An audit of the state’s labor agency found a seriously flawed process in how business licenses were granted in South Carolina.
Three years ago, the state’s 40 professional or occupational licensing boards– which approve licenses for everything from dentists to barbers— were all combined into one division of the Department of Labor, Licensing, and Regulation. Until that reorganization, the 5-7 member boards each operated with its own staff. Under the revamp, the employees were transferred to a new Office of Licensure and Compliance (OLC).
However the report released Wednesday shows the transition did not go well.
Legislators asked the Legislative Audit Council (LAC) to look into LLR shortly after a contentious 2010 subcommittee hearing, in which the agency’s former director walked out.
“I have had more constituent complaints about LLR than all other state agencies combined,” said Rep. Bill Sandifer (R-Oconee), one of several lawmakers who requested the audit.
The biggest complaint was that employees weren’t answering phones at the licensing division. The report found more than 27 percent of calls to the office’s call center from April 2010-March 2011 went unanswered.
“To simplify, it just wasn’t well-managed,” said LAC Executive Director Tom Bardin, “The phones would ring, go to voicemail, or they would just go unanswered, depending on the situation.”
The report also found that call center employees were spending only 36 percent of their time either on the phone or handling after-call work, when 70 percent should be a reasonable expectation. Calls to the Cemetery Board were answered less than half of the time.
“Calls to LLR seemed to fall into this deep, dark well,” Sandifer said, adding that experienced similar problems when he tried making the calls himself.
In an effort to fix the problems, new agency director Catherine Templeton eliminated the office and call center after her appointment by Governor Nikki Haley earlier this year. Templeton returned support staff to their respective boards, with administrators overseeing them, much in the same way they were before the reorganization.
The report notes the improvements appear to be successful.
Wednesday’s report also found many of the individual boards had built up large reserve funds from licensing fees. Bardin said auditors found millions of dollars in excess revenue. “That meant certain boards were paying too much as far as their licensing fees are concerned,” Bardin said, adding that Templeton had since ordered several fees reduced. The Legislature took nearly $10 million from those reserves to shore up the state budget in 2009.
The agency also tried to pay for a new $3 million computer system that was never put in place. Bardin said officials hired a “financially shaky” company that never installed the system (the company is later identified as government software firm Accela, Inc.). The agency even paid $120,000 in maintenance for a system that did not exist.
The report notes a financial analysis had warned against paying the firm in advance, but LLR paid $2 million before stopping in October. In February, the agency began taking legal action against the company.