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

SPONSOR:	McKibben		DATE TYPED:	02/12/99		HB
SHORT TITLE:		Retiree Basic Plan Premium Cap				SB	223
					ANALYST:		Woodlee

APPROPRIATION

Appropriation Contained		Estimated Additional Impact		Recurring or Non-Rec	Fund Affected
FY99	FY2000	FY99	FY2000	Recurring or Non-Rec	Fund Affected

(Parenthesis ( ) Indicate Expenditure Decreases)

REVENUE

Estimated Revenue		Subsequent Years Impact (25 Years)	Recurring or Non-Rec	Fund Affected
FY99	FY2000	Subsequent Years Impact (25 Years)	Recurring or Non-Rec	Fund Affected
	$ 633.0	$ 410,000.0	Recurring	Benefits Account # 381

(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates SB224

SOURCES OF INFORMATION

New Mexico Retiree Health Care Authority

SUMMARY

Synopsis of Bill

Senate Bill 223 will increase the current 3% cap on retiree contributions (premiums) for the basic plan of benefits up to, but not to exceed, 9%.

Significant Issues

The NMRHCA indicates that the contributions has had a statutory cap of 3% per year. The inflation rate has consistently exceeded the 3% cap creating a deficit which has been paid fro the contributions of employees and employers. As the years have progressed, the level of subsidy to retirees has increased and the solvency of the program has deteriorated until the 25 year solvency period has been reduced to 11 years.

FISCAL IMPLICATIONS

SB 223 does not appropriate any funds. The bill would assist to extend the solvency of the NMRHC program. It would generate $410,000.0 over the 25 year mandated solvency period.

ADMINISTRATIVE IMPLICATIONS

The NMRHCA indicates that the bill will non have an administrative impact on the program. It will be able to absorb the function within their existing capacity.

DUPLICATION

The agency indicates that this bill is a duplicate of SB 224, also sponsored by Senator McKibben.

TECHNICAL ISSUES

According to the NMRHCA, the bill is drafted incorrectly. The following is an amendment proposal from the agency:

On line 23, page 1 it reads "board, which increases shall not exceed three percent in any."

This should read

"board, which increases shall not exceed [three] nine percent in any."

This change is already indicated on line 6, page 2.

MW/njw