HOUSE BILL 1086
48th legislature - STATE OF NEW MEXICO - first session, 2007
INTRODUCED BY
Ben Lujan
AN ACT
RELATING TO PUBLIC FINANCE; DESIGNATING THE RETIREE HEALTH CARE FUND AS AN IRREVOCABLE TRUST; DECLARING AN EMERGENCY.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. Section 10-7C-1 NMSA 1978 (being Laws 1990, Chapter 6, Section 1) is amended to read:
"10-7C-1. SHORT TITLE.--[Sections 1 through 16 of this act] Chapter 10, Article 7C NMSA 1978 may be cited as the "Retiree Health Care Act"."
Section 2. Section 10-7C-3 NMSA 1978 (being Laws 1990, Chapter 6, Section 3) is amended to read:
"10-7C-3. LEGISLATIVE FINDINGS AND DECLARATION OF POLICY.--
A. The legislature finds and declares that public employees face a severe problem in securing continuing medical insurance when they retire. Medical care inflation has far exceeded the general inflation rate for the past decade. It is expected that at least some of the factors that have contributed to this phenomenon will continue into the foreseeable future. As the public employee population grows older, the ratio of retirees to active employees is expected to continue to rise. This factor will be exacerbated as the life expectancy of the aged improves and the post-World War [two] II generation approaches retirement age. Financial problems faced by the federal medicare system are becoming more serious, and it is apparent that there will be attempts to shift those costs to the public employer and employee. More such cost shifting is likely, and one of the purposes of the Retiree Health Care Act is, within the constraints of what can be afforded by the taxpayers, to alleviate this burden on the retiree as much as possible.
B. The legislature further finds and declares that the public employees covered by the Retiree Health Care Act have entered into public employment in circumstances where they have received in exchange for their services a present salary and an expectation of receiving a future stream of benefits, including payment of certain retirement benefits. The legislature declares that the expectation of receiving future benefits may be modified from year to year in order to respond to changing financial exigencies, but that such modification must be reasonably calculated to result in the least possible detriment to the expectation and to be consistent with any employer-employee relationship established to meet that expectation. [The legislature does not intend for the Retiree Health Care Act to create trust relationships among the participating employees, retirees, employers and the authority administering the Retiree Health Care Act, nor does] The legislature does not intend to create contract rights [which] that may not be modified or extinguished in the future; rather, the legislature intends to create, through the Retiree Health Care Act and the designation of the retiree health care fund as an irrevocable trust as provided in Section 10-7C-8 NMSA 1978, a means for maximizing health care services returned to the participants for their participation under the Retiree Health Care Act.
C. The legislature further finds and declares that nothing in the Retiree Health Care Act shall prohibit the legislature from increasing or decreasing participating employer and employee contributions, eligible retiree premiums or group health insurance coverages or plans and that participation in the Retiree Health Care Act by retired and active public employees shall not be construed to establish rights between the retired and active public employees and the state for health care benefits [which] that cannot be modified or extinguished in the future to meet changes in economic or social conditions.
D. The legislature further finds and declares that the health care coverage provided under the Retiree Health Care Act shall constitute a state group health insurance plan, separate subsequent state group health insurance plan, state group insurance plan, separate subsequent state group insurance plan, state medical group insurance plan and separate subsequent state medical group insurance plan for the purposes of Sections 10-11-121, [10-12-15, 10-12A-11] 10-12B-16, 10-12C-15 and 22-11-41 NMSA 1978.
E. The legislature further finds and declares that participation of current retirees in the Retiree Health Care Act is predicated on State ex rel. Hudgins v. Public Employees Retirement Board 58 N.M. 543, 273 P.2d 543 (1954); the additional monthly participation fee to be paid by current retirees as a condition of participation in the Retiree Health Care Act is in lieu of the lump-sum consideration paid by the retirees who were the relators in that case."
Section 3. Section 10-7C-6 NMSA 1978 (being Laws 1990, Chapter 6, Section 6, as amended) is amended to read:
"10-7C-6. BOARD CREATED--MEMBERSHIP--AUTHORITY.--
A. There is created the "board of the retiree health care authority". The board shall be composed of not more than twelve members, who shall be the trustees of the retiree health care fund and shall have the sole and exclusive fiduciary duty and responsibility for administration and investment of the fund.
