Committee advances bill forcing licensing boards to publicly review fees and cap fund balances

The Senate Committee on Regulatory Affairs and Government Efficiency on Jan. 21 advanced Senate Bill 1037, which would require licensing boards to hold an annual public review of fees and disclose board fund balances and would cap those balances at two years of operating expenses plus a 5 percent cushion.

Sponsor Senator John Kavanaugh, who presented the bill to the panel, said the measure “prevents the boards from purposely or inadvertently, overfilling their coffers at the expense of their members, and it provides a mechanism where when it gets overfilled, you know, they stop collecting until it gets restored to another area.” He added the change would protect licensees from unnecessary fees and would reduce the likelihood of future fund sweeps.

The committee adopted a chair amendment dated Jan. 21 that broadened the measure from health professional boards to apply to non-health professional and occupational licensing boards and removed a provision that would have allowed boards to retain additional money equal to their last operational funding request if the legislature did not approve that request in the state budget.

Ryan Sullivan, testifying for the Arizona Dental Association, supported the bill. He described the policy purpose and gave a numeric example to show how the cap would work: using a simplified board budget of $1,000,000, Sullivan said the allowable fund balance would be roughly $2,100,000 over two years plus a 5 percent cushion; any amount above that threshold would trigger a fee reduction or temporary fee holiday.

Committee members asked about fairness between current and future licensees and whether an automatic suspension of collections would create “free riders.” Senator Sandra Epstein asked whether fees should be scaled back rather than halted to preserve fairness for those who previously paid higher fees. Kavanaugh and Sullivan replied that the annual public review would prevent fees from drifting far out of line and that a steady, predictable fee reduction over time would be the goal rather than abrupt year-to-year swings.

After discussion, a committee member moved to adopt the Jan. 21 amendment and to return SB 1037 with a due-pass recommendation as amended. The amendment was adopted, and the bill passed the committee on a roll call of 7 ayes, 0 nos.

What the bill would do

- Require each covered licensing board to review, in a public meeting, the amount of each fee authorized in board statutes and to disclose the board’s fund balance. - Prohibit a board’s fund balance from exceeding two years of the board’s annual operating expense plus 5 percent. - Require fee reductions or fee suspensions until the fund balance is below the prescribed amount. - Remove authorization that would have permitted boards to maintain additional funds equal to a previously requested but unapproved operational funding request (this authorization was removed in the committee amendment).

Context and next steps

The Arizona Dental Association and other licensee groups testified in favor, saying the bill would limit fee volatility and reduce the need to raise fees after fund sweeps. The committee returned SB 1037 with a due-pass recommendation as amended; the bill will move to the full Senate for further consideration.