0001| SENATE BILL 6
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0002| 42ND LEGISLATURE - STATE OF NEW MEXICO - FIRST SPECIAL
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0003| SESSION, 1996
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0004| INTRODUCED BY
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0005| MANNY M. ARAGON
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0006|
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0007|
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0008|
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0009|
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0010|
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0011| AN ACT
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0012| RELATING TO STATE FUNDS; CREATING THE RISK RESERVE IN THE
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0013| GENERAL FUND; PROVIDING FOR TRANSFERS INTO AND EXPENDITURES FROM
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0014| THE RISK RESERVE UNDER CERTAIN CIRCUMSTANCES; MAKING AN
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0015| APPROPRIATION; DECLARING AN EMERGENCY.
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0016|
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0017| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
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0018| Section 1. [NEW MATERIAL] RISK RESERVE CREATED IN THE
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0019| GENERAL FUND.--
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0020| A. The "risk reserve" is created in the general
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0021| fund. The risk reserve shall consist of all money transferred
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0022| to the risk reserve pursuant to Sections 10-2-16, 13-5-1,
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0023| 15-7-6, 41-4-23 and 51-1-45 NMSA 1978. A separate account
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0024| within the risk reserve shall be kept for each source of the
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0025| transfers into the risk reserve. Interest earned on the risk
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0001| reserve shall be credited to the risk reserve.
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0002| B. The risk reserve may be expended only upon
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0003| specific authorization by the legislature in an amount
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0004| authorized by the legislature for the following purposes, as
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0005| designated in the legislative authorization:
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0006| (1) in the event that general fund balances,
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0007| including all authorized revenues and transfers to the general
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0008| fund and balances in the general fund operating reserve,
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0009| excluding balances in the risk reserve, are insufficient to meet
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0010| the level of appropriations authorized from the general fund for
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0011| a fiscal year, an amount may be authorized for transfer from the
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0012| risk reserve to the general fund, but only in an amount
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0013| necessary to meet general fund appropriations after transfers
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0014| from the general fund operating reserve have been made that
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0015| equal five percent of the appropriations for that fiscal year;
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0016| or
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0017| (2) in the event that any balance in the state
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0018| government unemployment compensation reserve fund, the local
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0019| public body unemployment compensation reserve fund, the public
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0020| property reserve fund, the public liability fund, the surety
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0021| bond fund or the workers' compensation retention fund is
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0022| insufficient to meet the expenditures required by law to be made
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0023| from each fund, the necessary amount may be authorized for
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0024| transfer from the appropriate account in the risk reserve to the
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0025| appropriate fund.
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0001| C. Upon the transfer of any amount pursuant to
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0002| Paragraph (1) of Subsection B of this section and upon a finding
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0003| by the secretary of finance and administration that there is no
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0004| schedule of repayment of that amount to the risk reserve, the
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0005| secretary shall determine, on an agency-by-agency basis, how
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0006| much of the transferred amount was derived from federal funds.
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0007| Upon a determination, the secretary shall negotiate a settlement
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0008| with the federal government concerning any reimbursement that
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0009| may be owed by the state. After reporting to the legislative
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0010| finance committee on the results of the negotiations, the
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0011| secretary is authorized to reimburse, or otherwise compensate,
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0012| the federal government, and that amount is appropriated for that
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0013| purpose.
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0014| D. It is the intent of the legislature that the risk
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0015| reserve be reimbursed in full for any amounts transferred
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0016| pursuant to Paragraph (1) of Subsection B of this section. The
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0017| secretary of finance and administration shall recommend in the
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0018| annual executive budget recommendation a proposed schedule of
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0019| repayment to the risk reserve of any such amounts transferred.
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0020| Section 2. Section 10-2-16 NMSA 1978 (being Laws 1978,
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0021| Chapter 132, Section 4, as amended) is amended to read:
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0022| "10-2-16. SURETY BOND FUND.--
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0023| A. There is created in the state treasury a "surety
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0024| bond fund".
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0025| B. Money deposited in the surety bond fund may be
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0001| expended by the department:
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0002| (1) to provide surety bond coverage;
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0003| [(2) to create a retention fund to cover all
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or any portion of the surety bond risks of state agencies and
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covered educational entities;
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(3)] (2) to pay claims of state agencies and
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0007| covered educational entities covered by a surety bond
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0008| certificate of coverage issued by the department; and
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0009| [(4)] (3) to pay any costs and expenses of
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0010| carrying out the provisions of this section.
