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

SPONSOR HEC

DATE TYPED 3/8/05

HB 791/HECS

SHORT TITLE School Liability for After-Hours Use

SB

ANALYST Wilson

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

$150.0-$200.0 Recurring General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

New Mexico Public School Insurance Authority (PSIA)

SUMMARY

Synopsis of HEC Bill Substitute

The House Education Committee substitute for House Bill 791 bill requires PSIA to assume the

risk for liability coverage for authorized use of school facilities by the community. It also re-

quires APS to do the same under its risk program. Coverage is limited to $1million combined

single limit per occurrence

Currently, schools may allow building use by outside groups and coverage is provided in one of

two ways: (1) the school district is named as an additional insured on the user’s policy or (2)

limited additional premises liability insurance is provided through NMPSIA and billed to the

user. Examples of outside groups which have been approved in the past are Boy Scouts, Lions

Club. Private individuals have been permitted to use school buildings for wedding receptions or

post-funeral pot luck dinners.

Significant Issues

The significant issue is should the cost of insurance for the use of school buildings after hours be

paid out of taxpayer money or should it be paid by the outside private users.

House Bill 791/HECS -- Page 2

The other significant issue is if the legislature decides that these insurance costs should be picked

up by the taxpayers, then an additional appropriation to PSIA will be needed to cover these risks.

FISCAL IMPLICATIONS

Historically, losses incurred for use of school premises by outside groups have averaged $100

thousand annually. There are a limited number of carriers interested in writing this coverage.

PSIA estimates the fiscal impact of $150 thousand to $200 thousand per year will be passed on

to the school districts.

ADMINISTRATIVE IMPLICATIONS

The PSIA will need to use staff time and legal expenses to rewrite and republish the PSIA rules

and regulations as well as to educate member entities.

DW/yr:sb:lg