Quarterly Newsletters 17/18 First Quarter Newsletter | Page 5

Schools. The key document for coverage is the Memorandum of Coverage. A group of NMPSIA consultants and staff have been meeting once a month reviewing the MOC to clarify coverage and ensure that Districts and Charters receive the best coverages available.

With Risk, there are many areas of loss control focus. Several years ago, NMPSIA and Poms and Associates focused on poor roof conditions. The focus included drawing in the PSFA and the PSCOC. Increased attention and funds have significantly improved the condition of property and lowered losses.

NMPSIA’s efforts to focus on playgrounds, a leading cause of serious injury among children, have also led to an expansion of PSFA review. Our hope is that an increase in funding will ultimately reduce the risk and affect the stability of the pool.

NMPSIA, through its contract with Poms and Associates, has spent the last year focusing on school violence. Included in this focus is a serious discussion about armed school employees. Preparing for a policy, policies or statutory change requires input from many points of view, while protecting the integrity of the NMPSIA against catastrophic losses.

Employment practices liability is always an issue of concern. The Risk team is looking at hiring, discipline and termination practices with the intent of ensuring due process and the safety of children who attend NM public schools. This initiative will involve input from all levels of school staff.

In addition, we continue to review condition of property and provide adjusting services for all manner of claim from Workers’ Compensation to Improper actions by employees, consulting services and training. If you have any concerns related to risk matters, please contact Sammy Quintana at NMPSIA.

Financial Overview

The Employee Benefits Fund recognized a loss of $11.1 million during FY17 and an unaudited fund balance of $9.8 million. NMPSIA’s target fund balance is one month of claims, or approximately $24.7 million. Over the last eight years, NMPSIA’s annualized average medical and prescription paid trend has increased 5.2%, while the percent change in revenue has only increased 3.6%. Average membership has decreased 1.7% per annum. The NMPSIA Board of Directors have approved a 3.98% premium increase to the High Options and HMO plan, and a 1.82% increase to the Low Option plans effective October 1, 2017. This rate increase is expected to generate $309.3 million in revenue for FY18, resulting in a projected $18.5 million (0.8 months of claims) fund balance at the end of the fiscal year.

The Risk fund recognized a loss of $6.1 million during FY17 and an unaudited fund balance deficit of $11.9 million. Sixteen million dollars from the Risk Fund cash reserves were swept during the recent special legislative sessions. The NMPSIA Board of Directors approved a cumulative 2.83% increase in billed premiums for FY18, which will generate approximately $79.9 million. Fund balance is projected to remain flat at the end of the fiscal year. However, current cash reserves are sufficient to pay projected claims. NMPSIA’s strategy is to replenish fund balance within a three to five year period.

If you have any concerns related to financial matters, please contact Richard Valerio at NMPSIA.

5