Fiscal Note & Local Impact Statement

126 th General Assembly of Ohio

Ohio Legislative Service Commission

77 South High Street, 9th Floor, Columbus, OH 43215-6136 Phone: (614) 466-3615

Internet Web Site: http://www.lsc.state.oh.us/

BILL:

Sub. H.B. 458

DATE:

May 23, 2006

STATUS:

As Enacted Effective October 12, 2006

SPONSOR:

Rep. Core

LOCAL IMPACT STATEMENT REQUIRED:

No

Minimal Cost

 


CONTENTS:

Revises the Veterinary Practice Law and creates the Veterinarian Loan Repayment Program

 

State Fiscal Highlights

 

STATE FUND

FY 2007

FY 2008

FUTURE YEARS

Occupational Licensing and Regulatory Fund (Fund 4K9) Veterinary Medical Licensing Board

Revenues

Gain of $10,000 to $15,000 from limited licenses; gain from veterinary business facility licenses; negligible loss from renewal surcharge

Loss of approximately $33,000 from renewal surcharge

Gain from limited and veterinary business facility licenses; loss from renewal surcharge

Expenditures

Increase of $500 to $1,000 for printing costs; increase corresponding to additional workload for loan program

Increase corresponding to additional workload for loan program

Increase corresponding to additional workload for loan program

Veterinarian Loan Repayment Fund (New Fund) Board of Regents

Revenues

Negligible gain from renewal surcharge

Gain of approximately $33,000 from renewal surcharge

Gain from renewal surcharge

Expenditures

Increase corresponding to loan repayments and program administration

Increase corresponding to loan repayments and program administration

Increase corresponding to loan repayments and program administration

Veterinary Resource Shortage Area Fund (New Fund) Veterinary Medical Licensing Board

Revenues

Potential gain from gifts

Potential gain from gifts

Potential gain from gifts

Expenditures

Increase corresponding to extent used for implementation and administration of loan program

Increase corresponding to extent used for implementation and administration of loan program

Increase corresponding to extent used for implementation and administration of loan program

Note: The state fiscal year is July 1 through June 30. For example, FY 2006 is July 1, 2005 June 30, 2006.

 

        Limited Licenses. This bill provides for the Veterinary Medical Licensing Board to issue limited licenses to practice veterinary medicine to individuals (not already licensed by the Board) whose sole professional capacity is with a veterinary academic institution or veterinary technology institution. This provision mainly applies to the Ohio State University Veterinary College and the Ohio Department of Agriculture and will likely result in a gain of approximately $10,000 to $15,000 per biennial renewal cycle to the Occupational Licensing and Regulatory Fund (Fund 4K9) contributed by the Veterinary Medical Licensing Board. The Board does not anticipate any increase in costs associated with issuing and renewing limited licenses, as the number would be very small compared to the total number of veterinary licenses the Board handles.

        Veterinarian Loan Repayment Program. This bill creates the veterinarian loan repayment program, to be jointly developed by the Board of Regents and the Veterinary Medical Licensing Board. To fund this repayment program, a $10 surcharge from each veterinary or limited license renewal fee is deposited to the Veterinarian Loan Repayment Fund (New Fund) in the Board of Regents, which would result in a gain to that fund of approximately $33,000 in even numbered years (when such licenses are renewed) and a negligible gain in odd-numbered years, the Board's "off years" in terms of license renewals. There would be a corresponding loss in revenue to the Occupational Licensing and Regulatory Fund (Fund 4K9) as a result of the surcharge.

        New Operating Costs. This program would also impose additional personnel costs for the Veterinary Medical Licensing Board related to administering the Veterinarian Loan Repayment Program, such as approving applicants, engaging in negotiations with applicants regarding service area, and preparing the report to the Governor and General Assembly. The Board of Regents may also experience increased costs (paid out of the Veterinarian Loan Repayment Fund) related to the administration and implementation of the program.

