Licensing businesses and professions serves the important purpose of protecting consumers from unqualified professionals and unscrupulous businesses. At the same time, a successful licensing system should make it easy for qualified individuals and businesses to get the certifications they need. Unfortunately the current system does neither of these things well.

An analysis by the California Performance Review found three core issues:

Licensing responsibilities are split among more than 45 independent departments, bureaus and commissions.
The state’s list of business and professional licenses takes up 15 single-spaced pages, listing hundreds of required licenses, permits, and certifications. The statutes and regulations themselves are thousands of pages long. Under these circumstances, people seeking to obtain a license, or consumers trying to lodge a complaint about a problem, do not know where to turn.


The multitude of boards and commissions increases the risk that the board members can be unduly influenced by the industry the board is supposed to regulate, accepting lax standards instead of protecting consumers.

The current system does not license qualified individuals in a timely manner because resource allocation is not flexible.
Despite unused resources at other licensing boards and commissions, new resources were required to address a backlog of 7,000 unprocessed applications at the State Contractors Licensing Board that were more than five months old and a backlog of more than 4,000 applications for nursing credentials.


California licensing authorities have not adopted best practices.
In many instances California licensing boards have not adopted qualification standards used in the rest of the country. This deters professionals from moving to California and results in additional cost and delay.

To address these problems, California’s consumer protection and business regulatory functions should be reorganized to establish an integrated Department of Commerce and Consumer Protection. The Department should:

• Be more flexible to allow licensing staff to be moved between areas based on changing needs instead of being fixed in specific departments; and
• Establish one point of contact and accountability for licensing and consumer complaints.

This reform plan should help restore California’s economic prosperity by making it easier for businesses and entrepreneurs to operate in California, while protecting consumers more effectively. Other states have redirected test preparation and administration resources to consumer protection and industry policing after adopting national exams. In these states, professionals are tested and licensed faster, and out-of-state professionals are certified to practice expeditiously. If this proposal were adopted, people would no longer have to navigate a maze of regulations and administrative bodies to be licensed to do business in the state. But, more importantly, California’s consumer protection efforts should be focused on consumer protection rather than administrative process.

The integrated Department should include the following four divisions with department-wide functions consolidated in the Office of the Secretary:

1. Office of the Secretary—(including the Office of the Consumer Protection and Licensing Portal, the Office of Consumer Protection, the Office of Gaming, and the Office of Hearings and Appeals);
2. Division of Real Estate Services;
3. Division of Financial Services;
4. Division of Commercial Licenses; and
5. Division of Motor Vehicles.

This organizational framework is depicted in Exhibit 10.

More specifically, the proposed components include:

1. Management Goal: The Secretary should report directly to the Governor and serve as the primary point of accountability for the management of all Departmental programs. The Secretary should consolidate similar functions that cut across various programs to create a unified approach to policy and enforcement.
   Exhibit 10

   

2. Proposed Functions: The Secretary should fulfill all present Agency Secretary and Department Director roles for the offices within the Department. In addition, the Secretary should advise and assist in the implementation of major policy and program matters and be the principal communication link between the Governor and the constituent units of the Department. Cross-cutting and coordinating responsibilities should be vested with the Office of the Secretary. To this end, the appointed boards and commissions that are part of the state licensing effort should be eliminated. The Secretary should meet with the public and industry representatives on an ad hoc basis to gather information and guidance as necessary.

   Specific functions performed within the Office of the Secretary should include legal, budget review, personnel management, intergovernmental affairs, enforcement coordination, information management coordination, strategic planning, and public affairs.

3. Transferred Functions: All of the authority of the entities consolidated into this Department should be vested with the Secretary.

1. Management Goal: The goal of the Office should be to establish an online one-stop-shop for all information, forms and applications for professional and commercial licenses. The portal should consolidate the license application process so that an applicant would only need to submit one set of fingerprints and other information and all relevant licensing entities would have access to it.

2. Proposed Functions: The portal should link all information for all licenses issued by the Department and other licensing entities. Consumers searching for information and guidance about a complaint should find everything necessary to verify a licensee’s status or to submit required information. The portal should maintain information about the educational requirements, licensing procedures and the continuing education requirements necessary for licensure.

