Title of Regulation: 18VAC80-20. Hearing Aid Specialists Regulations (amending 18VAC80-20-70).

Statutory Authority: § 54.1-201 of the Code of Virginia.

Public Hearing Information: No public hearing is currently scheduled.

Public Comment Deadline: April 1, 2022.

Agency Contact: Stephen Kirschner, Executive Director, Board for Hearing Aid Specialists and Opticians, 9960 Mayland Drive, Suite 400, Richmond, VA 23233, telephone (804) 367-8590, FAX (866) 245-9693, or email hearingaidspec@dpor.virginia.gov.

Basis: Section 54.1-113 of the Code of Virginia requires regulatory boards to periodically review and adjust fees. Section 54.1-201.4 of the Code of Virginia provides the authority to regulatory boards to levy and collect fees. Section 54.1-304.3 of the Code of Virginia describes the authority of the Department of Professional and Occupational Regulation (DPOR) to collect and account for fees. Section 54.1-308 of the Code of Virginia requires costs to be paid by regulatory boards.

Purpose: The Board for Hearing Aid Specialists and Opticians must establish fees adequate to support the costs of board operations and a proportionate share of the department's operations. Current fees do not provide adequate revenue for those costs. DPOR is funded entirely from revenue collected for license applications, renewal, examination fees, and other licensing fees and receives no general fund money. DPOR is self-supporting and must collect adequate revenue to support its mandated and approved activities and operations. Fee revenue collected on behalf of the various boards funds the department's authorized special revenue appropriation. The board's primary mission is to protect the citizens of the Commonwealth by prescribing requirements for minimal competencies, by prescribing standards of conduct and practice, and by imposing penalties for not complying with the regulations.

Substance: The board reviewed the fees and based on projected revenues and expenses developed a fee schedule that meets the requirements of the applicable statutes while being the least burdensome to the regulant population. The following is the expected range of the proposed fee increases to be made in this regulatory action.

Range of Fees:

Issues: The advantages of this change to the public is that the board will continue to be financially solvent. The advantage for the agency is that the proposed fee adjustments will ensure that the board has sufficient revenues to fund its operating expenses, allowing the department to comply with § 54.1-113 of the Code of Virginia. There are no disadvantages to the public or the Commonwealth in raising the board's fees as proposed here.

Department of Planning and Budget's Economic Impact Analysis:

Summary of the Proposed Amendments to Regulation. The Board for Hearing Aid Specialists and Opticians (Board) proposes to increase the hearing aid specialist fees it levies for initial licensure, renewal, reinstatement, and temporary permits. All fees would be increased from their current levels (which range from $20 to $50) to $125. The Board proposes to increase its fees based on a current cash deficit, which is projected to keep growing unless fees are increased.

Background. The Department of Professional and Occupational Regulation (DPOR) is funded entirely from revenue collected by the regulatory boards it supports for license applications, renewal, examination fees, and other licensing fees. Hence, DPOR must collect adequate revenue to support its mandated activities and operations. Fee revenue collected on behalf of the various Boards funds the Department's authorized special revenue appropriation. The Board determines the fees it collects based on the adequacy of the fees to provide sufficient revenue for upcoming operating cycles; it has no other source of income.

Section 54.1-201 of the Code of Virginia requires that the boards within DPOR "levy and collect fees for certification or licensure and renewal that are sufficient to cover all expenses for the administration and operation of the regulatory board and a proportionate share of the expenses' of DPOR.¹ In addition, the Callahan Act (§ 54.1-113) requires that regulatory boards adjust their fees whenever the account shows that "expenses allocated to it for the past biennium to be more than 10% greater or less than moneys collected on behalf of the board" so that "the fees are sufficient but not excessive."²