        Printing Costs. This bill will require the Veterinary Medical Licensing Board to print new copies of the Veterinary Practice Act to veterinary schools and students. The Board produces these copies in-house and estimates that they will cost approximately $500 to $1,000 to print.

 

Local Fiscal Highlights

 

LOCAL GOVERNMENT

FY 2006

FY 2007

FUTURE YEARS

Counties and Municipalities

Revenues

Potential gain from filing fees and fine revenue

Potential gain from filing fees and fine revenue

Potential gain from filing fees and fine revenue

Expenditures

Potential negligible increase in court costs

Potential negligible increase in court costs

Potential negligible increase in court costs

Note: For most local governments, the fiscal year is the calendar year. The school district fiscal year is July 1 through June 30.

 

        Unlicensed Veterinary Business Facilities. The bill provides for the Board to seek the issuance of an injunction, by the appropriate court, that would require the closure of an unlicensed veterinary business facility until an application for licensure is filed. Additionally, the bill provides for a penalty of up to $2,000 for unlicensed veterinary business facilities, which would likely be deposited into the appropriate county's general fund. It is uncertain how often veterinary business facilities would remain unlicensed, but it is assumed it will be rare. If that were true, then it is likely that any additional cost to the courts involved would be negligible (or absorbed within existing resources) and may be offset by filing fees.

 

 


 

 

Detailed Fiscal Analysis

Revised Definitions

 

This bill includes several changes to the definition of "practice of veterinary medicine" to remove from the definition the requirement that the veterinarian receive compensation for their services. In removing this requirement, veterinarians who would refuse to be paid in order to avoid the potential of lawsuits for malpractice under current law would still be liable for the services rendered. The bill would also add to the definition of "practice of veterinary medicine" the rendering of professional advice or recommendation by any means, including telephonic or other electronic communication. Various other definitions and terms are also modified to reflect the current state of the practice. The Veterinary Medical Licensing Board, the state agency responsible for regulating the practice of veterinary medicine and licensing veterinarians and registered veterinary technicians, noted that the bill would not have an appreciable effect on the number of licenses issued by the Board. The Board licensed 3,660 veterinarians and registered 1,611 veterinary technicians in FY 2005.

 

New Licenses

 

Limited License

 

Current law exempts faculty members of colleges of veterinary medicine accredited by the American Veterinary Medical Association from having to be licensed by the Board, provided that the individual is a veterinarian and only is practicing in conjunction with teaching duties at the school or college or in its main teaching hospital. This bill eliminates this provision and requires the issuance of limited licenses to practice veterinary medicine to an individual whose sole professional capacity is with a veterinary academic institution or veterinary technology institution that does not already have a valid license. A person holding a limited license is authorized to engage in the practice of veterinary medicine only to the extent necessary to fulfill the person's employment or educational obligations as an instructor, researcher, diagnostician, intern, or resident in a veterinary, specialty, or graduate student. The initial fee for a limited license for interns, residents in a veterinary specialty, or graduate student is $35 and the fee for instructors, researchers, and diagnosticians is $155. The biennial renewal fee for the limited license is as follows: $155 for applications postmarked no later than July 1, $225 for applications postmarked after July 1 but no later than August 1, and $450 for applications postmarked after August 1.

 

The Veterinary Medical Licensing Board stated that this provision applies mostly to the Ohio State University Veterinary College and the Ohio Department of Agriculture. It is the Board's understanding that all of the veterinarians at the Department of Agriculture are currently licensed. According to the OSU Veterinary College, of the approximately 100 faculty members, only a small portion have obtained licenses from the Ohio Veterinary Medical Licensing Board and would not be required to obtain the limited license. Faculty members that have already obtained a license usually practice veterinary medicine on breaks and sabbaticals and consult. This provision is likely to result in a revenue gain to the Occupational Licensing and Regulatory Fund (Fund 4K9), where license revenue received by the Veterinary Medical Licensing Board is deposited.

