Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports if they are used for other purposes.

 

Current FIRs (in HTML & Adobe PDF formats) are available on the NM Legislative Website (legis.state.nm.us).  Adobe PDF versions include all attachments, whereas HTML versions may not.  Previously issued FIRs and attachments may also be obtained from the LFC in Suite 101 of the State Capitol Building North.

 

 

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

 

 

 

SPONSOR

Rodella

DATE TYPED

1/27/04

HB

143

 

SHORT TITLE

Adjust Volunteer Firefighter Retirement

SB

 

 

 

ANALYST

Gilbert

 

APPROPRIATION

 

Appropriation Contained

Estimated Additional Impact

Recurring

or Non-Rec

Fund

Affected

FY04

FY05

FY04

FY05

 

 

 

*Indeterminate - See Narrative

Recurring

Fire Protection Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

 

REVENUE

 

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY04

FY05

 

**$(Indeterminate) See Narrative

Recurring

General Fund

(Parenthesis ( ) Indicate Revenue Decreases)

 

SOURCES OF INFORMATION

LFC Files

 

Responses Received From

Public Employees Retirement Association (PERA)

Public Regulation Commission (PRC)

 

SUMMARY

 

Synopsis of Bill

 

House Bill 143 expands the number of persons eligible to receive a benefit under the Volunteer Firefighters Retirement Act (VFRA). This bill allows VFRA members to post or adjust service credit earned for one or more calendar years prior to January 1, 2004, by filing proper documentation with the Public Employees Retirement Association (PERA) no later than December 31, 2004.  Current law requires posting of service credit for the preceding year, on or before March 31st of each year.

 

 

 

Significant Issues

 

This bill would provide a one-time opportunity for VFRA members to post and/or adjust service credit earned for one or more calendar years of service earned prior to January 1, 2004.

 

HB 143 places the responsibility for reporting service credit corrections on VFRA members, rather than fire department chiefs.

 

The six-month “grace period” for reporting service credit corrections proposed in this bill is similar to a grace period previously offered to VFRA members.

 

FISCAL IMPLICATIONS

 

According to PERA, no relevant demographic data or actuarial studies have been compiled to evaluate the fiscal impact of this amendment.  PERA is aware however, that a significant portion of the Volunteer Firefighter Fund membership has not had all eligible service credit posted to their accounts.

 

* The source of funding to meet the VFRA fund’s statutory obligations is an annual appropriation of $750,000.  This amount is supplemented, as required, to meet unfunded obligations. Adding new liabilities to the fund may increase the annual contribution to the fund in order to keep it actuarially sound.

 

** As a result, this bill may reduce general fund revenue since receipts remaining in the fire protection fund are annually transferred to the general fund per section 59A-53-15 NMSA 1978.

 

ADMINISTRATIVE IMPLICATIONS

 

Allowing members a one-time opportunity to correct service credit that was earned for years prior to January 1, 2004, but not posted to their member accounts, will have a significant administrative impact on PERA.  PERA is unable to assess the extent of the impact, because it does not presently have information regarding the number of persons who will seek to post or adjust service credit as the result of this legislation.  The legislation, if enacted, would require changes to PERA’s computerized retirement information systems.  Additionally, PERA will incur increased printing costs associated with printing pertinent information and required “Corrected Qualification Record” forms.  Additional staffing will also be needed to correct and post prior year service credit.

 

OTHER SUBSTANTIVE ISSUES

 

The Volunteer Firefighters Retirement Plan, passed by the Legislature in 1983, is unlike any other PERA coverage plan in that it is not funded based upon contributions from salary.  Volunteer firefighters are not salaried employees and their “retirement benefits” do not derive from employment.  Rather, the benefits are provided by the Legislature and funded by the Legislature from the Fire Protection Fund.

 

RLG/yr