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0011| C. Claims against the surety bond fund shall be made
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0012| in accordance with a certificate of coverage issued by the
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0013| department to each state agency and covered educational entity.
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0014| If the secretary has reason to believe that the surety bond
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0015| fund, including any transfers to the surety bond fund from the
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0016| risk reserve, would be exhausted by the payment of all claims
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0017| allowed against the fund during a particular state fiscal year,
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0018| the amounts paid for each claim shall be prorated with each
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0019| state agency and covered educational entity receiving an amount
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0020| equal to the percentage that its claims bear to the total of
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0021| claims outstanding and payable from the fund. Any amounts due
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0022| and unpaid as a result of such proration shall be paid in the
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0023| following fiscal years.
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0024| D. The department shall collect or transfer funds
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0025| from each state agency and covered educational entity to cover
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0001| costs of coverage of employees of the agency as required by this
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0002| section. Money collected or transferred from a state agency or
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0003| covered educational entity pursuant to this subsection shall be
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0004| deposited in the surety bond fund. Income from the surety bond
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0005| fund shall be credited to the fund.
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0006| E. The department may provide individual surety bond
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0007| coverage protecting employees who are employers or supervisors
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0008| from personal losses for which they may be responsible, which
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0009| losses were caused by the lack of honesty or faithful
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0010| performance of employees under their supervision or control.
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0011| F. The department shall have the right to recover
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0012| from a public employee for any loss under the Surety Bond Act
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0013| for which the public employee was responsible.
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0014| G. The risk management advisory board shall review:
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0015| (1) specifications for all surety bond coverage
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0016| to be purchased by the department;
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0017| (2) the form and legal sufficiency of any
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0018| surety bond coverage to be purchased by the department; and
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0019| (3) the form, purpose and content of any surety
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0020| bond certificate of coverage to be issued by the director.
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0021| H. Before the beginning of each fiscal year, the
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0022| risk management advisory board shall calculate the current cash
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0023| balance in the surety bond fund, all revenue projected to be
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0024| deposited into the fund during the next fiscal year and all
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0025| expenditures projected to be made from the fund during the next
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0001| fiscal year. Ninety percent of all projected excess cash
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0002| balances shall be transferred to the risk reserve. Excess cash
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0003| balances shall be calculated as the current cash balance plus
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0004| projected revenue minus projected expenditures."
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0005| Section 3. Section 13-5-1 NMSA 1978 (being Laws 1981,
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0006| Chapter 101, Section 1, as amended) is amended to read:
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0007| "13-5-1. STATE AGENCY PUBLIC PROPERTY--INSURANCE--RESERVES
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0008| FOR LOSSES OF STATE AGENCIES--PUBLIC PROPERTY RESERVE FUND
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0009| CREATED.--
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0010| A. The risk management division of the general
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0011| services department shall purchase a blanket insurance policy
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0012| for public buildings of state agencies against loss or damage by
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0013| fire, windstorm, hail, smoke, explosion, riot or civil
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0014| commotion. The risk management division may provide coverage to
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0015| covered educational entities under the public property reserve
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0016| fund through blanket or individual policies. [The risk
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management division shall create a reserve for the uninsured
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value of any such public building and for the uninsured loss or
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damage to any such building by flood, subject to any deductible
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which the risk management advisory board determines shall be
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borne by individual state agencies or covered educational
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entities.]
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0023| B. Subject to any deductible to be borne by
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0024| individual state agencies or covered educational entities, the
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0025| risk management division of the general services department
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0001| may purchase insurance [establish reserves or provide a
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combination of insurance and reserves] to:
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0003| (1) cover, in any amount not to exceed
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0004| replacement cost, buildings of state agencies or covered
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0005| educational entities destroyed or damaged by any peril other
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0006| than a peril set forth in Subsection A of this section;
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0007| (2) cover, in any amount not to exceed
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0008| replacement cost, any personal property [which] that is
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0009| destroyed or damaged by any peril; or
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0010| (3) cover, in any amount not to exceed
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0011| replacement cost, any personal property which is stolen.
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0012| C. Any insurance purchased pursuant to Subsections A
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0013| and B of this section may be purchased with such deductible
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0014| provisions as may be deemed desirable by the risk management
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0015| advisory board.