While the exact amount of the initial gain would depend on how many faculty members and students would require the license, it is likely to be approximately $10,000 to $15,000, if all receive an initial license in FY 2007. For comparison to the Board's biennial revenue, the Board received $633,755 in FY 2004 and $183,810 in FY 2005 (the Board's "off-year" in license renewals) for a FY 2004-2005 total of $817,565. The Board's budget for FY 2006 is $353,691, which includes $60,000 for the veterinary student loan repayment program created in the most recent main operating appropriations act. The Board does not anticipate any increased costs associated with issuing and renewing limited licenses, as the number would be very small compared to the total number of veterinary licenses the Board handles. The revenue gain in future biennial renewal cycles from limited license renewals is likely to be approximately $10,000 to $15,000, assuming most licensees would renew by July 1.

 

Provisional Veterinary Graduate License

 

This bill provides the authority for the Veterinary Medical Licensing Board to issue a provisional veterinary graduate license to individuals that have graduated from an approved veterinary college and are waiting to take an examination required for licensure. This license is good for six months following the date of issuance and is not renewable. Holders of these licenses may only assist in medical treatments, diagnosis, and surgery under the direct supervision of a licensed veterinarian and cannot be represented as being a licensed veterinarian. The fee for this license is $100. This license would extend the time a person may be considered a student if, for example, the student fails the licensure exam and cannot begin practicing veterinary medicine with a normal license. As such, this license likely will be issued in unique or unusual circumstances and would result in only a negligible gain in revenue to the Occupational Licensing and Regulatory Fund (Fund 4K9).

 

Veterinary Business Facility Licenses

 

Current law requires that when a partnership or corporation carries on the practice of veterinary medicine, all partners or shareholders of the corporation must be either licensed or the holders of temporary permits issued by the Veterinary Medical Licensing Board. Additionally, whenever a nonprofit corporation carries on the practice of veterinary medicine, a majority of the members of the trustees must be either licensed or the holders of temporary permits issued by the Board. The bill repeals this section.

 

In its place, this bill would define a "veterinary business facility" as a for-profit entity of which a majority controlling interest is vested in individuals who are not licensed veterinarians or nonprofit entity of which a majority of the members of the board of directors are not licensed veterinarians. The bill would require the licensure of these facilities. It is uncertain how many facilities will be granted the license, as there should not be any of these facilities currently operating since they are prohibited.

 

The application and renewal fees are both $300. Licenses are to be renewed biennially in odd-numbered years. This provision is likely to generate revenue to the Occupational Licensing and Regulatory Fund (Fund 4K9) in an amount that would correspond to the number of licenses issued by the Board.

The bill provides for the Board to seek the issuance of an injunction, by the appropriate court, that would require the closure of an unlicensed veterinary business facility until an application for licensure is filed. Additionally, the bill includes a penalty of up to $2,000 for unlicensed veterinary business facilities. It appears that the penalty for operating an unlicensed veterinary business facility is consistent with an "unclassified offense," which would operate as a misdemeanor since there is no incarceration associated with the penalty. County and municipal courts would have jurisdiction in adjudicating such violations. In these cases, the applicable courts collect the fine revenue and forward it to the general fund of the county in which the court is located. It is uncertain how often veterinary business facilities would remain unlicensed, but it is assumed it will be rare. If that were true, then it is likely that any additional cost to the courts involved would be negligible (or absorbed within existing resources) and may be offset by filing fees. Counties may experience a minimal gain in revenue from the fine the bill imposes.

 

Other Permit and License Changes

 

This bill removes a situation in which a temporary permit may be issued for applicants for admission to an examination. These temporary permits were granted to persons (typically students) taking the examination but not having passed it. Under this situation, a person could fail the examination and still be permitted to practice as if he or she had a full license. The requirements for the temporary license are that the person attend an accredited school and are going to take the licensure examination. The Board has typically issued only three to six of these temporary permits per year. The fee for a temporary permit is $100. Removing this type of temporary permit will result in a negligible loss in revenue to the Occupational Licensing and Regulatory Fund (Fund 4K9) contributed by the Veterinary Medical Licensing Board.