B. The board shall include:
(1) one member who is not employed by or on behalf of or contracting with an employer participating in or eligible to participate in the Retiree Health Care Act and who shall be appointed by the governor to serve at the pleasure of the governor;
(2) the educational retirement director or the educational retirement director's designee;
(3) one member to be selected by the public school superintendents' association of New Mexico;
(4) one member who is a teacher who is certified and teaching in elementary or secondary education to be selected by a committee composed of one person designated by the New Mexico association of classroom teachers, one person designated by the national education association of New Mexico and one person designated by the New Mexico federation of teachers;
(5) one member who is an eligible retiree of a public school and who is selected by the New Mexico association of retired educators;
(6) the executive secretary of the public employees retirement association or the executive secretary's designee;
(7) one member who is an eligible retiree receiving a benefit from the public employees retirement association and who is selected by the retired public employees of New Mexico;
(8) one member who is an elected official or employee of a municipality participating in the Retiree Health Care Act and who is selected by the New Mexico municipal league;
(9) the state treasurer or the state treasurer's designee; and
(10) one member who is a classified state employee selected by the personnel board.
C. The board, in accordance with the provisions of Paragraph (3) of Subsection D of Section 10-7C-9 NMSA 1978, shall include, if they qualify:
(1) one member who is an eligible retiree of an institution of higher education participating in the Retiree Health Care Act and who is selected by the New Mexico association of retired educators; and
(2) one member who is an elected official or employee of a county participating in the Retiree Health Care Act and who is selected by the New Mexico association of counties.
D. Every member of the board shall serve at the pleasure of the party that selected that member.
E. The members of the board shall begin serving their positions on the board on the effective date of the Retiree Health Care Act or upon their selection, whichever occurs last, unless that member's corresponding position on the board has been eliminated pursuant to Subsection D of Section 10-7C-9 NMSA 1978.
F. The board shall elect from its membership a president, vice president and secretary.
G. The board may appoint such officers and advisory committees as it deems necessary. The board may enter into contracts or arrangements with consultants, professional persons or firms as may be necessary to carry out the provisions of the Retiree Health Care Act.
H. The members of the board and its advisory committees shall receive per diem and mileage as provided in the Per Diem and Mileage Act but shall receive no other compensation, perquisite or allowance."
Section 4. Section 10-7C-8 NMSA 1978 (being Laws 1990, Chapter 6, Section 8) is amended to read:
"10-7C-8. FUND CREATED--INVESTMENT--PREMIUMS--APPROPRIATION.--
A. There is created the "retiree health care fund", which shall be an irrevocable trust. All funds, assets, proceeds, income, contributions and payments from any source whatsoever paid to or otherwise accruing to the fund shall be held in trust for the sole and exclusive purpose of providing group health insurance to eligible retirees and eligible dependents pursuant to the provisions of the Retiree Health Care Act. Assets held in trust are legally protected from creditors of the employers participating in or eligible to participate in the Retiree Health Care Act and from creditors of all members of the board of the retiree health care authority.
B. All money in the fund shall be invested as provided for in Subsection [D] E of this section. All income earned from investment of the fund shall be credited to the fund. Except as otherwise specifically provided [herein] in the Retiree Health Care Act, the money in the fund is appropriated to the board to carry out the provisions of [the Retiree Health Care] that act. Any funds remaining at the end of any fiscal year shall not revert to the general fund.
[B.] C. The board shall provide for the collection of premiums from eligible retirees and eligible dependents, which money when combined with other money appropriated to the fund shall be sufficient to provide the required insurance coverage and to pay the expenses of the authority. All premiums and other money appropriated to the fund shall be credited to the fund.
[C.] D. All premiums and other money collected by the authority shall be received and disbursed directly by the authority. Receipts and disbursements are subject to audit by the state auditor.
[D.] E. The board shall determine which money in the fund constitutes the long-term reserves of the authority. The state investment officer shall invest the long-term reserves of the authority in accordance with the provisions of Sections 6-8-1 through 6-8-16 NMSA 1978. The state treasurer shall invest the money in the fund that does not constitute the long-term reserves of the fund in accordance with the applicable provisions of Chapter 6, Article 10 NMSA 1978."
Section 5. Section 10-7C-16 NMSA 1978 (being Laws 1990, Chapter 6, Section 16, as amended) is amended to read:
"10-7C-16. RETIREE HEALTH CARE FUND--BUDGET.--The funds in the retiree health care fund are trust funds and shall be used only for the purposes provided in the Retiree Health Care Act, including reasonable costs of administration. Expenditures for the administration of the Retiree Health Care Act shall be made as provided by an operating budget adopted by the board and approved by the state budget division of the department of finance and administration as provided by law and pursuant to appropriation by the legislature."
Section 6. EMERGENCY.--It is necessary for the public peace, health and safety that this act take effect immediately.
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