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0016| D. The director of the risk management division of
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0017| the general services department shall include in his annual
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0018| report to the legislature an inventory of all public buildings
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0019| insured by the division, the estimated total value of such
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0020| buildings, the total insured value of such buildings and the
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0021| amount of any deductible or maximum loss provisions in the
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0022| current insurance policy covering such buildings.
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0023| E. There is created in the state treasury the
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0024| "public property reserve fund". The fund shall consist of
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0025| assessments of state agencies and covered educational entities
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0001| deposited in the fund, money appropriated to the fund, income
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0002| earned by the fund and money received as proceeds of insurance
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0003| purchased pursuant to this section. The fund may be used to:
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0004| (1) purchase property insurance;
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0005| (2) pay any claim covered by a certificate of
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0006| coverage issued by the director of the risk management division
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0007| of the general services department; provided such claims shall
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0008| only be paid to the extent of actual expenses [which] that
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0009| have been or will be incurred to repair, reconstruct and replace
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0010| covered property;
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0011| (3) pay the cost of repair, reconstruction and
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0012| replacement of property and expense incidental thereto arising
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0013| from damage or destruction covered pursuant to this section;
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0014| (4) enter into such consulting and other
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0015| contracts as may be necessary or desirable in carrying out the
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0016| provisions of this section; and
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0017| (5) pay any costs and expenses incurred in
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0018| carrying out the provisions of this section.
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0019| F. The director of the legislative council service
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0020| may elect to cover all or any part of any public buildings or
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0021| property under his jurisdiction through the public property
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0022| reserve fund by giving written notice of such election to the
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0023| director of the risk management division of the general
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0024| services department and paying assessments [which] that the
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0025| director of the risk management division prescribes.
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0001| G. For purposes of this section, "state agency"
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0002| means the state or any of its branches, agencies, departments,
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0003| boards, instrumentalities or institutions.
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0004| H. For the purposes of this section, "covered
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0005| educational entities" means school districts as defined in
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0006| Section 22-1-2 NMSA 1978 and educational institutions
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0007| established pursuant to Chapter 21, Articles 13, 16 and 17 NMSA
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0008| 1978 [which] that request and are granted coverage from the
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0009| risk management division of the general services department, if
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0010| the coverage is commercially unavailable; except that coverage
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0011| shall be provided to a school district only through the public
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0012| school [group] insurance authority or its successor unless the
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0013| district has been granted a waiver by the authority or the
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0014| authority is not offering the coverage for the fiscal year for
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0015| which the division offers its coverage. A local school district
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0016| to which the division may provide coverage may provide for
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0017| marketing and servicing to be done by licensed insurance agents
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0018| who shall receive reasonable compensation for their services.
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0019| [I. The provisions of this section are effective
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July 1, 1990.]
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0021| I. Before the beginning of each fiscal year, the
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0022| risk management advisory board shall calculate the current cash
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0023| balance in the public property reserve fund, all revenue
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0024| projected to be deposited into the fund during the next fiscal
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0025| year and all expenditures projected to be made from the fund
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0001| during the next fiscal year. Ninety percent of all projected
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0002| excess cash balances shall be transferred to the risk reserve.
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0003| Excess cash balances shall be calculated as the current cash
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0004| balance plus projected revenue minus projected expenditures."
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0005| Section 4. Section 15-7-6 NMSA 1978 (being Laws 1977,
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0006| Chapter 385, Section 9, as amended) is amended to read:
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0007| "15-7-6. WORKERS' COMPENSATION RETENTION FUND.--
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0008| A. There is created in the state treasury the
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0009| "workers' compensation retention fund".
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0010| B. Money deposited in, earned by or appropriated
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0011| to the workers' compensation retention fund may be used by the
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0012| director to:
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0013| (1) purchase workers' compensation insurance;
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0014| [(2) establish appropriate reserves to provide
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workers' compensation coverage for employees of state agencies
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or employees of covered educational entities;
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(3)] (2) pay workers' compensation claims in
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0018| accordance with the Workers' Compensation Act;
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0019| [(4)] (3) enter into consulting and other
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0020| contracts as may be necessary or desirable in carrying out the
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0021| provisions of this section; and
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0022| [(5)] (4) pay any costs or expenses
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0023| incurred in carrying out the provisions of this section.