 

This bill creates a fee of $75 that a license applicant must pay to the Board for the reinstatement of a license issued under the Veterinary Practice Law that has lapsed more than one year. Instances where an applicant applies for reinstatement after a license has lapsed for more than a year occur infrequently, thus this provision would likely result in a negligible amount of additional revenue received by the Board and deposited into Fund 4K9. The bill eliminates current law specifying that the Board, subject to the approval of the Controlling Board, may establish fees in excess of the amounts provided in statute in the Veterinary Practice Law, provided that the fees do not exceed the amounts permitted by statute by more than 50%. The bill also extends a waiver of the registration fee during the time period when a licensed veterinarian is on active military duty to registered veterinary technicians.

 

Veterinarian Loan Repayment Program

 

Program Description

 

This bill creates the veterinarian loan repayment program for veterinarians that provide large animal veterinary services or to provide veterinary services necessary to implement or enforce the law or to protect public health in a veterinary resource shortage area. Under the program, the Ohio Board of Regents, by means of a contract entered into with a veterinarian who has signed a letter of intent for participation in the loan repayment program and the Veterinary Medical Licensing Board, may agree to repay all or part of the principal and interest (not to exceed $20,000 in any year) of a government or other educational loan taken out by a veterinarian for expenses incurred while the veterinarian was enrolled in an approved or accredited veterinary college in the United States. Allowable expenses include tuition, fees, books, and room and board.

The bill states that if the Veterinarian Loan Repayment Fund (New Fund) contains sufficient money, the Veterinary Medical Licensing Board must approve an applicant for participation in the program if the applicant is eligible for participation in the program and the applicant's services are needed in a veterinary resource shortage area. As of this writing, it is uncertain how many veterinarians would qualify to participate in the program.

 

If the veterinarian fails to meet the service obligation, the veterinarian must pay damages to the Board of Regents in an amount corresponding to when the failure occurs. If the failure occurs in the first two years of the obligation, the veterinarian would owe two times the total amount the Board has agreed to pay. If the failure occurs after the first two years of the obligation, the veterinarian would owe two times the total amount the Board is still obligated to repay. These damages are to be deposited into the Veterinarian Loan Repayment Fund.

 

Program Funding

 

In order to fund the loan repayment program, the bill requires that the Veterinary Medical Licensing Board must deposit $10 of each veterinary license or limited license biennial renewal fee that it collects into the Veterinarian Loan Repayment Fund (New Fund). In FY 2004, the Board received approximately 3,300 veterinary license renewals. Allocating $10 of the $155 renewal fee would result in a gain of approximately $33,000 to the Veterinarian Loan Repayment Fund in even-numbered years, which is when the vast majority of the Board's veterinary license renewals are processed.[1] Any additional revenue allocated from limited license renewals to the loan repayment program will be marginal.

 

In addition to the Veterinarian Loan Repayment Fund, which would be used by the Board of Regents to implement and administer the loan repayment program, the bill creates the Veterinary Resource Shortage Area Fund. Any gifts of money from any source may be received by the fund and used by the Veterinary Medical Licensing Board for the implementation and administration of a repayment program. The loan repayment program will likely operate in a manner similar to those loan repayment programs for physicians and dentists.

Am. Sub. H.B. 66, the main operating appropriations act of the 126th General Assembly, included language in temporary law that created the Veterinary Student Loan Program Fund (Fund 5BU) under the auspices of the Veterinary Medical Licensing Board for veterinary students focusing on large animal populations, public health, or regulatory veterinary medicine. Am. Sub. H.B. 66 also included language that authorized the transfer of $60,000 from the Occupational Licensing and Regulatory Fund (Fund 4K9) to the Veterinary Student Loan Program Fund (Fund 5BU). As of this writing, according to the Central Accounting System (CAS), this transfer has not yet occurred.

