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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

2/17/07

3/14/07 HB

SHORT TITLE School Insurance Due Process Reimbursement

SB 1095/aSEC/aSFC

ANALYST Propst

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

$1,300.0

NFI

Recurring

General

Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY07

FY08

FY09 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total $1,300.0 $1,300.0 $1,300.0 $3,900.0 Recurring General

Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Public School Insurance Authority (PSIA)

Public Education Department (PED)

Higher Education Department (HED)

SUMMARY

Synopsis of SFC Amendment

The amendment removes limits of $40.0 per claim and $120.0 per district on due process

reimbursements under the Individuals with Disabilities Education Improvement Act contained in

the original bill. It strikes the appropriation of $1,300.0 and makes the effective date of the act

July 1, 2008.

Finally the amendment adds the following sections:

“The authority shall include due process reimbursement in its self-insured retention risk pool.

Each year, the legislature shall authorize the board to collect the due process reimbursement

Senate Bill 1095/aSEC/aSFC– Page

2

premium from school districts and charter schools to cover the cost of due process

reimbursement. From the authorization, the board shall allocate due process reimbursement

premiums based on a school district’s or charter school’s claims experience and other criteria

determined by the board. A single due process reimbursement shall not exceed three hundred

thousand dollars."

Synopsis of SEC Amendment

PSIA notes that unlike the original bill which required PSIA to provide IDEA reimbursement

coverage to Albuquerque Public Schools (APS) even though APD does not participate in PSIA,

the amendment removes this requirement to include APS.

The Senate Education Committee amendment also changes the coverage amounts from the

originally proposed uniform $40.0 per occurrence and $120.0 per district per year. The

amendment sets a sliding scale reimbursement based on the number of special education students

at each district. The reimbursement schedule will be determined by the PSIA Board annually.

The range of reimbursement is a minimum of $20.0 for schools with small populations of special

education students to a maximum of $300.0 for districts with larger populations.

Synopsis of Original Bill

Senate Bill 1095 amends the Public School Insurance Authority Act to require coverage for

Individuals with Disabilities Improvement Act’s (IDEA) due process hearing expenses incurred

by all school districts and all charter schools. Even though Albuquerque Public Schools is

prohibited from participating in PSIA, SB 1095 extends IDEA coverage to APS as well.

Coverage is on a reimbursement basis and will be limited to $40.0 per occurrence and $120.0 per

district per year. Coverage is limited to attorney’s fees, hearing officer’s fees and other

reasonable expenses related to the due process hearing.

SB 1095 contains an appropriation of $1,300.0 to cover the anticipated cost of this coverage in

FY07.

FISCAL IMPLICATIONS

The appropriation of $1,300.0 contained in this bill is a recurring expense to the General Fund.

Any unexpended or unencumbered balance remaining at the end of FY08 shall revert to the

General Fund.

The appropriation of $1,300.0 is expected to cover the initial cost of this increase in benefit

levels. Future costs will be collected from the schools via the PSIA Risk premium assessed to

school districts and charter schools.

SIGNIFICANT ISSUES

PSIA reports that interim testimony has been given regarding the need to include this coverage

for school districts. This coverage traditionally has been offered by PSIA even though it is not a

mandatory offering.

In a report dated December 12, 2005, the Public Education Department reported to the LESC the

Senate Bill 1095/aSEC/aSFC– Page

3

results of its survey of due process costs experienced by the districts. For the school year

previous to the survey, total due process hearing (DPH) costs for all districts reporting were

$1,245.9. During the three years surveyed, total DPH costs per year ranged from $270.0 for

Albuquerque Public Schools to $479 for Chama Valley Independent Schools. Twenty-two

districts reported experiencing DPH costs but only eight reported experiencing DPH costs each

year of the three-year survey period.

PED notes that since the bill reimburses for costs related to due process hearings conducted

pursuant to IDEA, it does not appear that costs associated with appeals to district court from due

process decisions would be covered by the reimbursement provisions of this bill.

PERFORMANCE IMPLICATIONS

PSIA currently provides $20.0 coverage per claim, $80.0 aggregate per year. An increase in

these limits will not increase the workload, merely the premium necessary to absorb the

expanded coverage limits.

TECHNICAL ISSUES

The complete title of the IDEA is the “Individuals with Disabilities Education Improvement Act

of 2004." See Section 1 of P.L. 108-446. The bill omits the “of 2004" in referring to IDEA.

POSSIBLE AMENDMENTS

Suggest the following on page two, line twelve, ($120.0) per district per year (including any

charter schools within the boundaries of any district)

; and provided further that,

Suggest the following on page two, line 15, “districts except for those districts granted a waiver

pursuant to Section 22-2-6.9 NMSA 1978".

WEP/nt