The board has been working to increase fees since 2014. The board's fees were last adjusted effective February 1, 2017, (FY 2017) through a regulatory action that was submitted for amendment in FY 2014.³ However, this action did not increase the license fees, but rather removed certain fees from the regulation and replaced them with language requiring the fees to be set in accordance with the Code of Virginia §2.2-4300 (Virginia Procurement Act) and § 54.1- 201.4. Subsequently, DPOR was subject to a review by the Joint Legislative Audit and Review Commission (JLARC) in 2018. In its report, JLARC stated "DPOR should revise the fee change using more realistic expense projections." If, however, DPOR determines that the fee change is not needed in the near term, the fee change could be withdrawn."⁴

Specifically, the Board proposes the following fee increases:

Application Fee from $30 to $125 (317% increase)

Temporary Permit Fee from $30 to $125 (317% increase)

Renewal from $20 to $125 (525% increase)

Reinstatement from $50 to $125 (150% increase).

The other profession within the Board is Opticians, and the application and renewal fees for that profession are currently $100. With the effective date for new fees anticipated to be in FY2021, it will have been 18 years since fees for hearing aid specialists have been raised. This has allowed the Board to spend down an accumulated cash balance that it has retained. The Board reports that regulants have thus been anticipating a fee increase.⁵ Further, the license fee and temporary permit fee appear to have been $130 in December 2002, along with a renewal fee of $175 and a reinstatement fee of $350. Hence, although the increase seems sharp on a percentage basis, the amount is comparable the fees that prevailed before the Board lowered them to decrease its cash balances.⁶

The Board reported its Callahan Act percentage (i.e., the ratio of cash balances to expenditures at the end of a biennium) to be -0.29% for the biennium ending in 2020. Unless a fee increase is implemented in the interim, the Board projects that the Callahan Act percentage would fall as low as -14.6% at the end of the 2020-2022 biennium, and -29.7% at the end of the 2022-2024 biennium.⁷ Based upon these projections, it appears that the longer the Board postpones the fee increase, the higher the fee would have to be in order to close the deficit.

Estimated Benefits and Costs. The proposed fee increases would increase costs to currently licensed hearing aid specialists, and to temporary hearing aid specialist permit holders, who apply to renew their license once the increase became effective. The proposed fee increases would also affect future first-time applicants for licenses or permits, as well as those seeking to reinstate their license or permit after the fee increase became effective.

The Board estimates that biennial revenue would increase by approximately $100,600 once the fee increases go into effect.⁸ Thus, the proposed fee increases would benefit the Board by eliminating the current funding deficit as well as ensuring that it has adequate revenue to pay for ongoing operational expenses. Lastly, since the Board has been trying to increase the fees since 2014, regulants have had time to anticipate and prepare for future fee increases.

DPOR considered three alternatives to the fee increases and found them to be non-viable and potentially more costly. First, a reduction in services would result in delays in issuing licenses, which would impose costs to regulants by creating barriers to their ability to work, broadly decrease the effectiveness of the Board in protecting public health, safety and welfare, and potentially decrease its revenues. Second, DPOR could obtain a Treasury loan; however, this would be a short-term solution that would require higher fee increases in the future to repay the loan. Finally, supplementing Board revenue with general funds would shift the Board's costs to taxpayers at large, instead of regulants who more directly benefit from the activities of the Board. It would also impose significant delays and administrative costs since allocating general fund moneys to DPOR would require a change in the Code of Virginia and the Appropriations Act. Thus, although the proposed amendments increase costs to regulants, they impose a lower cost overall relative to these alternatives.

Businesses and Other Entities Affected. The Board had 814 licensed hearing aid specialists and 48 temporary hearing aid specialist permit holders as of October 1, 2020.⁹ The Board estimates that there are approximately 73 first-time hearing aid specialist applicants and 53 temporary permit holder applicants annually.

Small Businesses¹⁰ Affected. According to the Bureau of Labor Statistics, hearing aid specialists nationwide are most often employed by health and personal care stores, offices of other health practitioners, other ambulatory health care services, offices of physicians, and in general medical and surgical hospitals.¹¹ Thus, the proposed amendments could affect such establishments either (i) if they are businesses that are independently owned and operated by hearing aid specialists, or (ii) if they are small businesses that hire hearing aid specialists and cover the cost of maintaining their license. However, the number of such small businesses in Virginia is unknown.