 


Report to Governor and General Assembly

 

The bill requires the Veterinary Medical Licensing Board to submit an annual report by March 1st to the Governor and the General Assembly describing the operations of the veterinarian loan repayment program during the previous calendar year. The report is to include various information on veterinary resource shortage areas and loan repayment program statistics. The cost to produce the report is uncertain, but it is likely that the report will impose only a minimal additional cost to the Board.

 

Impact on Board Operations

 

As a consequence of allocating $10 of each veterinary or limited license renewal to the loan repayment program, there will be a corresponding loss in revenue to the Occupational Licensing and Regulatory Fund (Fund 4K9). The Board reports that in the immediate future, it will be able to operate effectively even though there would be loss in revenue that supports the Board's operating expenses. However, it is possible that the allocation will affect the Board in the future, resulting in a request for a fee increase sooner than the Board had planned.

 

Furthermore, operating the loan repayment program may impose additional personnel costs to the Board to handle the workload for the program. The Board anticipates at least adding hours for the part-time clerk position. However, depending on the additional work that the program creates, it may be necessary to make the part-time position full-time and upgrade it to a new classification if the new work is outside of the description for the clerk.

 

Rule Adoption and Printing Costs

 

The bill notes several instances where the Veterinary Medical Licensing Board is to adopt rules, such as those relating to examinations, limited license issuance, veterinary facilities, and the veterinary loan repayment program. The Board has a standing rules committee that would develop the new rules, which would follow the normal Joint Committee on Agency Rule Review procedures. Therefore, the adoption of these rules would not pose a significant cost to the Board. The Board also would be responsible for reprinting copies of the Veterinary Practice Act that are included with each license application and distributed to veterinary schools for students or use as teaching tools. The printing of these copies is performed by Board staff and estimated to cost between $500 and $1,000.

 

Other Changes

 

The bill renames the "Executive Secretary" of the Board to the "Executive Director" of the Board throughout the bill. It does not appear as if this change in title will result in a change in compensation for this position. The bill also makes changes to the language regarding examinations for license applicants. Current law requires that the Board hold at least one examination during each calendar year for license applicants. The bill would change this language to require the Board to accept and review applications for admission to an exam in accordance with section 4741.09 of the Revised Code, which sets out the qualification and application requirements for admission to examinations for licensure. The language will not result in a change in the amount of times examinations are offered as the North American Veterinary License Examination (NAVLE) is a national examination given on the same dates in every state, and thus no new cost is anticipated.

 

Civil Penalties

 

This bill modifies the civil penalty that may be used to sanction violators of various sections of Revised Code section 4741. Specifically, the bill increases the minimum civil penalty upon the holder of a license, permit, or registration from at least $50 to at least $100. The bill retains the maximum penalty of $1,000. It also gives the Board greater flexibility in issuing civil penalties by eliminating specific penalties for first offenses and subsequent offenses. Consequently, the bill would allow the Board to issue a civil penalty to violators from $100 to $1,000 irrespective of the number of offenses a violator has committed. The bill also instructs the Board to adopt rules that establish grounds for, among other things, the imposition of civil penalties of up to $10,000 on a person who owns, operates, or controls a veterinary business facility, presumably for violations of the statutes governing such facilities.

 

It is uncertain what effect these changes will have upon the fine revenue contributed to the Occupational Licensing and Regulatory Fund (Fund 4K9) by the Veterinary Medical Licensing Board due to the greater flexibility the bill offers in the allotment of penalties and the fact that the particular penalty opted for depends on the circumstances of each case. The Board noted that first time offenders of minor infractions would typically receive the minimum penalty while higher penalty amounts would be reserved for repeat offenders or first time offenders of egregious violations (for example, taking on a case that the veterinarian was not qualified to handle that had dire results). In FY 2005, the Board collected approximately $33,100 in civil penalties. In addition to the changes to the civil penalties available, the bill makes various changes to the grounds for disciplinary action.

 

 

LSC fiscal staff: Jason Phillips, Budget Analyst

 

HB0458EN/arc



[1] In FY 2005, the Board processed 38 veterinary license renewals.