R P E N M
Retired Public Employees of New Mexico
Doug Crandalls View of RHCA
Excerpt from RPENM's Winter 2008 Newsletter about HB 728.
House Bill 728 - A legislative work group, formed as a result of HB 728 in the last legislative session, presented its final report and recommendations on December 15th. The work group was formed by the state legislature last year to review the association’s fiscal issues and long term solvency problems, and to present solutions at the 2008 legislative session. One of the recommendations in the report is to significantly raise monthly premiums to retirees to offset the plan’s solvency and funding issues. RPENM Executive Director Ann Crandall spoke on behalf of the membership at the NMRHCA December board meeting, explaining that large monthly increases to retirees could be financially devastating to retirees on a limited income, as well as to the RPENM membership as a whole. The NMRHCA board took exception to some of the committee’s recommendations, and sent a letter to the Legislative Finance Committee with their concerns. One solution that seems certain to be included in the final bill is to raise the contribution of employers and current employees, and to use this increase to strengthen the trust fund. These recommendations will be presented to the state legislature as a new bill during the next legislative session. It is most important that all RPENM members stay informed and track the final version of this bill (review our RPENM website at www.rpenm.org/). Contact your state legislators for any concerns that you may have!
One of the big issues last year was to create an “irrevocable trust” with the NMRHCA fund. Current legislation specifically rejects the idea of a trust fund, and the legislature was concerned about providing members with a property right if the irrevocable trust was passed. The main reason that NMRHCA wanted an irrevocable trust was to lessen the unfunded liability of the plan, which is currently over $4 billion. Recently, both Segal, the NMRHCA actuarial firm, and NMRHCA’s own attorney has given opinions stating that for all intents and purposes, the fund is already an irrevocable trust and cannot be used for any other purpose. At the same time, according to the legal opinions, the current arrangement does not constitute a property right. As such, it is likely that NMRHCA does not need to seek irrevocable trust legislation in order to be assured that the fund cannot be used for anything other than retiree health care.
A statewide health care proposal by Governor Richardson will most likely be heard during a special session of the state legislature next year. According to the Governor’s plan, NMRHCA will remain an independent organization, but under a larger umbrella. There are still many issues that need to be worked out with the Governor’s plan, however, (including as to where does the state find the doctors and facilities to handle 400,000 new patients?) before any plan will come to fruition. In any case, the NMRHCA board remains solid in their support to remain independent.
NMRHCA meetings are held the first Tuesday of each month and are rotated between Santa Fe and Albuquerque. The December 4 meeting was held in Albuquerque at Plaza del Sol, 600 2nd Street NW. Santa Fe meetings are generally held at the Willie Ortiz building on Cerrillos Road. All meetings start at 9:30 AM and all RPENM members are strongly encouraged to attend. This is your opportunity to ask questions and obtain information from the NMRHCA board of directors and staff.
By:
Doug Crandall
NMRHCA Investment Committee Chair
RPENM Board Member
One of the big issues last year was to create an “irrevocable trust” with the NMRHCA fund. Current legislation specifically rejects the idea of a trust fund, and the legislature was concerned about providing members with a property right if the irrevocable trust was passed. The main reason that NMRHCA wanted an irrevocable trust was to lessen the unfunded liability of the plan, which is currently over $4 billion. Recently, both Segal, the NMRHCA actuarial firm, and NMRHCA’s own attorney has given opinions stating that for all intents and purposes, the fund is already an irrevocable trust and cannot be used for any other purpose. At the same time, according to the legal opinions, the current arrangement does not constitute a property right. As such, it is likely that NMRHCA does not need to seek irrevocable trust legislation in order to be assured that the fund cannot be used for anything other than retiree health care.
A statewide health care proposal by Governor Richardson will most likely be heard during a special session of the state legislature next year. According to the Governor’s plan, NMRHCA will remain an independent organization, but under a larger umbrella. There are still many issues that need to be worked out with the Governor’s plan, however, (including as to where does the state find the doctors and facilities to handle 400,000 new patients?) before any plan will come to fruition. In any case, the NMRHCA board remains solid in their support to remain independent.
NMRHCA meetings are held the first Tuesday of each month and are rotated between Santa Fe and Albuquerque. The December 4 meeting was held in Albuquerque at Plaza del Sol, 600 2nd Street NW. Santa Fe meetings are generally held at the Willie Ortiz building on Cerrillos Road. All meetings start at 9:30 AM and all RPENM members are strongly encouraged to attend. This is your opportunity to ask questions and obtain information from the NMRHCA board of directors and staff.
By:
Doug Crandall
NMRHCA Investment Committee Chair
RPENM Board Member