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Business and Economy Liberty and Justice

State’s Regulatory Boards Don’t Handle Complaints Well, Comptroller Reports

Eleven professional regulatory boards are scheduled to terminate at the end of June if the Legislature doesn’t extend their bureaucratic life. Government Operations Committee chair Susan Lynn says she doesn’t foresee lawmakers refusing to reissue statutory approval for the boards, but Tennessee’s consumers and economy might be better served if they did.

A report released Tuesday by state auditors suggests some professional- and occupational-licensing boards aren’t doing a very good job of processing complaints filed against the business owners and service-providers they’re supposed to be overseeing.

“There are still few procedures requiring boards to document and record specific complaint information in a standardized format,” according to the performance audit (pdf) of the Division of Regulatory Boards.

The Comptroller of the Treasury’s report also noted that studies conducted in both 1999 and 2005 found similar problems. The Division of Regulatory Boards, which operates under the Department of Commerce and Insurance, has still “not developed the tools to provide themselves with the data needed to efficiently and effectively manage complaints.”

Many boards also don’t investigate license applicants for criminal histories, even though regulations require them “to be of good moral character, honest, and/or trustworthy and free of criminal convictions,” the report stated.

“We generally concur with the finding and did concur before the audit began,” said Mary Moody, deputy director of the Commerce and Insurance Department.

Nothing in the report came as a surprise to her department, Moody told the Labor and Transportation Subcommittee of the Joint Government Operations Committee on Tuesday.

A lot of the government’s problems boiled down to not having enough attorneys, Moody said.

The auditors added that “attorney workloads and board meeting frequency…may play a significant role in the timely resolution of complaints.”

“Complaint files show that boards’ administrative staff spend relatively little time on complaint intake and closure tasks. Most of the time a complaint is open occurs between the time the staff attorney receives the complaint file and when the board makes its final decision,” according to the report.

There are 11 professional regulatory boards scheduled to terminate at the end of June if the Legislature doesn’t extend their operating mandate. They included licensing-oversight authorities for auctioneers, barbers, collection agents, cosmetologists, funeral directors, security guards, land surveyors, private investigators, polygraph technicians and real estate appraisers and agents.

More than half the complaints currently under review or investigation by boards that oversee barbers (71 cases), cosmetologists (311), land surveyors (16), private investigators (45) and security guards (315), have gone unresolved for more than 180 days. The committee that oversees security guards hasn’t met since 2006, according to the audit.

Rep. Susan Lynn, R-Mt.Juliet, who chairs the Joint Government Operations Committee, said she doesn’t foresee lawmakers refusing to reissue statutory approval for the boards this year.

However, Lynn said she’d like to see the state initiate a thoroughgoing examination of whether Tennessee’s consumers and economy might be better served in absence of some of the licensing boards and requirements.

“I’m not a fan of occupational licensure unless it directly serves to protect the constitutional rights of the citizens, since the purpose of government is to secure those rights,” said Lynn.

Last year Lynn and Sen. Bill Ketron, R-Murfreesboro, sponsored an “Economic Civil Rights Act,” which called for eliminating any occupational board that in reality tends to function more as a protectionist barrier against new competition than as a safeguard against legitimate threats to citizens’ safety, health or rights.

“If you’re doing something that is potentially a danger to somebody else, then the state should have the power to regulate,” said Lynn. “If not, then a license requirement is often just an attempt to force people to jump through hoops. There are a lot of regulations like that which are meant for achieving good, but which really end up only hurting people economically.”

According to the free-market Tennessee Center for Policy Research, only nine other states have as strict or stricter regulatory burdens on entrepreneurs, merchants and service-sellers as the Volunteer State.

“While generally sold as a means to protect the public interest, regulations often exist merely to protect a chosen class,” wrote TCPR staffers in a statement delivered to a House committee looking into the bill last session. “This smothers competition and preserves a government-endorsed monopoly, thereby increasing the costs of goods and services to consumers. Reduced competition also makes it more difficult for consumers to receive the quality of goods and services they demand.”

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