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

Romero

DATE TYPED

2/9/04

HB

 

 

SHORT TITLE

State Employee Group Insurance Contributions

SB

334

 

 

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 373

 

SOURCES OF INFORMATION

 

General Services Department

LFC Files

Public Schools Insurance Authority

 

SUMMARY

 

Synopsis of Bill

 

This bill changes the salary brackets and state contribution percentages towards group insurance for state, public schools, and higher education employees in FY 05 and FY 06.   There is no appropriation contained in the bill.

 

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, teachers, and higher education employees receive only a 60% share from the state for the cost of insurance.

 

FISCAL IMPLICATIONS

 

Costs increase under SB 334 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.

 

PSIA notes that average savings to an employee making $21 thousand who purchases Blue Cross Blue Shield family coverage would be $1,600 under the new benefit brackets in FY 05. 

 

 

FY 05 FISCAL IMPACT OF SB 334 (000's)

 

General Fund

Other Funds

Total

State Employees

         6,943.1

            5,237.7

12,180.8

Public Schools

        21,207.2

            1,116.2

         22,323.4

Higher Education

         1,215.4

            2,257.2

           3,472.6

Total

        29,365.7

            8,611.1

         37,976.8

 

FY 06 FISCAL IMPACT OF SB 334 (000's)

 

General Fund

Other Funds

Total

State Employees

        11,086.1

   8,363.1

     19,449.2

Public Schools

    19,186.2

   1,009.8

     20,196.0

Higher Education

        1,263.4

   2,346.3

      3,609.7

Total

      31,535.7

  11,719.2

     43,254.9

 

Per GSD, the above numbers for state employees include a 25% “migration” cost factor for additional state employees that may join the program due to the increased employer share of the premium.  Alternatively, as the above numbers for state employees do not factor in medical inflation, the 25% factor could address medical cost inflation.   The cost estimates for public schools and higher education do not include a migration factor.

 


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.

 

CONFLICT

 

Conflicts with SB 305 and HB 283, which set different contribution rates.  SB 373 provides for implementation of the health care brackets as proposed by the AFSCME agreement for state employees only.

 

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 July 1, 2004.  PSIA would request the effective date shall be effective between July 1, 2004 and January 1, 2005, in conjunction with the effective date of each district's, charter school's, or higher education group insurance premium changes. 

 

GGG/yr:njw