NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

SPONSOR   Garcia           DATE TYPED 02/14/99 HB           

SHORT TITLE ERA Military Service Credit             SB  38             

                                                   ANALYST  Eaton      

   Estimated Revenue    Subsequent Recurring Fund

FY99 FY2000 Years Impact or Non-Rec Affected

$    .  $   NFI   $    .                           

(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates/Conflicts with/Companion to/Relates to

SOURCES OF INFORMATION

New Mexico State Department of Education

Education Retirement Board (ERB)

SUMMARY

Synopsis of Bill:

This bill would amend the Education Retirement Act (22-11-34 NMSA 1978) by eliminating the requirement that electing to purchase service credit take place within three years of the date of hire. The maximum credit purchase is five years.

This bill would also amend the Act by eliminating the requirement that the military service was performed before July 1, 1967. (This law was enacted July 1, 1967.)

Significant Issues:

In the past, the legislature has provided a window of opportunity for the purchase of service credit -particularly military service. The cost would be based on contribution rates of the time, and interest to date. The employer may, but is not obligated to, pay the administrative unit contributions of the time and interest.

FISCAL IMPLICATIONS

None.

ADMINISTRATIVE IMPLICATIONS

Unknown. Possible increased volume of service and ERB staff workload. ERB has not indicated that this would require a budget increase.

CONFLICT/DUPLICATION/COMPANIONSHIP/RELATIONSHIP

HB 117 (M.H. Garcia) ERA Service Credit would allow provisional members who previously exempted themselves, to purchase service credit in the retirement fund.

HB 461 (Vickers) Purchase of Service Credit would amend the Educational Retirement Act - increasing the contribution/purchase cost of the service credit.

The purchase of military service has federal authority under Uniform Services Employment Reemployment and Retirement Act (USERRA). Possible conflict with this law has not been analyzed.

POSSIBLE QUESTIONS

• Can the additional costs (if any) associated with this legislation be contained to members who purchase the service credit?



• What effect (if any) would there be on fund balances or actuarial valuation, net of administrative costs, if a member who purchased service credit, retired immediately after the purchase?

JBE/gm