Compliance Economic Review
Pursuant to section 120.745(5), Florida Statutes
Related Rules:
Rule 69K-21.002 Florida Administrative Code Inspections
and
Rule 69K-21.004 Florida Administrative Code Fees
Department of Financial Services
Board of Funeral, Cemetery, and Consumer Services
April 2013
JUSTIFICATION FOR THE RULE
Rules 69K-21.002 and 69K-21.004 are related in operation. Rule 69K-21.002 requires inspections of new
funeral establishments, and annual inspections thereafter, and additional inspections upon certain
specified events occurring. Rule 69K-21.004 specifies inspection fees and other fees to be paid by the
funeral establishments. Rule 69K-21.002 implements s. 497.380(10), FS. The inspection fees and other
fees in rule 69K-21.004 are required pursuant to s. 497.380(4), (5) and (11).
The funeral industry has been significantly regulated in Florida since at least 1937; see ch. 17950, Laws
of Florida. The licensing and inspection of funeral establishments reflects considerations of public
health, safety and welfare. Funeral establishments routinely receive, store, and process dead human
bodies. The human remains may be infected with contagious diseases, and failure to properly store,
process and dispose of human remains may result in serious public health dangers. In addition,
legislation requiring the regulation of funeral establishments reflects a societal determination that
human remains must be processed and stored with some minimum of dignity and respect.
The inspection of a funeral establishment will include, but is not limited to, the following:
 Inspection of the embalming room for sanitary conditions, and to assure that required supplies
and equipment are present and operational.
 Inspection of coolers where remains are stored, to assure they are keeping remains at or below
40 degrees Fahrenheit.
 Inspection of human remains present, to assure they are being maintained in acceptable
condition, and that they are properly tagged with identification of the decedent.
 Verification that only properly licensed persons are performing embalming, and that there is a
properly licensed funeral director & embalmer in charge of the funeral establishment, who is
available to customers, and is overseeing operation of the funeral establishment.
 Inspection of the entire premises, to include storage rooms, utility rooms, etc., to assure that
improperly processed or stored human remains are not being concealed from the inspector.
The time it takes to conduct an inspection varies significantly from one funeral establishment to
another. The minimum is 1.5 hours and ranges up to an entire day, with repeat visits required. Factors
affecting how long it takes include but are not limited to:
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The size of the funeral establishment.
The amount of business the funeral establishment is doing.
The number of funeral establishment staff; whether staff with the needed answers is on-site;
the degree to which staff is knowledgeable, cooperative, evasive, etc.
The number and seriousness of any problems noted during the current inspection.
The funeral establishment's history of compliance or problems in past inspections.
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STATEMENT OF ESTIMATED REGULATORY COSTS
There are typically 865 licensed funeral establishments in Florida. Each of these funeral establishments
is inspected once per year (annual inspection), and is charged an inspection fee of $225 per inspection.
This represents an estimated aggregate annual cost to licensees of approximately $191,625 per year.
The Division of Funeral, Cemetery, and Consumer Services (herein the "Division") typically issues 50 new
funeral establishment licenses each year. Each of these new funeral establishments must be inspected,
at a fee of $225, before commencing operations. This represents an estimated aggregate annual cost to
the licensees of $11,250 per year.
Typically 30 funeral establishments will be subjected to a change of ownership each year, and an
inspection is required before the new owner may commence operations, at a fee of $225. This
represents an estimated aggregate annual cost to licensees of approximately $6,750 per year.
Typically 10 funeral establishments will change their location each year, and an inspection (at a fee of
$225) is required before operations at the new location may commence. This represents an estimated
aggregate annual cost to licensees of approximately $2,250 per year.
Pursuant to rule 69K-21.004, every second year each funeral establishment pays a two year funeral
establishment license renewal fee of $450. This results in an aggregate cost to the approximately 865
licensees, every 2 years, of $389,250 (865 x $450). Since this is paid once every two years, the cost per
year is half that. Thus the aggregate annual renewal fee is $194,625.
