Budget and Policy Post
February 25, 2016

The 2016-17 Budget

Department Of Consumer Affairs

The Department of Consumer Affairs (DCA) includes 40 boards, bureaus, commissions, and programs. Through these entities, DCA licenses approximately 3 million individuals in roughly 250 professional categories, such as doctors, acupuncturists, and cosmetologists. In addition, DCA licenses certain businesses, such as auto repair facilities. As part of its regulatory responsibilities, DCA also investigates complaints and disciplines violators of licensing requirements. In disciplining violators, the department coordinates with the Department of Justice (DOJ) and the Office of Administrative Hearings (OAH) within the Department of General Services. Additionally, DCA provides certain services to its boards and bureaus, including staff training, consumer education and outreach, and legal and audit services.

The Governor’s budget proposes $649 million from various funds for support of DCA in 2016-17, which is an increase of $10 million (1.6 percent) from the current-year estimated expenditures. The DCA is entirely supported by fees and other regulatory assessments.

Acupuncture Board—Curriculum Review and Licensing

LAO Bottom Line. We recommend the Legislature modify the Governor’s proposal to provide additional resources to implement Chapter 397 of 2014 (SB 1246, Lieu). First, we recommend approving $179,000 for two positions requested to address additional licensing workload but on a three-year limited-term rather than permanent basis, because the ongoing level workload associated with licensing activities is highly uncertain. Second, we recommend rejecting the remaining two positions ($173,000) requested for curriculum review of non-Board-approved schools and development of standards for curriculum for foreign training programs. We find that the department has not provided adequate workload justification for these positions. Third, consistent with the prior recommendations, we recommend rejecting $160,000 requested for additional office space since the amount of additional workload and staff needed on an ongoing basis is uncertain.


Overview of Acupuncture Board. The Acupuncture Board (Board) under DCA regulates the practice of acupuncture in California. As part of its regulatory activities, the Board approves acupuncture schools. The approval process includes activities such as reviewing a school's application, governance, curriculum, and policies, as well as conducting onsite visits. All other states rely on accreditation by a national accrediting body, the Accreditation Commission for Acupuncture and Oriental Medicine (ACAOM), to approve acupuncture schools. Generally, only those students who attend Board-approved schools are eligible to take the California’s acupuncture licensing examination. Students educated at non-Board-approved institutions must complete a Board-approved training program or receive special approval from the Board in order to have their education counted and take the exam. Currently, there are over 16,000 acupuncture licensees in California and 38 Board-approved acupuncture schools (22 located in California and 16 located in other states). There are also 28 schools that are ACAOM-accredited, but not Board-approved.)

Recently Enacted Changes Affecting Board. The Board was scheduled to sunset on January 1, 2015. However, in 2014 the Legislature enacted Chapter 397, which extended the Board’s sunset date to January 1, 2017. Chapter 397 also made various changes related to requirements for acupuncture schools in order to address issues identified during the Board’s 2014 sunset review. Specifically, starting in January 2017, the Board will (1) no longer have the authority to approve acupuncture schools (schools will instead be accredited by ACAOM), (2) be required to review acupuncture schools’ curricula to ensure that they meet California standards, and (3) be required to establish curriculum standards for foreign training programs.

Governor’s Proposal

The Governor’s budget includes four new positions and $512,000 in 2016-17 from the Acupuncture Fund to implement various provisions of Chapter 397. (The annual level of funding is proposed to decline to $373,000 starting in 2017-18.) Specifically, the proposal consists of the following: (1) two positions to address an anticipated increase in individual licensure applications, (2) one position to review and approve curricula of ACAOM-accredited schools that are not currently Board-approved, (3) one position to create curriculum standards for foreign training programs, and (4) one-time and ongoing costs associated with additional office space.

LAO Assessment

Below, we identify three concerns related to the workload justification provided by the administration for each of the proposed positions.

Unclear Level of Workload Associated With Additional Licensure Applications. The Board anticipates that the reliance on ACAOM accreditation rather than Board approval for schools will generate a two-to-three fold increase in applications for licensure because many students from the 28 schools that are ACAOM-accredited, but not Board-approved, will apply for the California exam. Accordingly, the Board requests two additional staff to address workload associated with processing these applications. We find that it is reasonable that some additional students may meet the state's requirement to have graduated from an ACAOM-accredited school rather than a Board-approved school. Additionally, to the extent that some additional students meet the state’s new requirements and are eligible for licensing, the Board could experience some increase in applications for licensure.

