Regulatory fee increases raise veterinarians' hackles

California board readies to impose stiff price increases

October 29, 2009 (published)
By Jennifer Fiala

The California Veterinary Medical Board (CVMB) is fielding resistance to its plan to raise fees for professional licenses and other registrations — some by as much as 100 percent — and in response, has rolled back a hike in premise permits by $25.

The move offers relief to the state’s 3,000 practice owners, yet it’s caused some veterinarians to raise their eyebrows. The discount is not much of a compromise, critics say, considering the state’s economy is in shambles and many California practices are hurting. According to CVMB’s proposal, annual fees for registration of a veterinary premise will double to total $200, despite the $25 deduction. The planned increase is one of more than a dozen augmented fees designed to stave off the board’s projected budget deficit, with $75 increases recommended for veterinary licenses and technician registrations ($325 and $175, proposed respectively) and a $50 hike in fees for state board examinations ($200 proposed).

The upshot: inflated costs of doing business for the state’s 10,000 licensed DVMs, some who question why CVMB needs to raise an additional $919,363 in annual net revenue on the backs of veterinarians and technicians. If CVMB’s plan gets greenlighted by state bureaucrats, the new fee structure likely would not take effect until fall 2010. The additional revenues, projected to raise annual earnings to almost $3 million, are intended to beef up the board’s ever-dwindling contingency fund, which California law states must contain three months to 10 months worth of operating expenses.

Those details do little to lessen the blow to veterinarians, who counter that now is a bad time to impose what amounts to an additional tax on the profession. Some see the increases as an insult considering California’s licensing and registration fees already rank among the highest in the nation.

In response to CVMB’s proposal, the California Veterinary Medical Association (CVMA) authored a letter to the board dated Oct. 7, asking officials to throttle back on the new fee structure. Others like Dr. Jon Klingborg, of Merced, Calif., accept the rising costs but wants something in return, such as a crackdown on unlicensed practice.

“I think that in the current economy we’re all expecting to pay higher fees for service, but the key is service,” says Klingborg, a small-animal practitioner. “While we understand the board is protecting the consumers from malpractice, it’s not just something veterinarians do but that lay people do as well. We have yet to see an aggressive or effective pursuit of what we would call unlicensed activity. Let’s see more get done, and that means protecting the animals, ultimately.”

Such strong opinions from DVMs in the nation’s most populous state might not have much of an impact considering new evidence that CVMB’s fiscal problems, however painful to veterinarians, appear small compared to the chronic financial woes that California’s government faces.

Statewide, officials predict a budget deficit of $7.4 billion for 2010-2011, with tax revenue shortfalls forecasted to exceed $1 billion. Such turbulence could cast a shadow on efforts to ease burdens for any profession that generates returns for the state, including veterinary medicine, with analysts expecting every agency that relies on or accumulates state revenue to feel the economic pressure.

California is not alone, with the Center on Budget and Policy Priorities reporting on Oct. 20 that despite deep spending cuts, gaps are already apparent in the 2010 budgets of at least 26 states — a product of the nation’s steepest decline in tax return receipts on record since the 1930s.

The center’s report gives no indication that relief will be soon underway: “States will continue to struggle to find the revenue needed to support critical public services for a number of years."

Many states are reporting budget crises — Arizona faces a $1.5-billion gap, a whopping 15.4 percent of its 2010 budget — and California appears to have company when it comes to allowing a state’s money problems to trickle down its veterinary profession. Effective this month, Connecticut’s license examination and renewal fees for veterinarians went from $450 to $565, per a new state budget. The increases came despite strong protest from the Connecticut Veterinary Medical Association and other professional organizations.

Jack Advent, executive director of the Ohio Veterinary Medical Association, recently orchestrated a successful push back against regulators’ plans to impose a 50-percent increase in fees for veterinarians in a state that charges $155 biennially for DVM licenses. He defeated it by using “basic math” to counter an imaginary deficit and convincing the Ohio Veterinary Medical Licensing Board to make do with the part-time investigators that it has.

“In this economy, this isn’t the time to be jumping fees through the roof,” he says. “This isn’t a business where you need profit margins. You just need enough to do the job at hand.”

California practice owner Klingborg feels the same way, but he also wants to make sure his colleagues are being treated fairly. He sits on the CVMB’s newly created multidisciplinary task force, charged with taking an in-depth look at the agency’s method of investigating complaints and disciplining veterinarians for infractions. Incidentally, the task force is one of the reasons why board officials contend that the agency needs more money — to pay for newly mandated programs.

In a notice to licensees, CVMB also blamed its need for fee increases on rising costs in attorney general fees, expert witness charges and examination development. State officials regularly dip into CVMB coffers for state employee raises and increased printing and postage costs, all of which puts a strain the board’s contingency fund and $1.4-million annual budget for expenditures. 

“The board is very aware of the current fiscal climate in California, and the current proposed fee increases are designed to be as conservative as possible while creating a solvent contingency fund to insure (sic) that the board has funds to carry out its consumer protection mandate,” a CVMB letter to licensees stated. Executive Director Sue Geranen adds that the process to change fees has long been in the works, starting with pressuring the Legislature to agree to raise the board’s fee caps, which had not been changed since 1992.

The need is real, Geranen says. “As of July 1, we’re into a deficit by the end of 2011.”

Hundreds of hours of work and more than a year later, CVMB received just a handful of responses to its notice of fee increases. The process requires approval by the state’s Office of Administrative Law and public notice 45 days before a public hearing. Comments are accepted during that window, and those who miss it can bring their concerns to the meeting.

It was during the last public hearing on the new price structure, held on Oct. 21, that CVMB voted to discount the premise fee by $25. The change requires another 15-day notice to the public and second hearing, which was not immediately scheduled.

If the changes are adopted, CVMB’s plan must go through the Department of Consumer Affairs’ Division of Legislative and Regulatory Review. Then it’s off to the Office of Administrative Law, which holds the plan up to its own set of criteria. Finally, approval is required by California Secretary of State Debra Bowen’s office.

“Right now it would be a crunch to get it into effect by July 1. I’m thinking it will more likely be September or October,” predicts Geranen.

CVMA, meanwhile, is continuing to poke holes in the board’s assertion that it needs so much additional income, especially when the monies are going to the contingency fund.

Why not, suggests CVMA President Dr. Mark Nunez, consider a fee increase at a level that will meet the minimum three-month reserve that the state requires?

“This goal could be accomplished with a combined annual revenue increase of approximately $780,000,” CVMA’s letter states. That’s roughly $200,000 less than the board’s original proposal to raise $990,488, the figure CVMB circulated before agreeing to decrease premise fees by $25.

Geranen counters that a smaller contingency fund just means that regulators will need to increase fees more regularly.

“The board does understand that in these economic times that if there was any other way we can do it, we would not increase the fees,” she says. “The board is, I think, pretty fiscally conscious and aware.”

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