NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature. The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.
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| SPONSOR: | Varela | DATE TYPED: | 03/09/01 | HB | 815/aHAFC | ||
| SHORT TITLE: | Raise Public Employee Salary Brackets | SB | |||||
| ANALYST: | Carrillo | ||||||
| Recurring
or Non-Rec |
Fund
Affected | ||||
| FY01 | FY02 | FY01 | FY02 | ||
| $ 8,229.8 | Recurring | General Fund | |||
| $ 794.2 | Recurring | Other State Funds | |||
| $ 335.3 | Recurring | ISIA* | |||
| $ 1,521.0 | Recurring | Federal Funds | |||
_____
____________
*Internal Service Funds/Interagency Transfers
(Parenthesis ( ) Indicate Expenditure Decreases)
SOURCES OF INFORMATION
Public School Insurance Authority
Commission on Higher Education
State Department of Education
State Highway and Transportation Department
State Personnel Office
Retiree Health Care Authority
Office of the Attorney General
Public Employees Retirement Association
LFC Files
SUMMARY
Synopsis of the HAFC Amendment
The House Appropriations and Finance Committee amendment to House Bill 815 provides an effective date of July 1, 2001.
The remainder of the FIR is unchanged.
Synopsis of Bill
House Bill 815 proposed to raise the public employee salary brackets used to determine employer insurance premium contribution levels. The proposed changes are illustrated below:
| Employer Contribution Level | Current Salary Bracket | Proposed Salary Bracket |
| 75 percent | Less than $15,000 | Less than $22,500 |
| 70 percent | Less than $20,000 | Less than $27,500 |
| 65 percent | Less than $25,000 | Less than $32,500 |
| 60 percent | More than $25,000 | More than $32,500 |
Significant Issues
According to staff from the State Personnel Office (SPO):
Section 10-7-4 NMSA 1978 (Group Insurance - Cafeteria Plan - Contributions from Public Funds) has not been adjusted since 1989. Inflation has resulted in employees moving up in the salary brackets and consequently paying for a larger and larger percentage of the total group insurance premium cost (and the public employer paying a smaller and smaller percentage).
There is a general fund cost generated by this change because the public employer share of the group insurance premium will increase. However, there is not an appropriation for FY02. In future years, the increased cost would be built into agency base budget requests.
FISCAL IMPLICATIONS
The following chart illustrates the impact of the increase in the salary brackets by $7,500.
| Agency | General Fund | Other State Funds | Interagency Transfers | Federal Funds | Total |
| RMD | 1,910.0 | 794.2 | 335.3 | 1,205.0 | 4,244.5 |
| PSIA | 4,548.7 | 252.0 | 4,800.7 | ||
| APS | 1,771.1 | 64.0 | 1,835.1 | ||
| Total | 8,229.8 | 794.2 | 335.3 | 1,521.0 | 10,880.3 |
RMD - Risk Management Division
PSIA - Public School Insurance Authority
APS - Albuquerque Public Schools
The proposed legislation provides a potential increase to the net disposable income for those employees whose annual gross salary is $32,500 or less.
ADMINISTRATIVE IMPLICATIONS
The human resources and payroll functions will have to be adjusted to accommodate the group health brackets.
TECHNICAL ISSUES
House Bill 815 should include an effective date of July1, 2001.
AMENDMENTS
Include an effective date of July 1, 2001.
AG's staff suggests tying any dollar increase in the cost to the employee of the health plan with any cost of living increase granted to the employee.
WJC/prr/njw