SB 0419 - Fiscal Note

Fiscal Note - SB 0419 - Licenses bail bondsman and surety recovery agents (bounty hunters)

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 1846-01

BILL NO. SB 419

SUBJECT: Crimes and Punishment: Licenses - Professional

TYPE: Original

DATE: February 23, 1998

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
Prof. Bail Bondsman Licensing Bd. Admin.	$236,800	$54,089	$140,164
PR Fees	($87,474)	$87,474	$0
Criminal Record System	$11,480	$11,480	$11,480
General Revenue	(Unknown, under $100,000)	(Unknown, under $100,000)	(Unknown, under $100,000)
Partial Estimated Net Effect on All State Funds**	$60,806 to $160,806	$53,043 to $153,043	$51,644 to $151,644

Does not include the 3% fee retention, plus interest, per bond.

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
None	$0	$0	$0
Total Estimated Net Effect on All Federal Funds	$0	$0	$0

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 2000	FY 2001	FY 2002
Local Government	$0	$0	$0

Numbers within parentheses: ( ) indicate costs or losses

This fiscal note contains 9 pages.

FISCAL ANALYSIS

ASSUMPTION

Officials from the Department of Economic Development (DED)-Professional Registration (DPR) assume the proposed legislation would result in the licensure of 729 Bail Bondsmen and 91 Bail Bond Companies, with a projected annual growth rate of 3% for each. The number of potential licensees was based on the number of Bail Bond Agents and General Bail Bond Agents licensed by the Department of Insurance. It is estimated there will be a total of 729 Surety Recovery Agents licensed on an annual basis, with a total number of individual licensees at 1,458 and the total number of companies licensed at 91.

It is assumed the Professional Bail Bondsman Licensing Board Administration Fund will reimburse PR Fees Fund for all expenses paid by PR Fees Fund.

The projected revenue reflects a $1,000 fee for bail bond companies (91 x $1,000) = $91,000), a $100 fee for bail bondsman and surety recovery agents ($1,458 x $100 = $145,800). NOTE: The fee for bail bondsman and bail bond companies is set by statute. DPR assumed it would be appropriate to make the fees for surety recovery agents consistent with the fees set by statute for bail bond agents.

The proposal also provides for a $25 examination fee and a $15 reexamination fee for bail bond agents. For purposes of this fiscal note, DPR is assuming these fees would be paid directly to a testing service.

To implement the legislation, DPR asserts the need for 1.75 additional FTE. These new

employees would include a .5 Principal Assistant (.5 FTE at $44,080 per year) to serve as the senior executive officer of the Board and be responsible for overseeing the licensure and regulation program, a .5 Licensure Technician II (.5 FTE at $21,948 per year) to provide technical support directly to the Principal Assistant and the Board and to be responsible for

ASSUMPTION (continued)

processing applications for licensure, as well as respond to any inquiries relating to the licensure law or rules and regulations, a . 5 Clerk IV (.5 FTE at $24,216 per year) to provide support for the Division's Technical Support Services and a .25 FTE Account Clerk II (.25 FTE at $21,108 per year) to provide support to the Division's Central Accounting Section.

In a similar previous proposal, DPR requested a different number of FTE. However, DPR has changed their methodology from prior years in determining FTE requests for new boards.

All expenses and personal services (except for the Bondsmen exam cost), would be split between the two funds in accordance with the number of licensees (47% for the PR Fees Fund to administer the Surety Recovery Agents Licensure Act and 53% for the Professional Bail Bondsman Licensing Board Administration Fund).

It is assumed the Board would meet four times per year for two days. Each of the seven members would be reimbursed for travel expenses (mileage, lodging and meals), for an annual total of $9,598 per year. It is assumed the Board would meet only two times in FY 00.

DPR has based postage and printing costs on the actual FY 98 usage for a board of similar size and type and has estimated costs in FY 00 to be $9,557, and $18,500 in subsequent years. Additional costs would be incurred the first year for statute and rule mailings to applicants and for the first year for start up printing of rules, letterhead and envelopes. Office and communication expenses and equipment are based on estimated existing costs within the Division.

Based on FY 98 complaints for an agency of similar size and type, DPR assumes there would be approximately 21 complaints filed with the Board each year. It is assumed the complaints and investigations would not start until FY 02. It is also estimated that 10% (2 investigations) of complaints filed would require field investigations. It is assumed that any professional expertise needed in an investigation would be handled by in-house staff and Board members. However, if there are substantially more complaints than estimated or additional legislation is passed or if it would be necessary to contract with outside professional experts, additional staffing, or expense and equipment would be needed. Total investigative travel expenses are estimated at $510 annually.