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0024| C. For the purposes of this section, "covered
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0025| educational entities" means school districts as defined in
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0001| Section 22-1-2 NMSA 1978 and educational institutions
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0002| established pursuant to Chapter 21, Articles 13, 16 and 17 NMSA
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0003| 1978 [which] that request and are granted coverage from the
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0004| risk management division of the general services department, if
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0005| the coverage is commercially unavailable; except that coverage
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0006| shall be provided to a school district only through the public
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0007| school [group] insurance authority or its successor unless the
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0008| district has been granted a waiver by the authority or the
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0009| authority is not offering the coverage for the fiscal year for
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0010| which the division offers its coverage. A local school district
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0011| to which the division may provide coverage may provide for
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0012| marketing and servicing to be done by licensed insurance agents
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0013| who shall receive reasonable compensation for their services.
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0014| D. Before the beginning of each fiscal year, the
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0015| risk management advisory board shall calculate the current cash
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0016| balance in the workers' compensation retention fund, all revenue
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0017| projected to be deposited into the fund during the next fiscal
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0018| year and all expenditures projected to be made from the fund
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0019| during the next fiscal year. Ninety percent of all projected
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0020| excess cash balances shall be transferred to the risk reserve.
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0021| Excess cash balances shall be calculated as the current cash
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0022| balance plus projected revenue minus projected expenditures."
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0023| Section 5. Section 41-4-23 NMSA 1978 (being Laws 1977,
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0024| Chapter 386, Section 17, as amended) is amended to read:
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0025| "41-4-23. PUBLIC LIABILITY FUND CREATED--PURPOSES.--
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0001| A. There is created the "public liability fund".
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0002| The fund and any income from the fund shall be held in trust,
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0003| deposited in a segregated account and invested by the general
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0004| services department with the prior approval of the state board
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0005| of finance.
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0006| B. Money deposited in the public liability fund may
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0007| be expended by the risk management division of the general
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0008| services department:
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0009| (1) to purchase tort liability insurance for
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0010| state agencies and their employees and for any local public body
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0011| participating in the public liability fund and its employees;
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0012| (2) to contract with one or more consulting or
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0013| claims adjusting firms pursuant to the provisions of Section 41-4-24 NMSA 1978;
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0014| (3) to defend, save harmless and indemnify any
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0015| state agency or employee of a state agency or a local public
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0016| body or an employee of such local public body for any claim or
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0017| liability covered by a valid and current certificate of coverage
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0018| to the limits of such certificate of coverage;
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0019| (4) to pay claims and judgments covered by a
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0020| certificate of coverage;
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0021| (5) to contract with one or more attorneys or
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0022| law firms on a per-hour basis, or with the attorney general, to
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0023| defend tort liability claims against governmental entities and
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0024| public employees acting within the scope of their duties;
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0025| (6) to pay any costs and expenses incurred in
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0001| carrying out the provisions of this section;
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0002| [(7) to create a retention fund for any risk
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covered by a certificate of coverage;
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(8) to cover personal injury liability risks of
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governmental entities, including the risks set forth in
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Paragraph (2) of Subsection B and Paragraph (2) of Subsection D
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of Section 41-4-4 NMSA 1978, to the extent and to the limits of
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any certificate of coverage;
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(9)] (7) to insure or provide certificates
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0010| of coverage to school bus contractors and their employees,
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0011| notwithstanding Subsection [E] F of Section 41-4-3 NMSA
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0012| 1978, for any comparable risk for which immunity has been waived
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0013| for public employees pursuant to Section 41-4-5 NMSA 1978, if
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0014| the coverage is commercially unavailable; except that coverage
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0015| for exposure created by Sections 41-4-9, 41-4-10 and 41-4-12
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0016| NMSA 1978 shall be provided to its member public school dis-
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0017| tricts and participating other educational entities of the
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0018| public school insurance authority, by the authority, and except
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0019| that coverage shall be provided to a contractor and his
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0020| employees only through the public school [group] insurance
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0021| authority or its successor, unless the district to which the
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0022| contractor provides services has been granted a waiver by the
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0023| authority or the authority is not offering the coverage for the
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0024| fiscal year for which the division offers its coverage. A local
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0025| school district to which the division may provide coverage may
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0001| provide for marketing and servicing to be done by licensed in-
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0002| surance agents who shall receive reasonable compensation for
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0003| their services; and
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0004| [(10)] (8) to insure or provide
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0005| certificates of coverage for any ancillary coverage typically
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0006| found in commercially available liability policies provided to
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0007| governmental entities, if the coverage is commercially
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0008| unavailable.
