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F I S C A L I M P A C T R E P O R T

SPONSOR McSorley

ORIGINAL DATE

LAST UPDATED

1/26/07

2/22/07 HB

SHORT TITLE

DISPUTE RESOLUTION & PREVENTION

OFFICE

SB 479/aSJC

ANALYST Propst

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

$185.0

Recurring

Public Liability Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates SB 499 Office of Peace

Duplicates appropriation in the General Appropriation Act: funding for three FTE was requested

at $185.0 and included in the Executive request and LFC recommendation at different levels.

SOURCES OF INFORMATION

LFC Files

Responses Received From

General Services Department (GSD)

SUMMARY

Synopsis of SJC Amendment

The amendment provides that parties “may decline to participate in a requested or offered

alternative dispute resolution activity."

Synopsis of Original Bill

Senate Bill 479 would establish an alternative dispute prevention and resolution program in the

Risk Management Division (RMD) of GSD to organize and manage use of alternatives to formal

litigation in dispute resolution and encourage use of dispute prevention for state agencies insured

by RMD. It:

•

requires agencies to offer positive alternatives to parties in disputes

•

establishes a nine-member council to develop standards for alternative dispute prevention

and resolution

Senate Bill 479/aSJC – Page

2

•

establishes an office of dispute prevention and resolution (ODPR)

•

requires development of standards for dispute prevention and resolution

•

provides for training standards and schedules

•

requires an annual report on ADPR activities and recommendations

•

contains a recurring $185.0 appropriation from the Public Liability Fund to support three

permanent staff in RMD to support the work of the Council.

FISCAL IMPLICATIONS

A three-person permanent staff in RMD would be funded with a $185.0 recurring appropriation

from the Public Liability Fund (PLF). The PLF is the requested revenue source for funding this

program because effective use of ADPR strategies creates reductions in settlement costs to that

fund.

SIGNIFICANT ISSUES

GSD reports that use of alternative dispute resolution strategies can yield dramatic results. In

FY98, New Mexico spent $6.3 million to settle or defend 273 civil rights claims against the state.

Training for state supervisors in civil rights and documenting discipline began in FY98. In

FY02, mediation training was added. Beginning in FY02, civil rights claims dropped from a

three-year average of 269 to 183 in FY02 (a 31% decline) with costs down to $4,300.0. In

FY03, the lower numbers held steady at 182 at a cost of $4,800.0. The net documented savings

in FY02 and FY03 was $3,500.0.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

SB 499 proposes $493.6 from the general fund for an office and 10-member council

administratively attached to the Department of Finance and Administration. The relationship or

overlap with the proposed bureau in RMD is not clearly known at this time. GSD’s budget

requested $158.0 from the PLF to support three permanent positions. The Executive request

included these three positions and the LFC recommendation included one position.

OTHER SUBSTANTIVE ISSUES

The ADR Council, established by Executive Order 2005-047, recommended this action in an

April 2006. GSD included the requested funding and FTE in its September 1, 2006

appropriation request in cooperation with the ADR Council.

RMD Loss Control Bureau does not have adequate resources to provide ADR training and

program direction. Only 37 of the 150 insured client agencies have received training in the last

three years. Civil rights claims (particularly employment-related litigation) cost nearly

$50,000.0 in the last five years.

WEP/mt:nt