It is assumed that existing staff would design, program, and implement a computer licensure program. However, if costs are higher than anticipated, further monies would be required.

ASSUMPTION (continued)

It is assumed the Office of the Attorney General (AGO) would provide approximately 60 hours of assistance per year with rules, opinions and meetings. Based on an hourly cost of $58.04, the annual total would be $3,482. Also, it is estimated that 25% of the investigations (1 case) would

be forwarded to the AGO for further action. It is assumed there would not be any cases until FY 02. Based on a cost of $5,400 per case, the annual cost would be $5,400.

It is assumed a national examination would be utilized for examinations. However, if the Board elects to develop its own examination, the cost is estimated to be somewhere between $10,000 and $50,000.

This legislation would allow a 3% retention, plus interest, of the $10 fee that defendants would be required to pay per bond. These funds would be deposited in the Professional Bail Bondsman Licensing Board Administration Fund. DPR is unable to estimate how much revenue this provision would generate for the fund, but estimates it could be a substantial amount.

Officials from the Department of Insurance (INS) assume license fees collected in the licensing of bail bondsmen would no longer be collected and deposited into the Insurance Dedicated Fund. However, this reduction in revenue should be offset by the reduction in expenditures for the printing and mailing of application forms, printing and mailing of licenses and travel expenses from complaint investigations against bail bondsmen, resulting in a net fiscal impact of $0. License fees were established at $25 to cover expenditures. No additional personnel were awarded to INS when the licensing of bail bondsmen became effective in 1984. INS currently licenses approximately 800 Bail Bondsmen.

Officials from the Department of Public Safety-Missouri State Highway Patrol (MHP) assume the proposal would result in 1,600 criminal background checks per year (provided by information from the Bailiffs Association). However, the Criminal Records and Identification Division estimates the division could absorb this without new FTE. The Criminal Records and Identification Division assumes they would collect $14 per record check for an annual total revenue of $22,400 ($14 x 1,600). In a similar proposal last session, MHP estimated record checks for 820 individuals. Since the information obtained by DPR indicates the same individuals licensed as bail bond agents would also be licensed as surety recovery agents, it is reasonable to assume the number of record checks would approximate the number of current bail bond agents. Therefore, Oversight assumes the estimated 820 from the previous fiscal note response more accurately represents the number of record checks and has used revenue from 820 individuals of $11,480 (820 x $14) in the fiscal impact specifications below.

ASSUMPTION (continued)

Officials from the Office of the Secretary of State (SOS) assume the proposed legislation would require the printing of additional pages in the Missouri Register and the Code of State

Regulations and have estimated a one-time publishing cost of $5,061 for FY 00. The actual financial impact could be substantially more or less than this estimate, depending on the actual rule making activity of the board. The impact in future years would depend upon the frequency

and length of rules filed, amended or withdrawn. While this bill alone would not require SOS to acquire additional staff, SOS assumes the cumulative effect of additional Register and Code publishing duties may, in the aggregate, necessitate additional staff. However, Oversight assumes SOS could increase fees to cover any additional costs, per Section 536.033, RSMo and has not included such costs in the fiscal impact specifications below.

Officials from the Department of Revenue (DOR) assume they would need one Tax Processing Technician I (1 FTE at $20,184 per year) in the Tax Administration Bureau to work with the DPR in order to identify and register these companies, develop reporting forms, develop a personal computer program, receive quarterly reports, prepare necessary documents, prepare correspondence and follow up on non-filers. However, in a previous similar proposal, DOR assumed minimal fiscal impact. Oversight assumes DOR could absorb additional duties resulting from this proposal and has not included associated costs in the fiscal impact specifications below.

Officials from the Department of Corrections (DOC) stated that they could not predict the number of new commitments which could result from the creation of the offense(s) outlined in this proposal. An increase in commitments would depend on the utilization of prosecutors and the actual sentences imposed by the court. If additional persons were sentenced to the custody of the DOC due to the provisions of this legislation, the DOC would incur a corresponding increase in operational costs either through incarceration (average $35.00 per inmate, per day) or through supervision provided by the Board of Probation and Parole (average $3.50 per offender, per day). Supervision by the DOC through probation or incarceration would result in some additional costs, but DOC officials assume that the impact would be minimal.

The need for additional capital improvements or rental space is not anticipated at this time. It must be noted that the cumulative effect of various new legislation, if adopted, could result in the need for additional capital improvements funding if the total number of new offenders exceeds current planned capacity.

Since DOC did not quantify their anticipated impact, Oversight assumes costs of less than $100,000 annually.

ASSUMPTION (continued)

Officials from the Office of the Attorney General (AGO), Department of Labor and Industrial Relations (DOL), Office of the State Treasurer (STO), and the Office of State Courts Administrator (CTS) assume the proposed legislation would have either minimal or no fiscal impact on their agencies.

