RULES AND REGULATIONS
Title 49—PROFESSIONAL AND VOCATIONAL STANDARDS
STATE BOARD OF BARBER EXAMINERS
[49 PA. CODE CH. 3]
Fees
[44 Pa.B. 2242]
[Saturday, April 12, 2014]The State Board of Barber Examiners (Board) amends § 3.103 (relating to fees) to read as set forth in Annex A. The final-form rulemaking increases the biennial license renewal fees for all licensees of the Board and adjusts certain application fees to cover the costs of processing those applications.
Effective Date
The final-form rulemaking will be effective upon publication in the Pennsylvania Bulletin. The new application fees will be implemented immediately upon publication of the final-form rulemaking. The new biennial renewal fees will take effect for the biennial renewal period beginning May 1, 2014.
Statutory Authority
Section 14(b) of the act of June 19, 1931 (P. L. 589, No. 202) (63 P. S. § 564(b)), known as the Barbers' License Law (act), 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 14 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 vast majority of its revenue through biennial renewal fees. A small percentage of its revenue comes from application fees and civil penalties.
The biennial renewal fees have not been increased since the final-form rulemaking published at 18 Pa.B. 2106 (May 7, 1988). Biennial renewal fees support the general operations of the Board. Licensees are charged the biennial renewal fees when they renew their licenses which expire on April 30 of even-numbered years. Application fees, on the other hand, are intended to offset the costs associated with the processing of the various applications and related inspections. The last time application fees were adjusted was in 2001. See 31 Pa.B. 1225 (March 3, 2001).
At the June 25, 2012, 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 Year (FY) 2009-2010 and FY 2010-2011 and projected revenue and expenses through FY 2014-2015. The BFO pointed out that as of June 2012, in spite of it being a renewal year, the Board incurred a deficit of $46,816.71. Projected revenues for FY 2012-2013, a nonrenewal year, were estimated at approximately $85,000. However, the Board's projected expenditures for the current fiscal year are in the area of $640,000, resulting in a projected deficit as of June 2013 of $601,816.71. The BFO projected that, without an increase to the biennial renewal fees, the Board will incur additional deficits totaling approximately $686,816.71 in FY 2013-2014 and $1,281,816.71 in FY 2014-2015. At that time, the BFO recommended that the Board consider increasing the biennial renewal fees by 205% to recoup the existing deficits and provide adequate revenues to meet the Board's operational needs. The Board voted to table the matter until the August 2012 meeting and asked the BFO to provide them with some options.
Thereafter, representatives from the BFO returned to the August 20, 2012, Board meeting. At that time, they presented the Board with various options. The Board selected an option that would raise biennial renewal fees by 200% which would eliminate all deficits by the end of FY 2017-2018 and provide a positive, albeit declining, balance in the Board's account through FY 2023-2024. The Board previously voted to adjust certain application fees to more appropriately reflect the current costs of processing the applications. These adjustments were also included in the proposed rulemaking.
Summary of Comments
The Board published the proposed rulemaking at 43 Pa.B. 1854 (April 6, 2013) with a 30-day public comment period. The Board did not receive comments from the public. On May 24, 2013, the Board received comments from the House Professional Licensure Committee (HPLC). On June 5, 2013, the Independent Regulatory Review Commission (IRRC) submitted comments to the Board.
The HPLC requested additional information pertaining to the major cost centers of the Board and explaining any significant increases in its expenditures. IRRC indicated that it would review the Board's response to the HPLC's comment as part of its determination of whether the rulemaking is in the public interest.
Response by the Board
In response, the Board first notes that it has been over 1 year since the BFO first met with the Board suggesting that a fee increase was necessary. Therefore, the Board asked the BFO to provide an updated analysis of the Board's fiscal situation based on current data. The BFO provided updated information to the Board which was discussed at the Board's regularly scheduled meeting on August 19, 2013. Two changes in the Board's current financial condition were noted at that meeting. First, the number of active licensees has increased since the proposed increase 1 year ago. Second, the Board has been able to reduce expenditures below the projections of 1 year ago so that the projected deficits have been reduced slightly. For example, when the Board approved the increase in August 2012, the BFO projected a negative fund balance at the end of FY 2012-2013 (a nonrenewal year) of approximately $601,816.71. However, the actual balance at the end of FY 2012-2013 came in at $546,230.78. The combination of the increase in renewable licenses and the small decrease in the existing deficit led the BFO to conclude that the proposed 200% increase could be lowered to a 160% increase and still be sufficient to recoup existing deficits, cover anticipated operational costs and allow the Board to return to firm financial ground.
As for the major cost centers of the Board, the largest cost center for the Board is ''enforcement and investigation'' which has averaged approximately $264,263 annually since FY 2006-2007. All costs incurred by the regulatory enforcement inspectors and professional conduct investigators associated with inspections of barber shops and schools and investigations of complaints involving barbers, barber shops and barber schools are included in this cost center. Enforcement and investigation costs account for over 40% of the Board's expenditures each year. Board administration costs and costs associated with the legal office combined account for another 35% of the Board's expenditures. Board administration costs include all costs associated with receiving and reviewing applications and issuing licenses. These costs have averaged $121,735 since FY 2006-2007. ''Legal office'' costs are those costs associated with the prosecution of disciplinary actions involving licensees of the Board and defending those actions on appeal. This cost center also includes the costs associated with the promulgating regulations pertaining to the practice of the profession. Legal office costs have averaged approximately $90,670 per year since FY 2006-2007. Finally, the costs associated with the Professional Compliance Office and hearing expenses average $41,937 and $25,797 per year, respectively. Together these five cost centers make up 90% of the Board's expenditures. The remaining 10% consists of costs associated with the Commissioner's office, revenue office, departmental services and Board member expenses.