However, we find that the magnitude of this increase is highly uncertain. There is uncertainty regarding how many additional schools will meet the state’s curriculum requirements, and, therefore, it is unclear how many additional students will be eligible for licensing in California. It is further unclear how many of the additional students eligible for licensing in California actually will seek licensure here. Nearly all the schools that are ACAOM-accredited, but not Board-approved, are located out of state. Even if these schools are able to meet California’s curriculum requirements and their students become eligible for licensure, their students may not seek California licensure because they may not want to practice in the state.

Insufficient Justification for Position to Conduct Curriculum Review. The Board indicates that there will be additional workload associated with reviewing the curriculum for all 28 acupuncture schools that are accredited by ACAOM, but not currently approved by the Board. It is reasonable that there could be some additional workload associated with reviewing curriculum for some non-Board-approved schools. However, the Board’s workload analysis does not take into account what should be reduced workload associated with Chapter 397’s removal of the requirement that the Board approve schools. Specifically, other tasks related to school approvals that will no longer have to be performed by the Board include site visits and reviews of broader school policies and governance. Thus, the Board has not adequately justified the net workload associated with activities related to reviewing schools.

Insufficient Justification for Position to Establish Foreign Curriculum Standards. We find that the workload associated with establishing curriculum standards for foreign training programs is inadequately justified. Specifically, the Board’s workload analysis focused on activities that are not consistent with the changes to the Board’s responsibilities under Chapter 397—such as processing additional applications from foreign schools—rather than activities associated with establishing foreign curriculum standards as is required. Moreover, we find that it is unclear that the activities the Board will need to conduct to establish foreign curriculum standards will be significant. We note that the Board largely could rely on the existing curriculum standards for domestic schools for foreign schools, which would minimize workload.

LAO Recommendations

Provide Limited-Term Funding for Licensing Workload. We recommend that the Legislature modify the proposal to approve $179,000 for two positions to process additional licensees but only on a three-year basis due to the uncertainty regarding the actual amount of additional licensing workload that will materialize due to Chapter 397. After the changes have been implemented for a period of time, the Board should be able to provide the Legislature with additional workload information to justify its ongoing staffing need for this program.

Reject Position to Conduct Curriculum Review. We recommend the Legislature reject the proposed $114,000 for the position to conduct curriculum review because the department’s workload analysis did not take into account likely offsetting reductions in workload associated with no longer having to approve schools.

Reject Position to Establish Foreign Curriculum Standards. We recommend the Legislature reject the proposed $59,000 for the position to establish curriculum standards. The workload analysis provided by the Board is not consistent with the activities required under Chapter 397 related to establishing standards for foreign curriculum. Furthermore, the Board has not adequately justified the activities it will undertake to establish standards for foreign curriculum.

Reject Office Space. We further recommend rejecting the $160,000 request for additional office space. It is premature to modify the Board’s existing office space given that it is uncertain whether the implementation of Chapter 397 will generate any additional workload that will require additional staff on an ongoing basis.

Department of Justice Staffing

Governor’s Proposal. The Governor’s budget proposes to provide $1.4 million in ongoing funding to DCA to reimburse DOJ for additional staff it is requesting to reduce the processing time of DCA formal discipline cases against licensees. The budget also includes corresponding increased reimbursement authority for DOJ, which we discussed in our February 2016 report, The 2016-17 Budget: Governor’s Criminal Justice Proposals.

LAO Assessment and Recommendations. As described in that analysis, we have two primary concerns regarding the additional positions for DOJ. First, we find that the average days to adjudication would likely decline without additional positions. This is because in 2014-15 DOJ received fewer cases than it adjudicated—thereby allowing DOJ to begin to reduce the total number of unresolved cases. Additionally, in 2015-16 DOJ received nine deputy attorney general and six legal secretary positions, but the number of cases received has remained relatively constant. Assuming DOJ attorneys each handle the same number of cases, the additional positions provided in 2015-16 should allow DOJ to adjudicate even more cases, which would further reduce the total number of unresolved cases and average days to adjudication. Second, issues unrelated to staffing—such as delays scheduling hearings by OAH and difficulties by DCA to obtain information necessary to complete investigations—could be causing delays. Accordingly, the additional positions requested for DOJ in the Governor’s budget might not address key factors contributing to delays in the enforcement process. Thus, we recommend rejecting the proposed additional positions for DOJ. Consistent with that recommendation, we recommend the Legislature reject the proposed $1.4 million augmentation for DCA to reimburse DOJ to support the positions.