FISCAL IMPACT - State Government	FY 2000	FY 2001	FY 2002
	(10 Mo.)
PROFESSIONAL BAIL BONDSMAN
LICENSING BOARD ADMIN. FUND
Income-Division of Professional Registration (DPR)
License Fees/Renewals	$236,800	$244,200	$251,700
Income-Department of Revenue (DOR)
3% Fee Retention, Plus Interest per Bond	Unknown	Unknown	Unknown
Costs-DPR
Reimbursement to PR Fees Fund	$0	($190,111)	($111,536)
PARTIAL ESTIMATED NET EFFECT
TO PROFESSIONAL BAIL BONDSMAN
LICENSING BOARD ADMIN. FUND**	$236,800	$54,089	$140,164
**Does not include the 3% fee retention, plus interest, per bond.
PR FEES FUND
Income-Division of Professional Registration (DPR)
Reimbursement from Professional Bail Bondsman
Licensing Board Administration Fund	$0	$190,111	$111,536
FISCAL IMPACT - State Government	FY 2000	FY 2001	FY 2002
(continued)	(10 Mo.)
Costs-DPR
Personal Service (1.75 FTE)	($43,047)	($52,950)	($54,274)
Fringe Benefits	(13,155)	(16,182)	(16,586)
Expense and Equipment	(27,790)	(30,023)	(31,465)
Other Costs/AGO	(3,482)	(3,482)	(9,211)
Total Costs - DPR	($87,474)	($102,637)	($111,536)
ESTIMATED NET EFFECT TO
PR FEES FUND	($87,474)	$87,474	$0
CRIMINAL RECORD SYSTEM FUND
Income-Missouri State Highway Patrol
Fingerprint check revenue	$11,480	$11,480	$11,480
ESTIMATED NET EFFECT TO
CRIMINAL RECORD SYSTEM FUND	$11,480	$11,480	$11,480
GENERAL REVENUE FUND
Costs-Department of Corrections (DOC)
Increased probation and parole	(Unknown,	(Unknown,	(Unknown,
	under	under	under
	$100,000)	$100,000)	$100,000)
ESTIMATED NET EFFECT TO
GENERAL REVENUE FUND	(Unknown,	(Unknown,	(Unknown,
	under	under	under
	$100,000)	$100,000)	$100,000)
FISCAL IMPACT - Local Government	FY 2000	FY 2001	FY 2002
	$0	$0	$0
FISCAL IMPACT - Small Business
This proposal could result in a direct fiscal impact to small businesses.

DESCRIPTION

This proposal would repeal the entire subchapter relating to the regulation of bail bond agents and would create within the Division of Professional Registration the "Professional Bail Bondsman Licensing Board." The bill would contain provisions regarding; (1) The appointment and composition of board, terms of the members, and the authority and duties of the board; (2) The application, registration and licensing of bail bonding companies and bondsmen, examination requirements, and would set fees at $100 for professional bail bondsmen and $1,000 for a professional bail bond company; (3) The issuance and execution of appearance bonds by

professional bail bonding companies and violations for solicitation by unlicensed persons; (4) Certain criteria to be met by applicants, which includes the submission of character references, finger prints, proof of competency and financial responsibility, and proof they have never been convicted of a felony or any offense involving moral turpitude; (5) The refusal to issue or renew licenses, and suspension and revocation of licenses due to the failure to comply with state laws; (6) Minimum compensation paid to and the acceptance of collateral by bonding companies; (7) Qualifications of persons wishing to act as sureties and forms to be used for non-licensed sureties; and (8) Intention of the bond, the binding authority of the bond forfeiture of bonds, failure to appear, surrendering of defendants, and arrest authority of sureties. Fees would be deposited into the newly created Professional Bail Bondsman Licensing Board Administration Fund.

The bill would also establish "The Surety Recovery Agent Licensure Act." The professional bail bondsmen licensing board would have the authority to license all surety recovery agents (bounty hunters), inspect training schools, appoint and examine inspectors, set fees, establish qualifications, issue licenses and credentials, require surety bonds and register non-resident surety agents, and promulgate rules.

This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.

This legislation would affect Total State Revenue.

SOURCES OF INFORMATION

Department of Economic Development-Division of Professional Registration

Department of Insurance

Department of Public Safety-Missouri State Highway Patrol

Office of the Secretary of State

SOURCES OF INFORMATION (continued)

Department of Revenue

Department of Corrections

Office of the Attorney General

Department of Labor and Industrial Relations

Office of the State Treasurer

Office of State Courts Administrator

Jeanne Jarrett, CPA

Director

February 23, 1999