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

SPONSOR Nava

ORIGINAL DATE

LAST UPDATED

2-2-08

HB

SHORT TITLE Volunteer Firefighters Retirement Amendments

SJM 44

ANALYST Aubel

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY08 FY09 FY10 3 Year

Total Cost

Recurring or

Non-Rec

Fund

Affected

Total

$.01*

$.01* Non-Recurring

See narrative

(Parenthesis ( ) Indicate Expenditure Decreases)

*Minimal

SOURCES OF INFORMATION

LFC Files

Responses Received From

Public Employees Retirement Association (PERA)

No Response From

Public Regulatory Commission (Fire Marshal Office)

New Mexico Municipal league

New Mexico Association of Counties

SUMMARY

Synopsis of Bill

Senate Joint Memorial 44 cites the difficulty of administering the Volunteer Firefighters

Retirement Act and requests the Public Employee Retirement Association (PERA), the State Fire

Marshal’s Office, the State Volunteer Firefighter Association, the Fire Service Council, the New

Mexico Municipal League and the New Mexico Association of Counties to report to the

appropriate interim committee after June 1, 2008 to propose amendments to the Act to remedy

the problems identified.

FISCAL IMPLICATIONS

The participating parties would incur operating expenses to fulfill the requirement to meet and

determine amendments, which would most likely be minimal.

House Joint Memorial 44 – Page

2

SIGNIFICANT ISSUES

PERA has testified before interim legislative committees that administering the State Volunteer

Firefighters Retirement program has become problematic in determining service credit, reporting

service credit, calculating benefits, and removing inactive members for the retirement database.

These issues with data unreliability have made a reliable actuarial assessment of the plan

difficult.

The agency notes one of the primary issues is whether a significant number of volunteer fire

departments will voluntarily participate in the data-clean up effort and provides the following

background information:

In July 2007, a letter under the signatures of PERA Executive Director Terry Slattery,

CEBS, and State Fire Marshal John Standefer was sent to all volunteer fire departments

requesting an update on the status of members reported active in PERA’s database. A

roster of active members was provided to each fire chief. As of December 31, 2007, 249

out of a 365 active volunteer fire departments had returned corrected rosters to PERA,

with 116 volunteer fire departments – approximately 1/3 of the total – not responding.

Requests for corrected rosters were again sent to all volunteer fire departments in January

2008 with the annual reporting certifications. The deadline to submit attendance

information by each fire department is March 31, 2008.

The Volunteer Firefighters Retirement Plan is unlike any other PERA coverage plan in that it is

not funded based upon contributions from salary. Volunteer firefighters are not salaried

employees and their “retirement benefits" do not derive from employment. Thus, payroll data

used to account for service credit for other retirement plans is unavailable, and PERA can only

depend on the information voluntarily provided by each fire chief.

PERA maintains that its joint work with the State Fire Marshal’s office, the Fire Service Council

and the interim committee to which these issues are assigned can remedy ongoing statutory

impediments that negatively impact administration of the Act.

PERFORMANCE IMPLICATIONS

As it currently is administered, the Volunteer Firefighters Retirement Plan is difficult to provide

reliable actuarial information.

ADMINISTRATIVE IMPLICATIONS

The listed agencies will be required to participate with the assigned interim committee to study

the provisions of the Volunteer Firefighters Retirement Act and consider necessary amendments

to remedy administrative problems it experiences.

OTHER SUBSTANTIVE ISSUES

PERA provides additional information as follows:

Service credit is reported on behalf of volunteer firefighters by the chief of each volunteer

fire department on or before a March 31

st

statutory deadline. Failure to meet this

House Joint Memorial 44 – Page

3

deadline results in the member’s loss of service credit for the preceding year. Recent

legislative changes have attempted to remedy this problem. For example, in 2005

legislation allowed an active member to post or adjust up to 5 years of service credit

earned prior to January 1, 2005. Volunteer fire departments statewide reported past or

adjusted service credit for approximately 1300-1500 individual volunteer firefighters. It

has been PERA’s experience that significant follow-up with volunteer fire departments is

required to ensure correct reporting for individual firefighter members. Nonetheless,

PERA is aware of many inquiries by volunteer firefighters since this reporting window

closed that still have not had their earned service credit reported to PERA.

In addition, prior to July 1, 2003, a volunteer firefighter whose first year of service credit

was accumulated during or later than the year in which the firefighter attained age forty

five (45) was not entitled to membership under the Volunteer Firefighters Retirement

Act. In 2003, the legislature amended the law to remove this maximum starting age

limitation. However, in Gill v. Public Employees Retirement Board, 2004-NMSC-016,

the New Mexico Supreme Court held that the 2003 amendment could not be applied

retroactively; therefore, the 2003 amendment did not resolve all of the service credit

reporting issues raised by former firefighters who had been excluded from membership

under the pre-2003 law.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

Amendments to improve the administration of the Volunteer Firefighters Retirement Plan will

most likely not be identified and related to the appropriate interim committee for legislative

consideration. In addition, PERA notes that service credit that is not reported on behalf of

volunteer firefighters by the chief of each volunteer firefighter department on or before a March

31

st

statutory deadline each year is not credited to a member’s account.

MA/mt