The Ohio State Board of Cosmetology

The Ohio State Board of Cosmetology 1929 Gateway Circle Grove City, Ohio 43123 Phone: (614) 466-3834 Fax: (614) 644-6880 www.cos.ohio.gov TESTIMONY before the OHIO HOUSE OF REPRESENTATIVES FINANCE SUBCOMMITTEE ON TRANSPORTATION HONORABLE REPRESENATIVE CHERYL GROSSMAN, CHAIRPERSON ON FISCAL YEARS 2016 AND 2017 BUDGET RECOMMENDATIONS BY CHRISTOPHER H. LOGSDON, M.B.A., EXECUTIVE DIRECTOR OHIO STATE BOARD OF COSMETOLOGY MARCH 18, 2015 INTRODUCTION: Representative Grossman and respected members of the Finance Subcommittee on Transportation, my name is Christopher Logsdon and I am the recently appointed Executive Director for the Ohio State Board of Cosmetology. Although recently appointed to this position, I have spent the last twenty-four years serving the state of Ohio as the Executive Director for the Ohio Respiratory Care Board. I appear before this subcommittee to seek the support of the Ohio House of Representatives concerning the Ohio State Board of Cosmetology s Fiscal Year 2016 and 2017 budget recommendations contained in H.B. 64. After a brief description of the Board and its role, I would like to focus the majority of my testimony on the Ohio State Board of Cosmetology s budget recommendations. THE OHIO STATE BOARD OF COSMETOLOGY: The Ohio State Board of Cosmetology (hereafter referred to as the Board ) is a unique regulatory board engaged in the governance of business, schools, and providers of branches of Cosmetology and Tanning services. The Board s stated mission is to protect and support the public through regulation and education while promoting integrity of the industry. Practically, the Board meets

this mission through the effective regulation of cosmetology schools, cosmetology salons, tanning facilities, and individuals engaged in the many branches of cosmetology, including full cosmetology services, hair design, manicuring, nail design, natural hair styling, and esthetics. Our goal is to effectively regulate the industry, while limiting the negative impact over-regulation may have on business and individuals. In total, the Board issues licenses to 96,836 individual providers of branches of Cosmetology. In addition, the Ohio State Board of Cosmetology issues licenses to approximately 11,800 cosmetology, hair design, manicuring, natural hair, esthetics salons and tanning facilities. Including instructor licenses, the Ohio State Board of Cosmetology renews approximately 115,000 licensed entities on a biennial basis. (Table 1) Additionally, the Board inspects the physical plant, establishes, and monitors the curriculum of more than 189 proprietary and Career Technical Cosmetology Schools in the state of Ohio. Table 1. Provider Licenses Instructor Licenses Salons Cosmetologist 65486 Cosmetologist Instructors 4058 Cosmetology 8552 Estheticians 3531 Esthetician Instructors 124 Esthetician 624 Hair Design 242 Hair Design Instructors 4 Hair Design 284 Manicurist 11113 Manicurist Instructors 151 Manicuring 1095 Natural Hair 31 Natural Hair Instructors 2 Natural Hair 7 Independent Contractor 16433 Tanning 1205 The Board s core mandates are to test minimum competencies of persons seeking to enter into one or more of the service branches of Cosmetology and to ensure that salons and individuals engaging in offering those services are compliant with infection control and safety standards established by the Board. The Board conducts its own theory and practical examination in Cosmetology and each branch of Cosmetology at its office in Grove City, Ohio. Annually, the Board tests over 12,000 candidates seeking to enter the Cosmetology industry. The State Board of Cosmetology consists of nine individuals appointed by the Governor with the advice and consent of the Ohio Senate. The State Board of Cosmetology is comprised of three graduate licensed cosmetologists, two of whom are actively engaged in the management of a beauty salon at the time of appointment; one regularly licensed physician; one owner of a licensed school of cosmetology; one member of the public; one Independent Contractor (IC) or owner of a salon that employs ICs; one person who represents individuals who teach the theory and practice of a branch of cosmetology at a vocational school; and one owner of at least five licensed beauty salons. The Ohio State Board of Cosmetology employs thirty-three (33) support staff and eight (8) administrative staff to complete the spectrum of duties entrusted to them by the Board.

