The North Carolina Board of Funeral Service’s proposal to increase fees on licensees was up for discussion today at an Administrative Procedures Oversight Committee meeting at the General Assembly.

The Joint Legislative Administrative Procedure Oversight Committee is the overseeing body for all occupational licensing boards in the state.

Former funeral board member and funeral home licensee Jody Tyson spoke to the committee against the board’s proposal to increase annual fees on licensees in four areas: registration of funeral establishments, funeral services licenses, funeral directors’ licenses and transportation licenses. The executive director of the funeral services board, Peter Burke, addressed the committee in favor of the proposal.

The board made the proposal in response to a May audit by the state auditor’s office which found that it was not in compliance with its own policy, adopted in 2009, that funeral homes and crematories in the state be inspected on a two-year basis.

The funeral board currently employs three people to inspect the 751 licensed funeral establishments and 110 crematories in three regions in the state. Burke said the suggestion to add a fourth inspector came up in discussion with state auditor Beth Wood following the audit.

But as the INDY reported in October, the board has substantial funds in operating, preneed recovery and reserve accounts, and has been accused of mismanaging money elsewhere, including giving annual employee raises, high travel reimbursement costs and purchasing a $1 million condo which is still being paid for.

“I simply do not think licensees should be made to pay the bills of hiring a fourth inspector, when the board clearly has the funds on hand,” Tyson told the committee.

Burke pointed out that the Board has not increased fees on licensees since 1991 and that the fee increases would only cost funeral establishments around $125 a year. He said the inspections policy was instituted in 2009 with the intention of being revisited; there was no inspections policy prior to 2009.

But the money flowing into the funeral board from the fee increases— an extra $139,000 a year according to Burke, $80,000 of which would be used to fund the fourth inspector—is a substantial amount for a not-for-profit licensing board which has seen vast increases in revenue since 1991, as the state population has increased and more funeral establishments have opened in North Carolina: the board reported $348,825 in net income at the end of fiscal year 2012 and $388,002 in net income at the end of 2011.

The board began this fiscal year with $770,655 in cash assets, with several hundred thousand dollars more in reserve and preneed recovery accounts.

“You seem to have healthy operating income,” Rep. Rick Glazier, D-Cumberland said to Burke. “I understand the goal is to look to neutralize expenses, but the net positions for two years show substantial operating income.”

Burke said he thought the board began fiscal year 2013 with “significantly less” than $770,655 in assets and said he would have to double check the numbers.

Rep. Tim Moffitt, R-Buncombe, asked Tyson what he requested from the committee and Tyson said he wanted the proposal to increase fees on licensees to be denied.

“They need to go back to the drawing board and look at how to save money,” said Tyson. “The internal organization of the board needs to be looked at.”

Moffitt said the committee’s role is “to listen to both sides of the story to see whether the fee increase rule should become permanent or not.” He said the committee could introduce a bill to disapprove of the rule next session, or any legislator could introduce such a “kill bill.” If the rule is not challenged within 31 days of May 14, 2014— the first legislative day next of the next session—the fee increases will go into effect.

The committee will discuss the rule pending further financial information to be supplied by Burke.