Recommendations of the Texas Comptroller

Move Certain Occupational
and Professional Licensing
Processes Online

Summary

Most administrative functions associated with Texas’ occupational licensing have changed little during a period of rapid technological advancement. Texas’ licensing processes still are largely paper based, expensive, time consuming, and inconvenient for citizens. Meanwhile, other states are moving ahead in developing “24/7” (24 hours a day/seven days a week) Internet-based occupational and professional licensing systems. Texas should join them.

Background

Occupational licensing is intended to prohibit unqualified people from practicing licensed occupations and to protect the public by ensuring compliance with regulations governing such fields. Most administrative functions associated with Texas’ occupational licensing have changed little during a period of rapid technological advancement. Largely, Texas’ licensing processes are still paper based, expensive, time consuming, and inconvenient for many citizens.

In fiscal 1999, 22 Texas state government boards and commissions issued 62,500 new occupational and professional licenses and renewed more than 400,000 licenses, producing $60.3 million in professional fees (Exhibit 1).[1]

Exhibit 1

Texas Occupational and Professional Licensing Activity, Fiscal 1999

Source: Texas Legislative Budget Board.

*Note: The Texas Real Estate Commission (TREC) placed its real estate broker licensing online in August 2000; however, additional licenses TREC administer should be placed online, as well as those issued by the Texas Appraisers Licensing Certification Board, which resides within TREC.

In early 2000, the Legislature asked the Department of Information Resources (DIR) to commission a study of these functions. The study reviewed not only licensing functions, but also the entire regulatory programs of each of 14 specific agencies. The report indicated that a consolidated effort to improve all of the agencies’ regulatory and licensing functions would be substantially cheaper than piecemeal reform efforts.[2]

Online Licensing

The Internet can allow both public and private organizations to increase the speed and efficiency of transactions. For example, public agencies can provide online services to the regulated community without time and geographic constraints. In a recent nationwide survey, 43 percent of respondents reported they would like to use the Internet to obtain or renew professional licenses.[3] A streamlined approach would provide ease of use for e-government services and would eliminate the need for navigating among numerous individual agency Web sites.

Two-thirds of Texans recently surveyed by the University of Texas’ Telecommunications and Information Policy Institute use computers, and 60 percent use the Internet. More than four-fifths of them think the Internet offers significant potential to make government services more readily available. Most respondents prefer that the costs of e-government be raised either through advertising or user fees.[4]

By one estimate, governments save up to 70 percent every time they move a service online.[5] Andersen Consulting estimates that every in-person or phone transaction that is moved online saves between $40 and $400 in paper and labor costs.[6]

Other States’ Activities

Several states are far ahead of Texas in allowing their citizens to obtain or renew licenses online.

Georgia, for instance, allows accountants and real estate professionals to renew licenses online at a 25 percent discount. Despite the discount, the state has realized savings of $350,000 a year from moving these services online.[7] Other online licensing options are available through the Georgia Secretary of State’s Office. These include licenses for occupations such as certified public accountants, athletic trainers, architects, cosmetologists, dietitians, dentists, electrical contractors, engineers/land surveyors, foresters, funeral directors, geologists, hearing aid dealers, librarians, low-voltage contractors, nursing home administrators, occupational therapists, optometrists, pharmacists, physical therapists, professional counselors, social workers, and marriage and family therapists.[8]

In 1998, Arizona contracted with a private vendor to develop an online motor vehicle registration system. Online registration reduced the average wait to register a vehicle from 45 minutes to 3 minutes, and the state’s cost plummeted from $6.60 per vehicle to $1.60 per vehicle. Arizona’s Motor Vehicle Department estimates that moving vehicle registrations online saved it about $1.25 million a year. The vendor keeps $1 for each online registration as well as a portion of the fee charged by banks for credit card processing.[9]

Maryland’s online system has made the state more responsive to the needs of the regulated community. Maryland slashed the time needed to issue licenses from two weeks to about 10 minutes. Maryland’s Department of Labor, Licensing, and Regulation (DLLR) began its online effort by focusing on 18 occupations most likely to include many computer users, beginning with real estate occupations. DLLR’s initial goal was to achieve a usage rate of 30 percent to 35 percent; response from the regulated community, however, was far in excess of initial projections. As of April 2000, more than 90 percent of Maryland’s real estate appraisers had renewed their licenses online, as did 83 percent of the state’s certified public accountants. Fifteen of the remaining 16 occupations had online renewal rates of more than 50 percent, and 38 percent of the remaining occupation, barbers, renewed online.

DLLR’s program serves more than 170,000 members of the state’s regulated community. As of April 2000, the state had made available online licensing for 18 occupations using 130 separate licensing forms. Maryland’s program received initial appropriations of $1.5 million during fiscal 1997 and 1998, and an additional $500,000 from general funds for the next several fiscal years.[10]

Alaska’s online licensing process allows customers to download business licenses and print them on their home computers, reducing state costs associated with printing, handling and mailing. Alaskans can now purchase new business licenses online, along with business license renewals, which were added in November 2000.

Texas’ Portal Project

The 1999 Texas Legislature created an Electronic Government Task Force to assess the feasibility of conducting state and local government transactions through the Internet. The task force, through a public-private partnership with a vendor, developed a framework providing a common business portal for the state to provide citizens with seamless access to government services. Through TexasOnline, Texans can renew certain licenses and certifications, file certain sales tax returns, and search for corporate status information 24 hours a day, seven days a week. Ultimately, the portal is intended to become a one-stop location for a variety of business transactions with state and local agencies.

