Minnesota accountants stare down the guardians of their industry

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Certified public accountants normally work in the background. But they are stepping forward in Minnesota to challenge national organizations with a grip on their industry.

The contest, which began unfolding Thursday in a state Senate committee hearing in St. Paul, has implications for millions of professionals in dozens of occupations. Cosmetologists, barbers, preschool teachers, dental assistants and anyone else who needs state permission to earn an honest living — more than one-fifth of U.S. workers — should be rooting for the underdogs.

“We knew we would get pushback,” says Geno Fragnito, director of government relations at the Minnesota Society of CPAs, the state group fighting for increased freedom. “Based on input from our membership, we made the decision to move forward, knowing full well what was coming back at us.”

The dispute involves occupational licensing requirements for Minnesota CPAs. Fragnito and his organization want flexibility for applicants, who already must pass a rigorous four-part exam that stumps about half of all test takers on their first try — a higher failure rate than the bar exam for attorneys.

CPAs must also graduate from college and gain work experience. Altogether, they face a grueling six-year licensing process.

This is closer to previous standards, before states started ratcheting up CPA education requirements to give the industry more prestige. Florida tweaked its laws first in the 1980s, and Tennessee followed nearly 10 years later. Other states, including Minnesota, waited until after 2000. Before these changes took effect, CPAs could launch their careers with 120 credit hours of college.

Now CPAs need 150 credit hours, which can cost more than $200,000. Research shows no measurable benefit from the extra schooling. “It has nothing to do with quality,” Fragnito says. “It has to do with control.”

Many business students do the math and choose other career paths like finance or marketing, leaving accounting firms with a shrinking talent pool.

The American Institute of Certified Public Accountants, one of the organizations asserting itself in Minnesota, does not care. It prefers the status quo. But rather than defend the 150-hour rule on the merits, it uses scare tactics. A recent letter to lawmakers threatens Minnesota CPAs with the loss of their ability to work across state lines if the legislation passes.

The National Association of State Boards of Accountancy, another organization lined up against Minnesota CPAs, uses similar rhetoric. These threats are mostly bluster. States, not lobbying groups, set licensing requirements.

Additional inspiration comes from Minnesota makeup artists and blow-dry stylists, who stared down the guardians of their industry and won the right to work without beauty school diplomas in 2020. Now, all these professionals need from the state is a short course in safety and sanitation.

More recently, lactation consultants won the right to help nursing mothers and their babies without two years of college in Georgia. African-style hair braiders won the right to twist and weave hair without a cosmetology license in Idaho. End-of-life doulas won the right to counsel grieving families without a funeral director license in California. And vacation property managers won the right to broker short-term rentals without a real estate license in Pennsylvania.

Our public interest law firm, the Institute for Justice, helped push through these reforms. Some concessions came through the legislative process. Other victories came in court. Either way, the underlying principle remains constant: People have a right to earn a living and provide for their families.

Lawmakers and regulators should not interfere without evidence that consumers lack sufficient information to fend for themselves. This means reducing barriers, whenever possible, for aspiring professionals, including accountants in the Land of 10,000 Lakes.