EXECUTIVE BUDGET RECOMMENDATIONS: The Board supports the budget recommendations contained in H.B. 64 of $3,758,000.00 in FY 2016 and $3,819,000.00 in FY 2017. The Board's budget was prepared using a zero-based budgeting approach. This process assumes no base budget for our agency and its programs. Each program s mission critical goals and objectives were separately evaluated. The costs to meet each program s goals and objectives were built into to the budget to determine the agency s funding needs for the next biennium. The amount reflected in the Executive Budget will fund continued operations for the Board at the current service levels. Effect of the Budget Recommendations The budget recommendations contained in H.B. 64 of $3,758,000.00 in FY 2016 represent an 8.2% overall increase from FY 2015 funding. FY 2017 recommendations for $3,819,000.00 represent a 1.6% increase over FY 2016 funding recommendations. This percent change is slightly more than other boards of a similar size. Payroll costs represent the greatest change in the budget amounting to an increase of 8.4% in FY 2016 and an additional 1.6% increase in FY 2017 over FY 2016. Payroll costs were based upon the agency s current personnel ceiling. Costs were determined using the wage and benefits model developed by the Office of Budget and Management under the SOPPS system. Purchased Personnel Services and Maintenance Services represent the second greatest change in the agency s budget request. This includes costs to bring on an in-house legal counsel amounting to a $50,000 change in FY 2016 and a $30,000 change in FY 2017. Based upon the strong recommendation of the Ohio Attorney General s office, the Board is proposing to create a permanent in-house counsel position in the next biennium. The Board believes some of the costs for this change can be accomplished through reorganization and the funding contained in the budget request. Continued funding for existing personnel and Board Members The budget recommendations will support current payroll costs for our existing office staff and board members (budgeted at 96 hours annually). In addition, the budget recommendations provide funding to meet the payroll obligations to fill the Executive Director position that was only recently filled and support a new position to assist the Board with examination development, maintenance, and policy development for each program area administered by the Board. Payroll costs represent approximately 78% of the Board s recommended budget in both FY 2016 and FY 2017. This

funding permits the Board to carry out its mandates, which include administering more than 15,000 theory and practical examinations each year, issuing an estimated 9363 new individual and salon licenses in FY 2015, and issuing an estimated 988 violation notices in FY 2015. (Table 2) Table 2. Inspection activity has remained relatively constant, meaning the Board is averaging approximately the same number of inspections (averaging about 12,000 annually) over the past few years. Violations of Board standards are found approximately 7.8% of the time. Notable; however, are the number of warnings given. In FY 2015, the Board implemented new reasonable inspection procedures that took into consideration the severity of infractions. New guidelines are based on the seriousness of the infractions, which have reduced the number of overall violations and increased warnings for non-critical findings. As a result, the Board believes it has achieved a more balanced approach to conducting inspections that reduces the number of violations issued, but encourages better education and compliance. (Table 3) Table 3.

