To ensure the fund balance in the medical board's contingent fund does not continue to significantly exceed the level established in law, it should, in light of its future needs, consider refunding physicians' license fees or, if successful in gaining the flexibility to adjust its fees through an amendment to existing law, consider temporarily reducing them.
The Board's budget and expenditures are affected by the actions of the Administration and Legislature. In 11/12 and 12/13, the Board did not spend its full allocated budget due to vacancies, hiring freeze, Executive Orders, purchasing restrictions, personal leave program, not implementing BreEZe as anticipated, and under spending the AG's line item due to vacancies. This resulted in a reversion to the Board's fund. There is a significant amount of uncertainty projecting the Board's budget for 14/15. SB 304 (Lieu) transfers all Board investigators, medical consultants, and support staff with associated funding to DCA. The Board currently has a 7% vacancy rate and a projected 4% vacancy rate, resulting in less money in the reserve. In addition, BreEZe is functioning, so the funding allocated will be used on an ongoing basis. As projected in the Board's current fund condition, the reserve amount will be 4.1 months at the end of 13/14, 2.6 months at the end of 14/15, 0.9 month at the end of 15/16, and -0.9 month at the end of 16/17, which is under the mandated reserve of 2-4 months. The fund condition also shows $1.6 million in funding that will be allocated to the Department of Justice to support the CURES system, anticipated costs for a Northern California Operation Safe Medicine, projected costs of BreEZe, and anticipated costs of enforcement enhancements. The Board is projected to be at the required reserve amount at the end of this fiscal year and within the mandated amount in 14/15 and with the budget uncertainty with the transfer of investigators, a fee reduction is not appropriate at this time. The Board will continually monitor its reserve balance to determine if a refund or reduction in physician licensing fees is appropriate.
The Board has partially implemented the recommendation in that it obtained a legislative change through AB 501 to the Board's mandated fund reserve from two months operating expenditures to “not less than two nor more than four months' operating expenditures”. As explained in the plan below, it is not appropriate for the Board to reduce fees at this time, as the Board will be in the mandated reserve of two to four months by FY 11-12.
The medical board should seek a legislative amendment to Section 2435 of the Business and Professions Code to include language that allows it the flexibility to adjust physicians license fees when necessary to maintain its fund balance at or near the mandated level.
In January 2008 Assembly Bill 547 (AB 547) was amended to include language giving the medical board the flexibility to set initial licensing and renewal fees up to a maximum of $790. On September 23, 2008, AB 547 was enrolled; however, the governor vetoed this bill on September 26, 2008. The medical board indicated that it fully supports our recommendation and is considering pursuing legislation again in 2009. (2009-406, p. 75)
†Response Type refers to the interval in which the auditee is providing the State Auditor with their status in implementing recommendations made in an audit report. Auditees must submit a response regarding their progress in implementing recommendations from our reports at three intervals from the release of the report: 60 days, six months, and one year or subsequent to one year.
*Agency responses received after June 2013 are posted verbatim.