Transaction costs, renewal invoice. Approximately 90 days prior to the biennial renewal date for each
funeral establishment, the Division mails each funeral establishment a renewal invoice that includes the
renewal fee and the inspection fee. The funeral establishment answers one question on the invoice,
regarding criminal convictions since the last prior renewal, attaches a check for the required aggregate
fees, and mails the invoice back to the Division. The Division estimates that on average it takes a funeral
establishment 20 minutes of staff time to process the renewal invoice, to include cutting the required
check. If the licensee staff time is valued at $30 per hour, the cost per licensee is $9.90. To this is added
$1.25 for the return envelope and postage, resulting in an aggregate processing cost per licensee of
$11.15 ($9.90 + $1.25). Thus the aggregate biennial administrative cost per year for funeral
establishments is $9,644. Since these costs are incurred only once every second year, the aggregate
annual cost to licensees is $4,822.
Transaction costs, inspection. The Division estimates that on average an inspection takes 15 minutes of
the time of the funeral establishment's funeral director in charge (FDIC), and 20 minutes of the
establishment's unlicensed support staff. If we estimate the value of the FDIC's time at $40 per hour,
and the value of support staff time at $20 per hour, the FDIC cost is $10, and the support staff time is
$6.60, or a total per licensee of $16.60. The Division estimates that 970 funeral establishment
inspections per year are done (865 + $65 + 30 + 10). This indicates an aggregate annual cost to the
licensees of $16,102 (970 x $16.60).
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Summarizing, the above shown estimated annual aggregate costs are:
$191,625
$ 11,250
$ 6,750
$ 2,250
$194,625
$ 4,822
$ 16,102
$427,424 total aggregate annual costs
Over 5 years the costs are an aggregate of $2,137,120 ($427,424 x 5).
Is this rule likely to have an adverse impact on economic growth, private sector job creation or
employment, or private sector investment in excess of $1 million in the aggregate within 5 years after
the implementation of the rule?
The Division answers this question in the negative. The number of licensed funeral establishments has
been increasing recently. In 2008 there were 42 new funeral establishment licenses issued, while in
2011 a total of 58 new funeral establishments were issued. In addition, the number of funeral
establishments renewing their license has been relatively constant over recent years.
Is the rule likely to have an adverse impact on business competitiveness, including the ability of persons
doing business in the state to compete with persons doing business in other states or domestic markets,
productivity, or innovation in excess of $1 million in the aggregate within 5 years after the
implementation of the rule?
The Division answers this question in the negative. Due to the nature of the funeral business there is
relatively little interstate competition among funeral establishments. It is simply in the nature of things
that a person or family arranging a funeral and burial will usually want to use a fairly near-by funeral
home and cemetery. The funeral home needs to be fairly convenient to their loved ones who will be
involved in the funeral service and cemetery interment. The idea of having their loved one's remains
shipped long distances to some remote and unknown funeral establishment and cemetery, simply for a
price advantage, is not typically practical or attractive to families arranging funeral services. If the
person already has a spouse, child, parent, etc., buried in a particular cemetery, that will usually drive
the choice of a funeral establishment, as the family will use a funeral establishment relatively near the
cemetery. If a person has had a good experience in a particular funeral home regarding the funeral
services of another person, particularly a family member, that will typically have a very strong influence
on the selection of a funeral home. Although cremation tends to be somewhat less of a "local" business,
even regarding cremation there is typically significant consumer resistance to having their remains
shipped long distances to unknown facilities for cremation.
Is the rule likely to increase regulatory costs, including any transactional costs, in excess of $1 million in
the aggregate within 5 years after the implementation of the rule.
The Division answers this question in the negative. The transactional costs identified in this Compliance
Economic Review have been in place for years, so no additional cost will result.
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1. NUMBER AND TYPES OF INDIVIDUALS AFFECTED
There are approximately 865 funeral establishments subject to inspection and renewal under the rules.
Each of these funeral establishments is typically a corporation or LLC. Funeral establishments range in
size from as large as staffs of 50 or more persons, to establishments having only 4 to 6 employees. Their
size depends on numerous factors, such as where they are located (urban, suburban, or rural), amount
of competition nearby, whether they are part of an affiliated group that feeds each business, etc.
2. COST TO THE AGENCY, AND TO ANY OTHER STATE AND LOCAL GOVERNMENT ENTITIES, OF
IMPLEMENTING AND ENFORCING THE PROPOSED RULE, AND ANY ANTICIPATED EFFECT ON STATE
OR LOCAL REVENUES
The rules will not result in any increase in costs to the agency. The Division has been implementing the
inspections and renewals for many years, and all required resources are in place.
