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

SPONSOR HJC

ORIGINAL DATE

LAST UPDATED

2/20/07

3/1/07 HB CS/140/aHAFC

SHORT TITLE Family Opportunity Accounts Act Eligibility

SB

ANALYST Lucero

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

$0.0

Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to Appropriation in the General Appropriation Act

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY07

FY08

FY09 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total

Minimal Minimal Minimal Recurring

Individual

Development

Account

Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Office of Workforce Training and Development (OWTD)

New Mexico Higher Education Department (HED)

SUMMARY

Synopsis of HAFC Amendment

The House Appropriations and Finance Committee Amendment strikes language that limits use

of the account of an indigent child to attend school; therefore, making the restriction the same for

all children. The amendment further requires a foster child or an indigent child complete high

school or their GED before using an account, unless a program administrator has approved use

for an allowable serious emergency.

CS/House Bill 140/aHAFC – Page

2

Synopsis of Original Bill

House Judiciary Committee Substitute for House Bill 140 would make several changes to the

current Family Opportunity Accounts Act (FOAA) Program:

•

Re-name the program to the Individual Development Accounts (IDA) Program; and

•

Lower the age under the definition of a child in foster care as an eligible individual from

age 16 to 15.

•

Add a Subsection (C) to Sec. 58-30-4, to read, “ELIGIBLE INDIVIDUALS, C. A child

is an eligible individual if the child: (1) is at least fifteen years of age and not more than

eighteen years of age; (2) is a member of a family whose members are all indigents;"

•

Requires those serving on the individual development account council obtain subject

matter expertise through attendance at conferences and workshops related to asset

building strategies and the payment of per diem for attendance at meetings, conferences,

and workshops.

•

Restrict the uses of IDA funds for (C) above (15 – 18 year olds) to costs related to post-

secondary education.

•

Corrects gender specific language

FISCAL IMPLICATIONS

House Judiciary Committee Substitute for HB 140 contains no funding for the FOAA program.

HAFC substitute for HB2 contains $250,000 for the FOAA program.

The original Act limits the funding for administrative costs to 5 percent of the individual

development account fund. The 5 percent limit may be too limiting to properly administer the

program. Most other states, allow for a 10 percent administrative cost. The ability to pay

Individual development council members additional or per diem, as proposed in the bill, may be

difficult to impossible given the 5 percent administrative cost limit. For FY08, given the HAFC

appropriation of $250,000 for FOAA, the administrative allocation will be $12,500 to administer

the program and pay per diem.

SIGNIFICANT ISSUES

House Judiciary Committee Substitute for House Bill 140 adds a new eligibility category; a child

aged 13 to 18 who is born in New Mexico, is a citizen or legal resident of the United States, is a

resident of New Mexico, and is a member of family whose members are all indigents. Prior to

this, eligibility was limited to those aged 18 or older unless the participant was a foster child in

which case eligibility was established at age 16 or older.

The new eligibility category, children aged 13 – 18 who are members of a family who is

indigent, is restricted in another section of the bill on how the money from the account may be

used. HB 140 limits the use of the money for children aged 13 – 18 to expenses to attend an

approved post-secondary or vocational educational institution, and includes payment for tuition,

CS/House Bill 140/aHAFC – Page

3

books, supplies and equipment required for courses. This restriction does not apply to children

in foster care aged 15 or older. It is unclear why indigent children accounts are restricted while

foster children accounts are not.

OWTD issued an RFP in early FY07 to begin implementing the program. Currently, three

contracts have been executed for more than $1.4 million under the program, and contractors have

begun enrolling and have enrolled participants.

PERFORMANCE IMPLICATIONS

None identified at this time

ADMINISTRATIVE IMPLICATIONS

There is a minimal impact to OWTD to implement the eligibility changes. There may be an

additional cost to pay per diem to the individual development account council for attendance at

required meetings, authorized conferences and workshops. Currently, the Act only allows 5

percent of the individual development fund to be spent administratively, which creates a limited

funding stream.

It is unclear if OWTD and/or the individual development fund will be required to pay for

individual development account council members to become subject matter experts. The bill is

proposing to pay per diem for attendance at a conference but it is unclear who pays for

conference fees, courses, etc.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

None identified at this time

TECHNICAL ISSUES

The bill proposes to expand an existing provision of law that provides that payments under the

program may be made only through vouchers signed by the director. The proposed modification

adds authorization for the director’s designee to also sign vouchers. Under the DFA SHARE

financial system, no signatures whatsoever are required on vouchers because SHARE vouchers

are strictly electronic records and no hard-copy vouchers exist in the system. In addition, no

electronic signatures exist for vouchers in SHARE. Thus the proposed expansion of the

provision, and the provision itself, are invalid under the SHARE financial system.

OTHER SUBSTANTIVE ISSUES

House Judiciary Committee Substitute for House Bill 140 changes the age requirement for an

eligible child from 13 to 15 years old and the age requirement for an eligible foster child from 16

to 15 years old. Also, language requiring an eligible foster child to have been born in New

Mexico was removed.

CS/House Bill 140/aHAFC – Page

4

ALTERNATIVES

Make the restriction on the use of the accounts the same for all children under the age of 18. The

bill proposes to limit use of the accounts of an indigent child to attend school while foster

children can use the accounts to purchase a home, car, start a business, go to school, etc.

DL/mt