Localities¹² Affected.¹³ The proposed amendments would not likely disproportionately affect any particular localities, nor introduce costs for local governments.

Projected Impact on Employment. The proposed amendments could discourage some individuals pursuing licensure as hearing aid specialists due to the higher license fees, to the extent that they perceive the increase in fees to be greater than the benefits of employment in this profession. However, it is unlikely to affect the overall employment of licensed hearing aid specialists since employers would not be directly affected by the increase in license fees.

Effects on the Use and Value of Private Property. The proposed amendments moderately increase costs for hearing aid specialists. To the extent that businesses that employ hearing aid specialists pay for these fees, the proposal could decrease the value of such firms by the amount of the fees or any ancillary costs. Real estate development costs would not be affected.

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¹See https://law.lis.virginia.gov/vacode/title54.1/chapter2/section54.1-201/

²See https://law.lis.virginia.gov/vacode/title54.1/chapter1/section54.1-113/.

³See https://townhall.virginia.gov/L/ViewStage.cfm?stageid=7560.

⁴See http://jlarc.virginia.gov/pdfs/reports/Rpt509.pdf.

⁵See page 3 of https://townhall.virginia.gov/l/GetFile.cfm?File=13\5274\9051\AgencyStatement_DPOR_9051_v1.pdf.

⁶See https://townhall.virginia.gov/l/GetFile.cfm?File=13\808\2177\Text_DPOR_2177_v2.pdf. Although the action did not affect fees, the final text shows the fees that were prevalent at the time. The fees were lowered through a separate exempt action: https://townhall.virginia.gov/l/ViewStage.cfm?stageid=2407.

⁷See Addendum 4 of the August 12, 2020 Board meeting minutes: https://townhall.virginia.gov/L/GetFile.cfm?File=Meeting\13\29204\Minutes_DPOR_29204_v1.pdf.

⁸See page 6 of the ABD: https://townhall.virginia.gov/l/GetFile.cfm?File=13\5274\9051\AgencyStatement_DPOR_9051_v1.pdf.

⁹See http://www.dpor.virginia.gov/uploadedFiles/MainSite/Content/Records_and_Documents/REG_POP(1).pdf.

¹⁰Pursuant to § 2.2-4007.04 of the Code of Virginia, small business is defined as "a business entity, including its affiliates, that (i) is independently owned and operated and (ii) employs fewer than 500 full-time employees or has gross annual sales of less than $6 million."

¹¹See https://www.bls.gov/oes/current/oes292092.htm.

¹²"Locality" can refer to either local governments or the locations in the Commonwealth where the activities relevant to the regulatory change are most likely to occur.

¹³§ 2.2-4007.04 defines "particularly affected" as bearing disproportionate material impact.

Agency's Response to Economic Impact Analysis: The agency concurs with the economic impact analysis performed by the Department of Planning and Budget.

Summary:

The proposed amendments adjust the board's licensing fee structure to comply with § 54.1-113 of the Code of Virginia.

18VAC80-20-70. Fees.

A. All fees are nonrefundable and shall not be prorated. The date of receipt by the board or its agent is the date which will be used to determine whether or not it is on time.

B. Application and examination fees must be submitted with the application for licensure.

C. In the event that a check, money draft, or similar instrument for payment of a fee required by statute or regulation is not honored by the bank or financial institution named, the applicant or regulant shall be required to remit fees sufficient to cover the original fee, plus the additional processing charge established by the department.

The following fees apply:

D. The written examination fee shall be established in compliance with the Virginia Public Procurement Act (§ 2.2-4300 et seq. of the Code of Virginia). The practical examination fee shall be established by the department that is sufficient to cover expenses for the administration of the examination in compliance with subdivision A 4 of § 54.1-201 of the Code of Virginia.