The major driving force behind the fee increase is not significant increases in expenditures, but rather the fact that the Board has not raised fees since 1988. Historically, the Board enjoyed a healthy balance in its ''account'' and elected not to increase its fees because the Board preferred to reduce the significant surplus of available funds. When it became apparent that a fee increase was necessary in 2008, for reasons beyond the Board's control, it was not promulgated in time to go into effect for the 2010 renewal. In 2010, a renewed effort was made to promulgate a fee increase for the 2012 renewal. With the change in administration in 2011, the Board's efforts were refocused as the Board worked with the BFO to explore options to reduce expenditures to mitigate any necessary fee increase. As a result, projected expenditures have been reduced from a high of $675,812.92 in FY 2010-2011 to $573,770.82 in FY 2011-2012 and $550,000 (projected) in FY 2012-2013. However, because there was not a fee increase in 2010 or 2012, the Board began incurring deficits, which now amount to $546,230.76 as of the end of FY 2012-2013. Without a fee increase at this time, even with the decreases in expenditure, these deficits will continue to mount because the Board currently produces approximately $671,000 in biennial revenues at the current fee levels, while incurring biennial expenditures of approximate $1.151 million, a difference of $480,000.
Description of Amendments
Based upon the current expense and revenue estimates provided to the Board, the Board is amending § 3.103 to increase the biennial renewal fees for all classes of licensees. The biennial renewal fees will increase in 2014 by 160%: $42 to $109 for barbers; $62 to $161 for barber shop managers; $67 to $174 for barber teachers; $72 to $187 for barber shops; and $112 to $291 for barber schools. A change has not been made to the proposed application fees, as these fees were designed to cover the costs associated with processing each application. Therefore, the fee for initial licensure by reciprocity will increase from $20 to $55 and the application fee for initial licensure of a barber shop will increase from $55 to $110. Conversely, the fee for initial licensure of a barber school will be reduced from $280 to $140. There are two fees the Board charges when a barber shop proposes a change depending on whether the proposed change requires an inspection. The Board is increasing the fee when an inspection is required from $55 to $90 and when no inspection is required from $15 to $40. Similarly, the fee to reinspect a shop or school after a failed inspection is being increased from $40 to $90.
Fiscal Impact
The final-form rulemaking will increase the biennial renewal fees for licensees of the Board. There are currently approximately 9,731 licensees that will be required to pay more to renew their licenses when they expire on April 30, 2014. In addition, applicants for various licenses will incur greater costs associated with processing applications and conducting inspections. 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 March 25, 2013, the Board submitted a copy of the notice of proposed rulemaking, published at 43 Pa.B. 1854, 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 February 26, 2014, 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 February 27, 2014, and approved the final-form rulemaking.
Contact Person
Further information may be obtained by contacting Kelly Diller, Board Administrator, State Board of Barber Examiners, P.O. Box 2649, Harrisburg, PA 17105-2649, RA-BARBER@pa.gov.
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 comments were received.
(3) The amendments to the final-form rulemaking do not enlarge the purpose of the proposed rulemaking published at 43 Pa.B. 1854.
(4) This final-form rulemaking is necessary and appropriate for administering and enforcing the authorizing act identified in this preamble.
Order
The Board, acting under its authorizing statutes, orders that:
(a) The regulations of the Board, 49 Pa. Code Chapter 3, are amended by amending § 3.103 to read as set forth in Annex A.
(b) The Board shall submit this order and Annex A to the Office of General Counsel and the Office of Attorney General as required by law.
(c) The Board shall certify this order and Annex A and deposit them with the Legislative Reference Bureau as required by law.
(d) This order shall take effect on publication in the Pennsylvania Bulletin.
JOHN E. PAYNE, Jr.,
Chairperson(Editor's Note: For the text of the order of the Independent Regulatory Review Commission relating to this document, see 44 Pa.B. 1534 (March 15, 2014).)
Fiscal Note: Fiscal Note 16A-428 remains valid for the final adoption of the subject regulation.
Annex A
TITLE 49. PROFESSIONAL AND VOCATIONAL STANDARDS
PART I. DEPARTMENT OF STATE
Subpart A. PROFESSIONAL AND OCCUPATIONAL AFFAIRS
CHAPTER 3. STATE BOARD OF BARBER EXAMINERS
SCHOOLS OF BARBERING § 3.103. Fees.
The schedule of fees charged by the Board is as follows:
Licensure of barber, barber shop manager or barber teacher
$10Licensure of barber by reciprocity
$55Licensure of barber shop
$110Licensure of barber school
$140Biennial renewal of barber license
$109Biennial renewal of barber shop manager license
$161Biennial renewal of barber teacher license
$174Biennial renewal of barber shop license
$187Biennial renewal of barber school license
$291Change in barber shop—inspection required
$90Change in barber shop—no inspection required
$40Reinspection after first fail—new or change (shop or school)
$90Verify license/permit/registration
$15Certification of student status or student training
hours
$30
[Pa.B. Doc. No. 14-764. Filed for public inspection April 11, 2014, 9:00 a.m.]
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