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

SPONSOR Zanetti

ORIGINAL DATE

LAST UPDATED

2/19/07

2/20/07 HB 1238

SHORT TITLE Reversion of Military Service Insurance Fund

SB

ANALYST Peery-Galon

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

NA

NA

NA

NA

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Response Received From

Department of Military Affairs (DMA)

State Treasurer

No Responses Received From

Department of Finance Administration

SUMMARY

Synopsis of Bill

House Bill 1238 amends Section 20-4-7.3 NMSA 1978 to make the Service Member’s Life

Insurance Reimbursement Fund a non-reverting fund in the State Treasury.

FISCAL IMPLICATIONS

The Service Member’s Life Insurance Reimbursement Fund was created to provide New Mexico

National Guard service members refunds for paid federal Servicemembers Group Life Insurance

(SGLI). DMA reports the reimbursements can occur months after the premiums are paid.

Currently, statute does not state that the Service Member’s Life Insurance Reimbursement Fund

is reverting or non-reverting. Because of this, the Department of Finance Administration directs

DMA to revert any money unexpended at the end of a fiscal year in the Service Member’s Life

Insurance Reimbursement Fund. DMA reports in fiscal year 2007, the reimbursements for SGLI

will be deficient two months of funding due to the department paying two months costs from

fiscal year 2006 from fiscal year 2007 funds. DMA states due to the money reverting from the

House Bill 1238 – Page

2

fund, the department will experience an annual deficit of $250 thousand in paying SGLI.

SIGNIFICANT ISSUES

The Service Member’s Life Insurance Reimbursement Fund is comprised of appropriations,

gifts, grants, donations, bequests to the fund and income from investment of the fund. The State

Treasurer states the proposed legislation would clarify that the fund holding and earnings are

non-reverting. Interest earnings are based on the State Treasurer Office’s general fund rate of

return and is apportioned by the office on a monthly basis.

Both the LFC and executive recommended $1,228,000 for the Department of Military Affairs for

the Service Member’s Life Insurance Reimbursement Fund in fiscal year 2008. This amount

will refund the monthly premium of $28.00 to cover approximately 3,936 New Mexico National

Guard members with an SGLI policy of $400,000.

ADMINISTRATIVE IMPLICATIONS

State Treasurer states the Service Member’s Life Insurance Reimbursement Fund is administered

by the Department of Military Affairs.

RPG/mt