3. Transferred Functions: The public information web functions of all state licensing entities should be transferred to this Office.

1. Management Goal: The goal of the Office should be to provide the people of California with a central location for all consumer protection activities.

2. Proposed Functions: The functions of the Division should include assisting consumers with complaints, educating and informing consumers about laws that protect them and what they should know about a business and reducing fraud.

3. Transferred Functions: The functions of the Office of Privacy Protection and the Division of Measurement Standards from the Department of Food and Agriculture should be transferred to this Office. In addition, the consumer protection functions of the entities transferred to the Department should be transferred to this Office.

1. Management Goal: The goal of the Office should be to fairly and efficiently regulate gaming, including card rooms, Indian casinos, horse racing and the State Lottery. Except for the California Horse Racing Board, gaming entities should retain their independence within the Department. However, they should utilize a uniform and coordinated enforcement strategy and consolidate administrative functions to better serve consumers.

2. Proposed Functions: The functions related to the regulation of gaming should be transferred to the Department.

3. Transferred Functions: Authority for:
   • The California Gambling Control Commission should be transferred as an independent Commission to the Office;
   • The California Horse Racing Board should be transferred from an independent board to the Office, and the Board eliminated; and
   • The California Lottery should be transferred as an independent commission to the Department.

1. Management Goal: The goal of the Office should be to efficiently and effectively administer disciplinary actions within the context of state law and rules for professional conduct to promote uniformity and reliability in decision making.

2. Proposed Functions: This Office should hear appeals and administer disciplinary actions and license denials for all entities transferred to the Department.

3. Transferred Functions: The disciplinary functions for all entities consolidated in the Department should be transferred to this Office.

1. Management Goal: The goal of the Division should be to license and regulate securities brokers and dealers, investment advisers and financial planners, certain fiduciaries and lenders in a fair and effective manner. The Division should also regulate the offer and sale of securities, franchises and off-exchange commodities. It should also provide licensing and oversight for financial and banking services.

2. Proposed Functions: The Division should carry out all of the existing functions of the Department of Corporations and the Department of Financial Institutions.

3. Transferred Functions: The functions and authority of the Department of Financial Institutions and the Department of Corporations should be transferred from the Business, Transportation and Housing Agency to this Division.

1. Management Goal: The goal of the Division of Motor Vehicles should be to quickly and accurately provide vehicle licensing and registration services to California residents. The Division should work to use the latest technology and techniques from the public and private sectors to make services convenient and efficient, such as greater use of the Internet as a service delivery mechanism.

2. Proposed Functions: The functions of the Department of Motor Vehicles unrelated to the collection of the Vehicle License Fee should be carried out by this Division.

3. Transferred Functions: The functions of the Department of Motor Vehicles should be transferred from the Business, Transportation and Housing Agency to this Division.

1. Management Goal: The goal of this Division should be to quickly, fairly and efficiently license businesses and professionals operating in California.

2. Proposed Functions: The Division of Commercial Licensing should be responsible for all non-specialty licenses for businesses and professionals in the state.

3. Transferred Functions: The professional and commercial licensing functions should be transferred to this Division from the following entities:
   • Department of Consumer Affairs: Board of Accountancy, California Architects Board, Bureau of Automotive Repair, Board of Barbering and Cosmetology, Cemetery and Funeral Bureau, Contractors State License Board, Court Reporters Board, Bureau of Electronic and Appliance Repair Board for Professional Engineers and Land Surveyors, Hearing Aid Dispensers Bureau, Bureau of Home Furnishings and Thermal Insulation, Bureau of Security and Investigative Services and Speech- Language Pathology and Audiology Board;
   • Labor Commissioner;
   • Department of Boating and Waterways;
   • Department of Transportation; and
   • Board of Pilot Commissioners for the Bays of San Francisco, San Pablo and Suisun.

Management Goal: The goal of the Division of Real Estate Licensing should be to protect consumers by licensing and regulating real estate professionals in a fair and effective manner.

Proposed Functions: The Division should be responsible for licensing and regulating real estate brokers, salespersons and mortgage brokers as well as real estate appraisers.

Transferred Functions: The functions of the Department of Real Estate and the Office of Real Estate Appraisers should be transferred from the Business, Transportation and Housing Agency to this Division.

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