Situation
The Contractor’s State License Board (CSLB) is a Board within the Department of Consumer Affairs (DCA) that licenses and regulates contractors in the construction industry. The Board is funded through revenue from fees it levies on applicants for initial licensure and renewals of licenses. As a result of increasing expenditures outside the Contractors State License Board’s (CSLB) control, the Board’s fund condition was going to soon reach a negative balance if a fee increase was not pursued immediately.
Challenge
To set fees at levels commensurate with staff workload while ensuring the generated revenue covers the projected expenditures plus the targeted reserve.
Solution
CPS HR determined the specific amounts for the fees through a complex analysis of work staff performed related to each fee, licensing and enforcement statistics and revenue and expenditure statements – known as a fee study.
Results
The fee analysis CPS HR conducted provided justification for creating a new fee structure that contained higher fee amounts for larger business entities and established a new fee for a specific license maintenance function. The analysis demonstrated how the specific fee levels would result in the Board being able to hit a very precise financial fund balance amount required per regulation. The analysis resulted in an overall 25% recommended fee increase with an annual estimated additional revenue of approximately$18,000,000. CPS HR finalized the 59-page comprehensive report which included sections on workload statistics, revenue and expenditures, fee history and the funding gap analysis and presented the findings at the December 2020 Board meeting. The Board unanimously approved the recommendations and the proposed fee increase was subsequently approved by the legislature and the new fee amounts went into effect on 1/1/2022. As a supplement to the primary fee study, CPS HR also conducted an activity-based costing and process improvement analysis that identified the Board’s highest cost processes to prioritize which processes, if improved, would likely result in the highest cost savings.
“Working with CPS HR on the fee study was a great experience. Staff were professional and knowledgeable, the report was prepared on time, and the presentation to the Board was pivotal in establishing our new fees” – Tonya Corcoran, Contractors State License Board Chief Deputy Registrar.