The Division estimates that the inspection of funeral establishments consumes the equivalent of 4 full
time field staff. If each of the 4 staff is estimated to cost the Division $55,000 in salaries and benefits
per year, the total is $220,000 per year. In addition, the Division estimates that transportation
(car/driving) costs per each of the 4 field staff average 200 miles per week at $.55 per mile equals $110,
times 48 weeks per year equals $5,280 per year per staffer, times 4 staffers equals $21,120 per year in
aggregate. The Division estimates that each of the 4 staffers causes $5,000 in other costs (office space,
utilities, equipment, and Division overhead), or $20,000 in aggregate for all 4 staffers, per year. The sum
of the Division costs is thus $246,120 per year.
3. TRANSACTIONAL COSTS
Transaction costs, renewal invoice. Approximately 90 days prior to the biennial renewal date for each
funeral establishment, the Division mails each funeral establishment a renewal invoice, which includes
the renewal fee and the inspection fees. The funeral establishment answers one question on the
invoice, regarding criminal convictions since the prior renewal, attaches a check for the required
aggregate fees, and mails the invoice and check back to the Division. The Division estimates that on
average it takes a funeral establishment 20 minutes of staff time to process the renewal invoice, to
include cutting the required check. If the licensee staff time is valued at $30 per hour, the cost per
licensee is $9.90. To this is added $1.25 for the return envelope and postage, resulting in an aggregate
processing cost per licensee of $11.15 ($9.90 + $1.25). Thus the aggregate biennial administrative cost
per year, for funeral establishments, is $9,644 (865 x $11.15). Since these costs are incurred only once
every second year, the aggregate annual cost to licensees is $4,822.
Transaction costs, inspection. The Division estimates that on average an inspection takes 15 minutes of
the time of the funeral establishment's funeral director in charge (FDIC), and 20 minutes of the
establishment's unlicensed support staff. If we estimate the value of the FDIC's time at $40 per hour,
and the value of support staff time at $20 per hour, the FDIC cost is $10, and the support staff time is
$6.60, or a total per licensee of $16.60. The Division estimates that 970 funeral establishment
inspections per year are done (865 + 65 + 30 + 10). This indicates an aggregate annual cost to the
licensees of $16,102 (970 x $16.60).
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4. ANALYSIS OF THE IMPACT ON SMALL BUSINESSES
The Division estimates that approximately 550 of the 865 affected funeral establishments are small
businesses.
The estimated cost per each small business follows (see economic analysis, above, for details):
$225 annual inspection costs
$225 annual license renewal cost ($450 paid every two years)
$11.15 annual transaction cost to small business to process annual renewal invoice
$16.60 annual transaction costs of facilitating annual inspection
$477 aggregate estimated annual cost per affected small business funeral establishment
METHODOLOGY USED TO CONDUCT THE ANALYSIS
Hourly rates for state personnel were calculated from actual salaries paid to those personnel. The $30
per hour for staff time of industry personnel is an estimate of the average composite cost of various
grades of staff that must spend some time on the task for the licensee. This composite was calculated
from knowledge of the industry. For example, to prepare a financial statement will require work and
review at multiple levels by staff of increasing responsibility, skill and compensation level. Low level
accounting clerks will assemble the data and prepare rough versions of the statements. These will be
passed to a person who is an accountant with a college degree and possibly professional licensure, who
will finalize the statements and endorse them and send them up the chain, where they will get reviewed
at one or two additional levels on the finance side of the firm. Frequently they will then cross over to
the firm’s legal staff for review of issues that may have potential legal/regulatory compliance impacts.
Some of these higher levels of staff may be compensated at $80 to $100 per hour.
The Division maintains a database from which it has extracted reliable data as to the number of licenses
issued per year and other pertinent data. The Division has staff that has extensive experience in
deathcare industry regulation and, to a significant extent, the economics and empirical characteristics of
deathcare industry businesses, particularly deathcare industry licensees. The Division has diligently
collated and applied all of said data to produce the good faith estimates of regulatory costs presented
herein.
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