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F I S C A L I M P A C T R E P O R T
SPONSOR HEC
ORIGINAL DATE
LAST UPDATED
2/9/2006
HB 450/HECS
SHORT TITLE School Liability for After-Hours Use
SB
ANALYST Geisler
APPROPRIATION
Appropriation Contained Estimated Additional Impact Recurring
or Non-Rec
Fund
Affected
FY05
FY06
FY05
FY06
$266.0
Non-Recurring General Fund
(Parenthesis ( ) Indicate Expenditure Decreases)
SOURCES OF INFORMATION
LFC Files
Responses Received From
New Mexico Public School Insurance Authority (PSIA)
SUMMARY
Synopsis of Bill
The House Education Committee substitute for House Bill 450 bill requires PSIA and Albuquer-
que Public Schools to assume the risk for liability coverage for authorized use of school facilities
by the community. Coverage is limited to $1 million combined single limit per occurrence. A
general fund appropriation of $266 thousand is made to the Public Education Department for the
cost of this additional coverage.
Currently, schools may allow building use by outside groups and coverage is provided in one of
two ways: (1) the school district is named as an additional insured on the userís policy or (2)
limited additional premises liability insurance is provided through NMPSIA and billed to the
user (called TULIP, for Tenant User Liability Insurance Policy). Examples of TULIP purchasers
are private individuals requesting to use school buildings for wedding receptions.
Significant Issues
The significant issue is should the cost of insurance for the use of school buildings after hours be
paid out of taxpayer money or should it be paid by the outside private users. In many small
communities, the public school buildings are the only public buildings available for events.
pg_0002
House Bill 450/HECS -- Page 2
FISCAL IMPLICATIONS
The bill contains an appropriation for $266 thousand. According to PSIA, this should be enough
to cover the cost of this coverage for all PSIA insured schools and APS. As this is a non-
recurring appropriation, future costs of this coverage would be built into the public school sup-
port budget.
Historically, losses incurred for use of school premises by outside groups (and reimbursed by
outside insurance carriers) have averaged $100 thousand annually. Premiums paid for this cov-
erage have been between $50,000 to $100,000 annually. It is difficult to accurately project the
exact costs, as not all after-school use has been reported to PSIA by the districts and participation
in the TULIP program has been low. There are a limited number of carriers interested in writing
this coverage.
ADMINISTRATIVE IMPLICATIONS
The PSIA will need to use staff time and legal expenses to rewrite and republish the PSIA rules
and regulations as well as to educate member entities.
WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL
The existing TULIP program would be available and paid for by the user, but the potential liabil-
ity for uninsured after school use will remain due to spotty compliance by schools in enforcing
the requirement that outside users have insurance.
GG/nt