State Unable to Regulate Mortuaries : Funeral homes: Complaints are piling up as the agency funded by license fees only has enough money for a director and clerical help.

Funeral homes operate in California with virtually no state regulation because the government agency responsible for inspections and investigations has been broke since May, a legislative committee charged Wednesday.

The shortage of funds has forced the Board of Funeral Directors and Embalmers to suspend all routine audits and inspections, and has allowed scores of consumer complaints to pile up without even preliminary examination, the chair of the Assembly Committee on Consumer Protection said in a brief report.

“Law-abiding, reputable funeral homes . . . have been paying license fees each year to support a regulatory system that is not adequately protecting consumers from those operators who would take advantage of (grieving relatives) during times of distress and sorrow,” wrote Assemblywoman Jackie Speier (D-South San Francisco).

Speier issued the findings by the committee’s staff as a prelude to hearings that she plans to conduct later this month on the regulation of the mortuary industry. She said it could be another three months before the agency can get the money to resume inspections and investigations of the state’s 779 licensed funeral homes.

In the meantime, she said, consumer complaints about everything from hidden funeral expenses to the pressure that some directors place on bereaved relatives to purchase expensive coffins are expected to multiply. As of mid-September, she said, 187 cases were awaiting investigation.

Advised of the committee’s findings by reporters, the board’s executive director, Jim Allen, confirmed that his agency “did run short of funds” and had to transfer all its inspectors and auditors to other state agencies, leaving him with only three clerical workers.

But he strongly took issue with Speier’s assertion that the agency has abandoned its responsibility to consumers.

“I certainly do not agree with that,” he said. “I think it’s a gross mischaracterization of the situation and frankly I resent that.”

Allen acknowledged that the agency, which is financed entirely by licensing fees, seriously miscalculated the costs of more frequent inspections and investigations of funeral homes. He said licensing fees are paid in January, and by May the agency had run so low on funds that it only had enough money to pay the executive director and the clerical workers through the end of 1991.

He said the board has already taken steps to avoid a similar crisis next year by approving a 25% increase in fees--the fees for a funeral home license, for example, will jump from $300 to $400 a year--but the next round of these higher fees will not be paid until January.

In an interview, Speier argued that the agency should have anticipated this year’s crisis and taken steps to avoid it.

“The fact that they’re wringing their hands now that they are broke doesn’t impress me,” she said. “They weren’t doing anything before this happened.”

Even when the agency had inspectors on its staff, she said, there was little evidence that it ever disciplined funeral homes that violated state regulations. She said the committee staff findings showed that in 1989 and 1990, the agency filed only one disciplinary case. She said it appears it has filed no cases in 1991.

“It’s too much of an old boys’ network,” she said, noting that most of the board’s members work in the funeral industry.

Allen insisted that until recently, the board was not in a position to aggressively pursue inspections and investigations of funeral homes. For years, he said, the funeral industry had used its lobbying power to block legislative approval of any increase in fees. It was not until 1987, he said, that the Legislature approved higher ceilings on fees.

He said the board increased fees to provide more money for inspectors and auditors, but did not realize until it ran out of funds that the increases were not high enough to cover all the investigation and inspection costs.

Speier said that although the legislative hearings will also focus on the state Cemetery Board, it does not face the same problems as the funeral board.

But she said she was concerned that the cemetery board has only one inspector to investigate the state’s 150 crematories. She said 40% of the people who die in California each year are cremated, compared to an average of only 17% for other states. By the year 2010, she said, it is estimated that more than 50% of those who die in the state will be cremated.

“The continued rise in cremations is reshaping the funeral and cemetery industries, yet the cemetery board, which is responsible for inspecting crematories, has only one inspector on the job,” she said.

However, John Gill, the board’s executive director, said one inspector is adequate because crematory inspections only take about half an hour.