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 Beffort
ORIGINAL DATE
LAST UPDATED
1/26/08
HB
SHORT TITLE Health Insurance in College Scholarships
SB 40
ANALYST Dearing
ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)
FY08
FY09
FY10 3 Year
Total
Cost
Recurring
or Non-
Rec
Fund
Affected
Total
*$680.0 *$680.0 *$1,360.0
Recurring
College
Affordability
Scholarship
Fund
(Parenthesis ( ) Indicate Expenditure Decreases)
Relates to General Appropriations Act
SOURCES OF INFORMATION
LFC Files
Responses Received From
Health Policy Commission
Higher Education Department (HED)
SUMMARY
Synopsis of Bill
Senate Bill 40 carries no appropriation. If enacted, Senate Bill 40 would mandate that awardees
of College Affordability Scholarship grants be provided additional funds for health insurance
policies.
FISCAL IMPLICATIONS
Distributions to the College Affordability Scholarship fund from the College Affordability
Endowment fund are statutorily capped at 50 percent of annual interest earned in the endowment.
Although Senate Bill 40 carries no appropriation for health insurance policies for grant awardees,
the service capacity to provide need-based scholarships from annual interest earnings of the
endowment will be reduced by the costs of providing health policies. The FY09 LFC budget
recommendation includes an appropriation of $4 million from the endowment fund, based on
earnings estimates, to the scholarship fund for $1,000 grants. The $4 million LFC
recommendation would provide scholarships for approximately 2,000-4,000 students without an
pg_0002
Senate Bill 40 Page
2
insurance provision. Of this appropriation, individual students can receive up to two (2), $1,000
grants in any academic year; up to 4,000 students can receive single grants from this
appropriation, 2,000 awardees in the event that grants are bi-annual. Most likely, there will be a
mix of awardees receiving grants annually or bi-annually.
Information provided by the New Mexico State University on standard policies offered to both
undergraduate and graduate students indicates standard student health policies cost
approximately $1,000.
1
Total New Mexico uninsured rates show a statewide number of 420
thousand or 22 percent of the state population.
2
Senate Bill 40 carries a provision such that those recipient students with existing coverage would
not receive the mandatory policy. It should be noted that there is strong potential that a higher
percentage of students eligible for the College Affordability grants will be uninsured as this is a
need-based scholarship and health coverage correlates with income levels. For instance, a 2005
survey by the Texas Department of Insurance
3
found average uninsured rates of approximately
29.1 percent of selected Texas Institutions. Using a higher uninsured rate of 35 percent due to
the need-based eligibility component and based on the NMSU provided average prices,
providing health policies to 35 percent of scholarship awardees would reduce the overall number
of FY09 bi-annual award recipients by approximately 340 students.
4
PERFORMANCE IMPLICATIONS
The HAFC FY09 GAA recommendation includes a $4 million special appropriation to the
College Affordability Endowment fund to increase the endowment value as well as language
requiring an accountability plan from higher education institutions prior to distribution.
ADMINISTRATIVE IMPLICATIONS
Higher Education Institutions or the Higher Education department will need to ensure that award
recipients do not already have health insurance coverage prior to grant awards being allotted.
RELATIONSHIP
Senate Bill 40 relates to the General Appropriation Act. LFC and HAFC recommendation for
the FY09 GAA includes a $4 million appropriation to the College Affordability Scholarship fund
from the College Affordability Endowment fund. The HAFC recommendation for the FY09
GAA also includes a $4 million special appropriation to the College Affordability Endowment
fund to increase the endowment value.
PD/bb
1
$971 based on policy NMSU offers to graduate students; United Healthcare offers Spring/Summer 1/15/2008 - 8/21/2008 $594.00
(215/365=59% of year or approximately $1006.78 for an annual policy). https://www.uhcsr.com/SelfServiceSupport/students/ole/SelectBasic-
Coverage.aspx
2
Kaiser Family Foundation, State Health Facts http://www.statehealthfacts.org/profileind.jsp.ind=125&cat=3&rgn=33
3
Texas Department of Insurance, Insurance Options for College Students in Texas: A Study of Student Health Insurance Plans;
http://www.tdi.state.tx.us/reports/life/documents/spg2CollegeIns.pdf
4
(estimated # of Bi-annual awardees = 2,000; 2,000 x 35% = 700, 700 x $971 = $680 thousand, ((700 x $2,000=$1.4 million) + (700 x $971 =
$680 thousand*) =$2.08 million ($2.08 million -$4 million appropriation = $1.92 million/$2,000 = 960 +700) = 1660 versus 2000 recipients
without legislation.