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

SPONSOR Komadina

ORIGINAL DATE

LAST UPDATED

1/23/07

HB

SHORT TITLE

Relating to Health Insurance; Providing Uniform

Contributions for Public School Employees

SB 37

ANALYST Propst

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

FY09

$7,538.0*

$8,292.0*

Recurring General Fund

(Parenthesis ( ) Indicate Revenue Decreases)

*Note: The estimated increase in PSIA Revenue is 3% of medical, dental, vision, and disability

collected premiums.

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY07

FY08

FY09 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total

$32,242.0*

$36,268.0

$68,510.0

Recurring General

Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

*Note: This is the estimated annual impact to all school districts and charter schools in PSIA.

This does not include the financial impact for APS.

SOURCES OF INFORMATION

Public School Insurance Authority, Higher Education Department

Responses Received From

Public School Insurance Authority (PSIA)

Higher Education Department (HED)

Senate Bill 37 – Page

2

SUMMARY

Synopsis of Bill

Senate Bill 37 relates to Health Insurance; Providing Uniform Contributions for Public School

Employees.

This bill increases the state contribution percentage towards group insurance for member school

districts and charter schools, including APS to a straight 80% for all employees, regardless of

salary. It does not change the contribution requirements for higher education entities.

The table below shows the reductions in monthly payroll deductions under the 80% approach.

The Blue Cross Blue Shield High Option estimated FY 08 premiums were used.

Current Brackets FY 08 Employee New Employee

Deduction for Medical Deduction at 20%

Under $15,000 $111 single, $282 family $89 single, $226 family

$15,000 - $20,000 $133 single, $339 family $89 single, $226 family

$20,000 - $25,000 $156 single, $395 family $89 single, $226 family

$25,000 & over $178 single, $452 family $89 single, $226 family

Source: Public Schools Insurance Authority

FISCAL IMPLICATIONS

According to PSIA, the state share (annual) would increase by the following amounts for these

NMPSIA coverages:

Medical: $36,320.0

Dental: $ 2,303.0

Vision: $ 425.0

Disability: $ 552.0

Total: $39,600.0

This calculation also assumes a 3% growth in employee enrollment.

If the bill were amended to an October 1 effective date (see Administrative Implications and

Amendment below), the first year impact would be for nine months or $29,700.0; in subsequent

years where the 80% contribution is for the full 12 months, the base figure would be $39,600.

For subsequent years, PSIA used this base and assumed an average 10% increase.

SIGNIFICANT ISSUES

There is no appropriation contained in the bill. In the 2004 session PSIA entities were given au-

thority to increase their contributions up to 80%. PSIA has identified only three entities that

have increased their contribution above the minimum brackets.

Senate Bill 37 – Page

3

PERFORMANCE IMPLICATIONS

Growth in covered lives will likely occur. NMPSIA would need to consider a special enrollment

for those who previously declined coverage.

ADMINISTRATIVE IMPLICATIONS

The effective date contained in the bill is July 1, 2007. PSIA notes that this may be problematic

for school business offices, which cut their summer payroll checks in May. A July 1 effective

date would mean additional work for school business offices because they would have to change

the deductions once in May to reflect the new contribution of 80% and again in September for

the October premium changes. In the future, however it would be easier for the school business

offices to have a flat 80% because the employer match would not change when an employee en-

ters a different salary bracket.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

PSIA reports that fewer employees might be able to afford to enroll for health insurance benefits.

POSSIBLE AMENDMENTS

Insert an October 1, 2007 effective date.

WEP/nt