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Audit: 10 of Idaho's Occupational Licensing Boards In the Red

Sal Rodriguez
October 11, 2013, 9:00am

A September 12th audit has revealed that 10 of Idaho's 29 occupational licensing boards are operating at a combined deficit of $622,000. The boards, funded by various fees it imposes on 57,643 licensees, have also been found to engage in the unauthorized practice of shifting funds from financially stable boards to the underfunded boards to make up for the shortfall.

The audit of the Idaho Bureau of of Occupational Licenses (IBOL) covers management issues in IBOL. Finding "deficiencies in the general administrative procedures and accounting controls of the Bureau," the audit focused on the finances of the boards.

With ten boards operating at a deficit, including seven that have been running deficits for three consecutive years, the audit listed the cash balance of all 29 boards. The ten boards operating with negative cash balances as of June 30th, 2012, are:

The best funded board in Idaho is the Cosmetology Board, which forces aspiring cosmetologists to have 467 days of education and training, take two exams, and submit to various fees.The audit reports that the Cosmetology Board has a cash balance of $1.6 million.

The chief problem the audit raises is the ongoing method of dealing with underfunded boards.

"The boards with positive cash balances in the Occupational Licenses Account have been, in effect, 'lending funds' to cover the allocated portion of the Bureau’s services and other expenses incurred by the boards with negative cash balances," the audit reports, despite not being "given the legislative authority to spend their revenue beyond statutory bligations and normal operating expenses."

Unfortunately, the auditor presented several potential solutions that would place greater burden on licensees, job-seekers, and taxpayers. The report suggests "cutting costs or developing fee increases" if "a negative cash balance is expected to continue" following performance reviews. The audit also suggested that the IBOL work "with the Legislature to authorize a one-time fee assessment or requesting General Fund support."

A better idea would be to evaluate whether or not these boards even need to exist. Using the regulatory assumptions of Colorado's Department of Regulatory Agencies (DORA), that "regulation is justified only when the public is being harmed," could be an effective premise of reviewing the 29 agencies. Taken together with the idea that the benefits of government intervention are justified only when they outweigh the alternative (doing nothing), Idaho would likely find itself with far fewer occupational licensing boards, if any.

This is easier said than done, particularly considering the sorry state of regulatory review in Idaho. According to a 2010 report by the Institute for Policy Integrity, "several elements of Idaho’s regulatory review structure seem, at best, perfunctory. For example, rules are more or less automatically extended under sunset review, fiscal impact statements are sparse, and the fuller economic impact statements are rarely requested."

A 2012 study by the Institute for Justice found that Idaho licensed at least 47 low- to moderate-income occupations, including some occupations that fewer than half of other states license. Nursery workers, log scalers, travel guides, and farm labor contractors, for example, must get permission from at least one government entity before being allowed to work.

Exactly how the people of Idaho are better off with a Midwifery or Athlete Agents Registration Board is unclear, and it is even more troubling that not only are these boards underfunded, but may soon require taxpayers to cough up more money to shore up agencies of questionable value.

For more on Reason Foundation's work on occupational licensing, click here.



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