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

SPONSOR HEC

ORIGINAL DATE

LAST UPDATED

2/9/2006

HB 450/HECS

SHORT TITLE School Liability for After-Hours Use

SB

ANALYST Geisler

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

$266.0

Non-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 Bill

The House Education Committee substitute for House Bill 450 bill requires PSIA and Albuquer-

que Public Schools to assume the risk for liability coverage for authorized use of school facilities

by the community. Coverage is limited to $1 million combined single limit per occurrence. A

general fund appropriation of $266 thousand is made to the Public Education Department for the

cost of this additional coverage.

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 (called TULIP, for Tenant User Liability Insurance Policy). Examples of TULIP purchasers

are private individuals requesting to use school buildings for wedding receptions.

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. In many small

communities, the public school buildings are the only public buildings available for events.

House Bill 450/HECS -- Page 2

FISCAL IMPLICATIONS

The bill contains an appropriation for $266 thousand. According to PSIA, this should be enough

to cover the cost of this coverage for all PSIA insured schools and APS. As this is a non-

recurring appropriation, future costs of this coverage would be built into the public school sup-

port budget.

Historically, losses incurred for use of school premises by outside groups (and reimbursed by

outside insurance carriers) have averaged $100 thousand annually. Premiums paid for this cov-

erage have been between $50,000 to $100,000 annually. It is difficult to accurately project the

exact costs, as not all after-school use has been reported to PSIA by the districts and participation

in the TULIP program has been low. There are a limited number of carriers interested in writing

this coverage.

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.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

The existing TULIP program would be available and paid for by the user, but the potential liabil-

ity for uninsured after school use will remain due to spotty compliance by schools in enforcing

the requirement that outside users have insurance.

GG/nt