PROPOSED RULEMAKING
STATE BOARD OF COSMETOLOGY
[49 PA. CODE CH. 7]
Biennial Renewal Fee Increase
[35 Pa.B. 2400] The State Board of Cosmetology (Board) proposes to amend § 7.2 (relating to fees) to read as set forth in Annex A. The proposed rulemaking would increase the biennial license renewal fee for all classes of licenses issued by the Board.
Effective Date
The proposed rulemaking will be effective upon final-form publication in the Pennsylvania Bulletin. The new fees will take effect for the biennial period beginning February 1, 2006.
Statutory Authority
The proposed rulemaking is authorized under section 16 of the act of May 3, 1933 (P. L. 242, No. 86) (Act 86) (63 P. S. § 522). It 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.
Background and Need for Amendment
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 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 Years (FY) 2001-2002 through 2003-2004 and projected revenue and expenses for FYs 2004-2005 through 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 Act 86.
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 FYs, 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 FY. 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 FY 1999-2000. Finally, the Board closed more cases in FY 2003-20004 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 proposed 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.
Description of Proposed Amendments
Based upon the previous expense and revenue estimates provided to the Board, the Board proposes to amend 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 proposed rulemaking also deletes a reference in § 7.2 to a cosmetology manager's license, based on the amendments to Act 86 made by the section 3 of the act of June 29, 2002 (P. L. 645, No. 98) (63 P. S. § 510.4), which removed the requirement that a cosmetology shop owner employ a licensed manager if the owner does not manage his own shop.
Fiscal Impact
The proposed rulemaking will increase the biennial renewal fee for all classes of Board licensees. The proposed rulemaking should have no other fiscal impact on the private sector, the general public or political subdivisions.
Paperwork Requirements
The proposed rulemaking will require the Board to alter some of its forms to reflect the new biennial renewal fees. However, the proposed rulemaking should not create additional paperwork for the private sector.
Sunset Date
Act 86 requires that the Board monitor its revenue and expenses on an FY and biennial basis. Therefore, no sunset date has been assigned.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on April 13, 2005, the Board submitted a copy of this proposed rulemaking and a copy of a Regulatory Analysis Form to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the Senate Consumer Protection and Professional Licensure Committee and the House Professional Licensure Committee. A copy of this material is available to the public upon request.
Under section 5(g) of the Regulatory Review Act, IRRC may convey any comments, recommendations or objections to the proposed rulemaking within 30 days of the close of the public comment period. The comments, recommendations or objections must specify the regulatory review criteria which have not been met. The Regulatory Review Act specifies detailed procedures for review, prior to final publication of the rulemaking, by the Board, the General Assembly and the Governor of comments, recommendations or objections raised.
Public Comment
Interested persons are invited to submit written comments, suggestions or objections regarding this proposed rulemaking to Linda Dinger, Administrator, State Board of Cosmetology, P. O. Box 2649, Harrisburg, PA 17105-2649 within 30 days following publication of this proposed rulemaking in the Pennsylvania Bulletin.
SUSAN E. RINEER,
ChairpersonFiscal Note: 16A-4512. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 49. PROFESSIONAL AND VOCATIONAL STANDARDS
PART I. DEPARTMENT OF STATE
Subpart A. PROFESSIONAL AND OCCUPATIONAL AFFAIRS
CHAPTER 7. STATE BOARD OF COSMETOLOGY
GENERAL PROVISIONS § 7.2. Fees.
Fees charged by the Board are as follows:
* * * * * Biennial renewal of manicurist's license$[21] 35
Biennial renewal of cosmetician's license$[21] 35
Biennial renewal of cosmetologist's license$[23] 35
Biennial renewal of [cosmetology shop manager's or] cosmetology teacher's license$[36] 55
Biennial renewal of cosmetology shop's license$[41] 60
Biennial renewal of cosmetician or manicurist shop's license$[25] 60
Biennial renewal of cosmetology school's license$[66] 150
* * * * *
[Pa.B. Doc. No. 05-765. Filed for public inspection April 22, 2005, 9:00 a.m.]
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