Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance

committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

if they are used for other purposes.

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

SPONSOR Campos

ORIGINAL DATE

LAST UPDATED

2-22-2007

HB

SHORT TITLE Teacher and Education Staff Salary Increases

SB 1150

ANALYST Dearing

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

*$197,213.5

Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to Appropriation in the General Appropriation Act

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY08

FY09 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total *See Appropriations

table

*$197,213.5

*$197,213.5

Recurring General

Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Corrections Department (CD)

Public School Department (PSD)

SUMMARY

Synopsis of Bill

Senate Bill 1150 appropriates One-Hundred Ninety-Seven Million, Two-Hundred Thirteen

Thousand ($197,213,458) from the general fund for expenditure in FY08 to the Public Education

department, Higher Education department, the transportation distribution in the public school

support budget, and the department of Finance and Administration for distribution to three (3)

1

1

Senate Bill 1150 appropriates $582 thousand dollars to DFA for distribution to the Corrections, Health and CYFC departments.

Senate Bill 1150 – Page

2

agencies for an average 7% compensation increase for educational, instructional and other

categories of educational and staff employees.

FISCAL IMPLICATIONS

3-Year Budgetary Impact of Items in Senate Bill 988

Recurring

Fund

DOLLARS IN MILLIONS

3-Year or Non-Rec

Affected

Expenditure

FY08 FY09 Impact

7% compensation increase for all Teachers, Instructional

Staff, School Principals, and other Licensed and Unlicensed

Staff

136.7

136.7

273.4

Recurring General Fund

7% compensation increase for Trans. Employees

3.2

3.2

6.3

Recurring General Fund

7% compensation for Teachers working in the Health,

Corrections and the Children Youth and Families

departments

0.6

0.6

1.2

Recurring General Fund

7% compensation increase for Public Education Dept.

1.8

1.8

3.7

Recurring General Fund

7% compensation increase for faculty and staff employees at

State post-secondary institutions, the New Mexico School

for the Blind and Visually Impaired, and the New Mexico

School for the Deaf

54.9

54.9

109.8

Recurring General Fund

Total Budgetary Impact

197.2

197.2

394.4

Recurring Appropriations

Table 1. Impact includes the Appropriation in SB1150. FY09 and 3-Year Impact does not consider cost of living adjustments to compensation

increases and does not include necessary increases for contribution to ERB.

The appropriation of $197.2 million contained in Senate Bill 1150 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.

Senate Bill 1150 would establish a 7 percent raise for all public education employees throughout

the State including public, public-postsecondary, teachers working in other departments, and

public education transportation employees including contract employees.

Senate Bill 1150 carries no language directing a portion of the appropriation to contributions to

the Education Retirement Board.

The LFC raises concern that compensation increases at this level are actuarially extraordinary

increases as applicable to the Education Retirement Board assumptions. Compensation increases

of this magnitude do not consider the effects on unfunded liabilities within the Education pension

fund, and will require additional increases to maintain long-term solvency of the pension fund.

Compensation increases of 7% require significant additional appropriations for ERB that are not

provided for in the Senate Bill 1150 appropriation.

The three-year estimated additional operating cost to enact Senate Bill 1150, including this

appropriation are Three-Hundred Ninety-Four Million, Four- Hundred Twenty-Seven Thousand

Dollars ($394,427,000.0). This 3-year figure does not include necessary ERB contributions.

PD/nt