The portal service includes authentication services, such as passwords, and infrastructure that may be used for “digital signatures”; “scalable” architecture that allows for the rapid expansion of and changes to applications; around-the-clock access; the ability to trace transactions through the system; acceptance of credit cards and other electronic payment mechanisms; web application development services; call center services; assistance with outreach marketing to constituents; shared revenue from convenience or premium service fees; and electronic interfaces to the state’s accounting systems. In addition, the Web site is bilingual, offering services in both Spanish and English.

The portal’s designers expect participating agencies to gain efficiencies through offering online transactions as an alternative to walk-in or mail-in transactions. In the future, the portal should allow citizens who must interact with multiple agencies to enter their identifying information only once.

Program Management Office

While Texas government is decentralized by law and tradition, this approach can result in unnecessary overlap and duplication of efforts among state agencies. A central coordinating office for electronic statewide initiatives could provide much-needed coordination for cross-governmental information technology (IT) projects, and help agencies make the best use of limited resources. To fulfill this role, a Program Management Office (PMO) within the Texas Department of Information Resources is recommended elsewhere in this report.

The PMO would direct and initiate statewide electronic government initiatives and serve as a repository for best practices, with a focus on project management expertise. The PMO would ensure that projects meet the state’s strategic objectives and increase operational productivity by using standardized approaches and standardized reporting on project progress and costs.

Recommendation

State law should be amended to require certain regulatory agencies to offer online occupational and professional licensing services through the Texas Online portal where feasible. The Program Management Office (PMO), recommended elsewhere in this report, should coordinate this effort among the affected state agencies.

While the portal is expanding to include additional services, agency participation is strictly voluntary, and agencies have been slow to address this new medium of service. The portal enables agencies to provide online licensing; however, mandated participation where feasible will increase the speed with which agencies offer this service to their respective regulated populations.

This requirement should be applied to the 22 state agencies listed in Exhibit 1. The PMO should coordinate this effort and be responsible for its implementation under the guidance of a steering committee made up of representatives of the 22 agencies. Online occupational and professional licensing should be one of the first projects undertaken by the PMO. Online licensing services should be made available through the TexasOnline state portal or by other means as deemed appropriate by the PMO.

The implementation of online licensing services should be conducted in phases. The PMO should use all available information to determine which regulatory agencies should be included in each phase of the project. The PMO should report a projected implementation schedule to the 2003 Legislature.

The PMO should establish a public-private partnership with a private vendor to provide front-end development costs for the licensing services. The system should be self funded.

If the Legislature does not create the PMO this recommendation still could be accomplished by adding an additional full-time equivalent employee (FTE) to the Texas Department of Information Resources to coordinate the online licensing effort.

Fiscal Impact

Online licensing efforts should be funded with existing appropriations or through convenience or subscription fees. Efficiency savings should result, but these savings cannot be estimated at this time. A consultant to conduct the licencing project would cost the state about $208,000 annually for salary and benefits.

Endnotes

[1] Texas Comptroller of Public Accounts, “USAS System Report,” Austin, Texas, July 7, 2000. (Computer printout.); and Texas Comptroller of Public Accounts, “Professional Fees for Selected Agencies,” Austin, Texas, May 24, 2000; and Texas Legislative Budget Board, “Output and Efficiency Measures Report,” Austin, Texas, August 16, 2000.

[2] Texas Department of Information Resources, Regulatory Systems Requirements and Comparative Analysis: Final Report (Austin, Texas, August 2000), pp. 4, 7.

[3] National Information Consortium, Benchmarking the eGovernment Revolution: Year 2000 Report on Citizen and Business Demand, by the Momentum Research Group of Cunningham Communications (Overland Park, Kansas, July 26, 2000), p. 3 (http://www.nicusa.com/NIC_flask2.htm). (Internet document.)

[4] University of Texas at Austin, Telecommunications and Policy Information Institute, E-Government and Computer and Internet Use in Texas (Austin, Texas, June 2000), pp. 3, 7 (http://www.utexas.edu/research/tipi/reports/dir_final2.htm). (Internet document.)

[5] Jeffrey H. Birnbaum, “Death to Bureaucrats, Good News for the Rest of Us.”

[6] Stephen Goldsmith, “The Coming Digital Polis,” Summer 2000 (http://www.city-journal.org/html/10_3_the_coming_digital.html). (Internet document.)

[7] Stephen Goldsmith, “The Coming Digital Polis,” Summer 2000 (http://www.city-journal.org/html/10_3_the_coming_digital.html). (Internet document.)

[8] State of Georgia, “Electronic Commerce in Georgia,” (http://www.ganet.org/index/ECGeorgia.html). (Internet document.)

[9] Jeffrey H. Birnbaum, “Death to Bureaucrats, Good News for the Rest of Us;” and telephone interview with Penny Martucci, assistant director, Competitive Governmental Partnerships, Arizona Department of Transportation, Phoenix, Arizona, August 24, 2000.

[10] Harry Loleas, “Maryland’s Electronic Licensing Initiative Enters Its Third Year,” CLEAR News, Summer 2000 (http://www.clearhp.org/newsletter.htm). (Internet document.)

e-Texas is an initiative of Carole Keeton Rylander, Texas Comptroller of Public Accounts
Post Office Box 13528, Capitol Station
Austin, Texas

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