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
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Previously issued FIRs and attachments may
also be obtained from the LFC in
|
SPONSOR |
Varela |
DATE TYPED |
|
HB |
451/aHAFC |
||
|
SHORT
TITLE |
State Employee Group Insurance Contributions |
SB |
|
||||
|
|
ANALYST |
Geisler |
|||||
APPROPRIATION
|
Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
||
|
FY04 |
FY05 |
FY04 |
FY05 |
||
|
|
|
|
Significant |
Recurring |
All
Funds |
(Parenthesis
( ) Indicate Expenditure Decreases)
Relates to:
HB 283, SB 305, SB 334
Duplicates:
SB 373
General
Services Department
LFC Files
Public Schools Insurance Authority
SUMMARY
Synopsis of HAFC
Amendments
The
House Appropriation and Finance Committee amendments to the bill:
1)
Set minimum and maximum levels for the state group
insurance contributions for state agencies, public schools and institutions of
higher education. The maximum contribution
levels are dependent on availability of funding. The minimum contribution levels serve to
protect the benefit level for employees by establishing a floor.
2)
Amend the bill to ensure that the
contribution percentage is equal for all state employees in a given salary
bracket (Amendments 6 and 10).
3)
Amends the Group Insurance Contribution
language relating to public schools in Section 22-29-10 NMSA 1978 to ensure consistency
to the bills amendments to Section
The Senate Amendments to the General Appropriation
Act (GAA) provide $2 million from the general fund in FY 05 towards
implementing the new contribution brackets for state employees proposed by
AFSCME and contained in HB 451. GSD has
stated that it would cost $6.9 million from the general fund to implement the
new brackets for FY 05. There is no
specific new funding identified in the GAA as amended for increasing the
employer share of groups benefits cost for public school and higher education
employees.
Synopsis of Original Bill
This
bill changes the salary brackets and state contribution percentages towards
group insurance for state executive, legislative & judicial departments in
FY 05 and FY 06. There is no appropriation
contained in the bill. The brackets for
public and higher education remain unchanged.
|
Current: |
State Pays |
Employee Pays |
|
Annual
Salary less than $15,000 |
75% |
25% |
|
$15,000
but less than $20,000 |
70% |
30% |
|
$20,000
but less than $25,000 |
65% |
35% |
|
$25,000
and over |
60% |
40% |
|
Proposed
in FY05: |
State Pays |
Employee Pays |
|
Annual
Salary less than $30,000 |
80% |
20% |
|
$30,000
but less than $40,000 |
70% |
30% |
|
$40,000 and over |
60% |
40% |
|
Proposed
in FY06: |
State Pays |
Employee Pays |
|
Annual
Salary less than $50,000 |
80% |
20% |
|
$50,000
but less than $60,000 |
70% |
30% |
|
$60,000
or more |
60% |
40% |
Significant Issues
This
bill appears to make changes in the state group insurance contribution rates to
bring them into accord with the American Federation of State, County and
Municipal Employees (AFSCME) collective bargaining agreement that was recently
negotiated with the state. This would be the first change in the
contribution brackets in several years.
Salary increases over the years means that the majority of state
employees receive only a 60% share from the state for the cost of insurance.
FISCAL IMPLICATIONS
Costs
increase under HB 451 compared to the current brackets as the employer contribution
will increase for all employees that make under $40 thousand in FY 05 and $60
thousand in FY 06. Right now the majority of employees make over $25 thousand and are
limited to a 60% contribution from the employer. A number of cabinet agencies are concerned
that the increased cost to agencies of changing the employer share has not been
budgeted.
The
average savings to an employee making $21 thousand who purchases Blue Cross
Blue Shield family coverage would be $1,400 under the new benefit brackets in
FY 05.
|
FY 05 FISCAL IMPACT OF HB 451 (000's) |
|||
|
|
General Fund |
Other Funds |
Total |
|
State Employees |
6,943.1
|
5,237.7
|
12,180.8
|
|
ADDITIONAL FY 06 FISCAL IMPACT OF HB 451 (000's) |
|||
|
|
General Fund |
Other Funds |
Total |
|
State Employees |
11,086.1 |
8,363.1 |
19,449.2 |
The above numbers
include a 25% cost factor for additional employees that may join the program
due to the increased employer share of the premium. Alternatively, as the above numbers do not
factor in medical inflation, the 25% factor could address medical cost inflation.
ADMINISTRATIVE IMPLICATIONS
Section 2 of the bill
provides that any salary adjustment in January 2005 shall not reduce the state
contribution even if the salary adjustment of an employee places the employee
in a higher salary bracket; provided that the state contribution may be lowered
for salary adjustment on or after January 2006.
DUPLICATION AND CONFLICT
Duplicates
SB 373.
Conflicts with SB 305 and HB 283, which set different
contribution rates. SB 334 provides for
implementation of the health care brackets as proposed by the AFSCME agreement
for state employees, public school employees, and higher education employees.
WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL?
Public employees would
continue to see their take home pay reduced by increasing insurance premiums.
AMENDMENTS
The effective date is
GGG/yr:dm:lg