately, due to circumstances beyond the Board's control, the final-form rulemaking was not published until January 24, 2009, at 39 Pa.B. 414, and was not implemented until the 2010 biennial renewal. This delay caused additional deficits to accrue. For that reason, the Board recognized that it might have to look into the possibility of another fee increase to address the lingering deficits.
At the December 7, 2011, Board meeting, representatives from the Department of State's Bureau of Finance and Operations (BFO) presented a summary of the Board's revenue and expenses for Fiscal Years (FY) 2009-2010 and 2010-2011, and projected revenue and expenses through FY 2014-2015. By the beginning of FY 2009-2010, the Board accrued a deficit of over $1 million. At the end of FY 2010-2011, in spite of the implementation of the fee increase, the BFO reported that the Board continued to run a deficit of $790,540.68. At the current fee levels, the Board receives revenue of approximately $2,152,000 over a 2-year period (consisting of a renewal year and a nonrenewal year). Budgeted expenditures for the next 2 fiscal years (FYs 2013-2014 and 2014-2015) are approximately $2,322,000. Therefore, the Board determined that it was necessary to raise fees to meet or exceed projected expenditures in compliance with section 18.1 of the act and to eliminate the existing deficit. At the time, the Board determined to wait until the close of FY 2011-2012 and review revenue and expenditure projections at that time. In June 2012, the BFO returned with revised estimates and recommended a $75 increase to the biennial renewal fees as sufficient to eliminate the existing deficit, provide for the current level of operations and return the Board to firm financial ground. As a result, the Board voted at its July 5, 2012, meeting to increase biennial renewal fees from $325 to $400.
Summary of Comments and the Board's Response
The Board published a proposed rulemaking at 43 Pa.B. 2044 (April 13, 2013) with a 30-day public comment period. Public comments were not received. On May 24, 2013, the House Professional Licensure Committee (HPLC) sent a request for information pertaining to the major cost centers of the Board and any significant increases in its expenditures. On June 12, 2013, the Independent Regulatory Review Commission (IRRC) sent a letter to the Board indicating that it would would review the Board's response to the HPLC's comment as part of IRRC's determination of whether this final-form rulemaking is in the public interest.
The three major cost centers of the Board are Board administration, the legal office, and enforcement and investigation. These three areas comprise 90% of the Board's budget. Board administration expenses are relatively stable, averaging approximately $146,000 each year since FY 2006-2007 (higher in renewal years and less in nonrenewal years). Enforcement and investigation is by far the largest cost center. These costs include those associated with routine inspections of funeral homes as well as investigations regarding complaints filed against licensed funeral directors and funeral entities. Enforcement and investigation has averaged approximately $480,000 each year since FY 2006-2007 (from a low of $425,065.23 to a high of $521,510.76). Legal office costs have fluctuated from a low of $120,882.07 in FY 2011-2012 to a high of $252,994.35 in FY 2007-2008, averaging about $173,500 in most years.
Enforcement and investigation and legal costs are all dependent upon the number of inspections conducted, the number of complaints filed, the number of those complaints that merit investigation, and the number of inspections and investigations that result in prosecutions. Costs also depend to a degree on the number of matters that are resolved through consent agreements and those that require hearings to be conducted. The complexity and seriousness of the matters also affect the costs. The Board averages approximately 200 new cases opened against its licensees each year. Each complaint is reviewed or investigated to determine if a violation of the act or regulations has occurred. The legal office then prosecutes those matters when a violation is alleged. The Board incurs hearing expenses for each matter actually prosecuted and the Board incurs additional legal costs defending any appeals. Ultimately, the number of complaints and disciplinary actions drive the bulk of the Board's costs and the Board does not have control over the number of complaints filed against its licensees or the number of disciplinary actions brought by the Commonwealth.
Because it has been 1 year since the Board last considered the fee increase, and to fully inform its deliberations regarding the final-form rulemaking, the Board asked the BFO for an updated financial picture. The Board again reviewed its financial condition at its meeting on August 7, 2013, and the situation has not changed dramatically. One notable change is that the renewable license count has increased slightly from 6,248 last year to 6,425 this year, which affects the amount of revenue that will be generated from the fee increase, however, this increase is not significant enough to impact the proposed increase at this time. Still, without the increase, the Board anticipates that its deficits will continue to mount. Additionally, the Board has been engaged in protracted litigation regarding the constitutionality of the act that has resulted at the trial level in a judgment (liability) in excess of $1 million. While the payment of the judgment has been stayed pending appeal, the liability must be considered in calculating the fee. According to the BFO, the new fee will allow the Board to recoup the remaining deficits, produce adequate revenue to pay the judgment if necessary and help the Board return to firm financial footing. For that reason, the Board voted at its August 7, 2013, meeting to promulgate the final-form rulemaking as proposed. Specifically, the biennial renewal fee for all classes of licensee will increase from $325 to $400, an increase of $75 each biennium.
Fiscal Impact
The final-form rulemaking increases the biennial renewal fees for licensees of the Board. There are currently approximately 6,425 licensees that will be required to pay more to renew their licenses when they expire in 2014 and every 2 years thereafter. The final-form rulemaking should not have other fiscal impact on the private sector, the general public or political subdivisions of this Commonwealth.
Paperwork Requirements
The final-form rulemaking will require the Board to alter some of its forms to reflect the new fees. However, the final-form rulemaking will not create additional paperwork for the regulated community or for the private sector.
Sunset Date
The act requires the Board to monitor its revenue and costs on a fiscal year and biennial basis. Therefore, a sunset date has not been assigned.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on April 2, 2013, the Board submitted a copy of the notice of proposed rulemaking, published at 43 Pa.B. 2044, to IRRC and the Chairpersons of the HPLC and the Senate Consumer Protection and Professional Licensure Committee (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 9, 2013, the final-form rulemaking was deemed approved by the HPLC and the SCP/PLC. Under section 5.1(e) of the Regulatory Review Act, IRRC met on November 7, 2013, and approved the final-form rulemaking.
Contact Person
Further information may be obtained by contacting Heidy Weirich, Board Administrator, State Board of Funeral Directors, P. O. Box 2649, Harrisburg, PA 17105-2649.
Findings
The Board finds that:
(1) Public notice of 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 no public comments were received.
(3) This final-form rulemaking is necessary and appropriate for administering and enforcing the authorizing act identified this preamble.
Order
The Board, acting under its authorizing statutes, orders that:
(a) The regulations of the Board, 49 Pa. Code Chapter 13, are amended by amending § 13.12 to read as set forth at 43 Pa.B. 2044.
(b) The Board shall submit this order and 43 Pa.B. 2044 to the Office of General Counsel and the Office of Attorney General as required by law.
(c) The Board shall certify this order and 43 Pa.B. 2044 and deposit them with the Legislative Reference Bureau as required by law.
(d) This order shall take effect upon publication in the Pennsylvania Bulletin.
DONALD J. MURPHY,
Chairperson(Editor's Note: For the text of the order of the Independent Regulatory Review Commission relating to this document, see 43 Pa.B. 6988 (November 23, 2013).)
Fiscal Note: Fiscal Note 16A-4822 remains valid for the final adoption of the subject regulation.
[Pa.B. Doc. No. 13-2314. Filed for public inspection December 13, 2013, 9:00 a.m.]
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