Additionally, the Board renews licenses on a biennial basis, resulting in approximately 120,000 individual and salon licenses being renewed through the State of Ohio s elicense system during the three months that precede the biennial license expiration date. During this three month period, Board staff collectively handle an average of 867 telephone inquiries per day. Purchase service funding Purchase services funding supports contract services used by the Board to conduct intermittent work that does not rise to the level of needing to hire staff or to complete work that requires specialized skills or knowledge that can be more efficiently performed by contractor. The Board contracts two primary services: (1) Court reporting services this contract covers the cost of expert personnel to record the proceedings of the Board, including board meetings, rules hearing, and administrative hearings held before the agency. Additionally, the Board contracts for Hearing Examiners services. Hearing examiners conduct administrative hearings and write reports and recommendations for the Board pursuant to requests received in compliance with Chapter 119 of the Revised Code. Continued funding of maintenance expenses The budget recommendations for FY 2016/2017 will provide for continued funding for maintenance service costs. Most maintenance expenses are fixed and directly related to services rendered to the Board through the Department of Administrative Services. Maintenance account spending includes information technology support services, internet connectivity, telephone charges, mail presort and postage, office rent, central service agency charges, financial transaction services for online payments, and elicense system use. In addition, these costs include Board member and investigative travel expenses, office supplies, and credit card processing fees for online license renewal. The maintenance budget is highly dependent upon stable costs associated with DAS services. Unforeseen fee increases for DAS services can have a significant impact on the Board s maintenance budget. The maintenance funding recommended for the Board during FY 2016 and FY 2017 also includes extended funding to support contract legal services for in-house work. The funding provides an additional $50,000 in FY 2016 and $30,000 in FY 2017. This recommendation is strongly supported by the Ohio Attorney General s office, is needed to address legal issues that are not within the scope of duties provided by the Board s Assistant Attorney General, such as daily administrative case management, and rules drafting. The Board has included

this recommendation in it 2015 Workforce Plan, which has been approved by the Ohio Department of Administrative Services and the Governor s office. The Board believes this budget, and in consideration of internal reorganization, will support this change. FY 2016-2017: Based upon an evaluation of the Board s FY 2016/2017 budget recommendation, the Board recognizes that this budget will present some challenges. The FY 2016/2017 budget recommendations are based on zero-based budgeting principles, intended to produce a well-planned budget. Historically, the Board lapses a very small amount of its annual budget, a testimony to very tight budget analysis and planning. The Board, like all agencies, is expected to continually identify unnecessary expenditures, new efficiencies, and less expensive alternatives to reduce its budget. Doing so requires the Board to continually evaluate its mission, its priorities, and analyze the impact of tradeoffs that may be identified. The Board and its staff are committed to evaluating methods to reduce spending while meeting the agency s mission critical objectives within the budget parameters. In February 2015, the Board approved a three-year strategic plan. Among the nine objectives stated in the plan is a goal to strengthen the existing structure of the agency, emphasizing a focus on strong foundational policies and procedures, consistent and predictable core program outcomes, and maximizing agency resources to limit growth. In addition, the Board also understands it must consider the impact of its regulations on business and individuals and carefully enact rules and procedures that strike a balance between protecting the public through effective monitoring of infection control and safety standards, licensing minimally competent providers, and upholding strong educational standards, while identifying unnecessary or irrelevant regulation that create an overreaching bureaucracy. In FY 2013, the Board began this process by updating it inspection guidance for field inspections, creating a reasonable inspection process. We believe we have more to do and greater improvements can be realized. Over the next two years, the Board will be reviewing its rules and procedures in an effort to clarify, improve, and balance effective regulation of the Cosmetology and Tanning industry. In addition, the Board plans on engaging LeanOhio to conduct a full process review designed to find process bottle-necks, improve workflow, and align the agency s workforce to better match the mission and needs of the agency.

REVENUE GENERATION: The Board is a non-grf funded agency. Similar to all professional licensing boards, the Board is required to generate sufficient revenue to meet its expenditures. Fees generated by the Board are deposited into the 4K90, joint professional regulatory board fund. Each board is responsible for supporting their own budgetary needs and is strictly held accountable by the Office of Budget and Management. Revenues generated through fees and fines are independently evaluated to determine if the program is self-sustaining. The Board believes revenue over the next biennium will sufficiently meet the Board s budget recommendations. CONCLUSIONS: In conclusion, the Board is seeking approval of the budget recommendations in the amount of $3,758,000.00 for FY 2016 and $3,819,000.00 for FY 2017. Should you have any questions regarding the Board's FY 2016 and FY 2017 budget recommendations, I would be pleased to address them.