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

SPONSOR Hall

ORIGINAL DATE

LAST UPDATED

2/1/07

HB 783

SHORT TITLE

Educational Entity Insurance Coverage

SB

ANALYST Propst

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Public School Insurance Authority

SUMMARY

Synopsis of Bill

House Bill 783 amends the definition of educational entities eligible to participate in the Public

School Insurance Authority. It expands the definition to include “non-profit organizations

dedicated to the improvement of public education and whose membership is composed

exclusively of public school employees, public schools or school districts".

FISCAL IMPLICATIONS

PSIA estimates minimal fiscal impact as a result of HB 783.

SIGNIFICANT ISSUES

According to the FY 06 audit of PSIA, “There are three non-governmental not for profit entities

with approximately 50 total employees that are included as NMPSIA members but are not

technically eligible to be members per NM State Law Chapter 22 NMSA." These three groups

(NEA, NMAA, and AFTNM) have been participating in PSIA since PSIA’s inception in 1987.

By statute, NEA has two members on the PSIA Board and AFTNM has one member on the

PSIA Board.

House Bill 783 – Page

2

At its December 2006 Board meeting, the PSIA Board directed staff to put forth legislation to

clarify the statutory definition of educational entities to address the eligibility of employees of

education related groups to participate in PSIA. Without such clarification, PSIA would be

forced to terminate coverage on NEA, NMAA, and AFTNM and these groups would have to

secure coverage on an individual basis.

ADMINISTRATIVE IMPLICATIONS

Expansion of the definition of educational entities would allow PSIA to continue to insure these

three groups and would also allow other educational entities (CES, NMSBA, etc.) to elect to

participate in PSIA.

Since the three groups in question are already in PSIA, no additional administrative work is

needed. If any additional educational entities sought coverage with PSIA, PSIA has the

processes in place to enroll them into the pool.

OTHER SUBSTANTIVE ISSUES

PSIA reports that an

issue of anti-donation may exist if it is historically shown that these groups’ loss

ratios exceed the average PSIA pool loss ratio and an argument could be made that these non-

governmental groups’ premiums are subsidized by the school districts. However, since these groups

represent less than 2/10% of the entire PSIA pool, the impact of any possible anti-donation restriction is

not significant. Court rulings on ‘deminimis’ standards would apply.

Total PSIA Monthly Medical Premium: $17,641,204

Total Monthly Medical Premium NEA, NMAA, AFTNM: $29,634

Total PSIA Medical Employees: 25,540

Total NEA, NMAA, AFTNM Medical Employees: 46

Expansion of eligibility will offer improve availability of insurance coverage for those other educational

entities currently securing coverage on their own. Other educational entities have expressed a desire to

join the PSIA pool, for example, Cooperative Educational Services.

WEP/mt