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0009| C. No settlement of any claim covered by the public
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0010| liability fund in excess of five thousand dollars ($5,000) shall
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0011| be made unless the settlement has first been approved in writing
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0012| by the director of the risk management division of the general
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0013| services department. This subsection shall not be construed to
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0014| limit the authority of an insurance carrier, covering any
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0015| liability under the Tort Claims Act, to compromise, adjust and
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0016| settle claims against governmental entities or their public
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0017| employees.
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0018| D. Claims against the public liability fund shall
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0019| be made in accordance with rules or regulations of the director
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0020| of the risk management division of the general services
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0021| department. If the director of the risk management division has
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0022| reason to believe that the fund, including any transfers to the
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0023| fund from the risk reserve, would be exhausted by payment of
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0024| all claims allowed during a particular state fiscal year,
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0025| pursuant to regulations of the risk management division, the
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0001| amounts paid to each claimant and other parties obtaining
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0002| judgments shall be prorated, with each party receiving an amount
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0003| equal to the percentage his own payment bears to the total of
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0004| claims or judgments outstanding and payable from the fund. Any
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0005| amounts due and unpaid as a result of such proration shall be
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0006| paid in the following fiscal years.
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0007| E. Before the beginning of each fiscal year, the
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0008| risk management advisory board shall calculate the current cash
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0009| balance in the public liability fund, all revenue projected to
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0010| be deposited into the fund during the next fiscal year and all
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0011| expenditures projected to be made from the fund during the next
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0012| fiscal year. Ninety percent of all projected excess cash
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0013| balances shall be transferred to the risk reserve. Excess cash
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0014| balances shall be calculated as the current cash balance plus
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0015| projected revenue minus projected expenditures."
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0016| Section 6. Section 51-1-45 NMSA 1978 (being Laws 1977,
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0017| Chapter 227, Section 7, as amended) is amended to read:
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0018| "51-1-45. STATE GOVERNMENT UNEMPLOYMENT COMPENSATION
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0019| RESERVE FUND CREATED--PURPOSES--ASSESSMENTS.--
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0020| A. There is created a "state government unemployment
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0021| compensation reserve fund". The fund and any income from the
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0022| fund shall be held in trust, deposited in a segregated account
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0023| and invested by the director of the risk management division of
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0024| the general services department with the prior approval of the
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0025| state board of finance. Money in the fund is hereby
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0001| appropriated to carry out the purposes of the fund.
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0002| B. The director of the risk management division of
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0003| the general services department shall assess each state agency
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0004| at the end of each calendar quarter in accordance with the rate
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0005| schedule prescribed by the risk management division plus an
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0006| additional amount to pay reasonable costs of administration of
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0007| the fund. Assessments shall be deposited in the state
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0008| government unemployment compensation reserve fund to carry out
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0009| the purposes of Laws 1977, Chapter 227, as amended. The
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0010| director of the risk management division shall approve the
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0011| method of computing the amounts that are payable under this
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0012| subsection by each state agency and the time and manner of
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0013| payments.
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0014| C. Money deposited in the state government
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0015| unemployment compensation reserve fund may be used by the
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0016| director of the risk management division of the general
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0017| services department to:
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0018| (1) pay the department for benefits paid to
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0019| employees of state agencies;
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0020| (2) pay any costs or expenses incurred in
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0021| protesting benefits paid by the department; and
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0022| (3) pay any other costs incurred in carrying
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0023| out the provisions of this section [and
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(4) establish and maintain a reserve fund for
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paying reimbursements of benefits paid to employees of state
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agencies].
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0002| D. Before the beginning of each fiscal year, the
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0003| risk management advisory board shall calculate the current cash
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0004| balance in the state government unemployment compensation
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0005| reserve fund, all revenue projected to be deposited into the
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0006| fund during the next fiscal year and all expenditures projected
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0007| to be made from the fund during the next fiscal year. Ninety
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0008| percent of all projected excess cash balances shall be
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0009| transferred to the risk reserve. Excess cash balances shall be
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0010| calculated as the current cash balance plus projected revenue
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0011| minus projected expenditures."
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0012| Section 7. EMERGENCY.--It is necessary for the public
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0013| peace, health and safety that this act take effect immediately.
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0014| - 17 -
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