Ledes from the Land of Enchantment

CYFD, General services, looking to avoid shortfall in settlement fund 

New Mexico taxpayers will likely pay nearly $17 million in the near future to settle seven lawsuits against the state’s child welfare agency, agency officials revealed in recent committee hearings during the ongoing legislative session.

The expected $16.9 million set to cover upcoming lawsuit settlements more than doubles what the state’s insurance division has paid in total on behalf of the Children, Youth and Families Department over the last five years.

According to the General Services Department, which insures the state government through the Risk Management Division, that total over the five-year span is $14 million.

Risk Management Division oversees the New Mexico liability fund, which uses taxpayer money to settle claims in court either through voluntary agreements, or court-ordered settlements.

The General Services Department Secretary Robert Doucette asked lawmakers for additional money to prevent a shortfall in the liabilities fund at a Jan. 23 presentation to the Senate Finance Committee. The Legislative Finance Council said in its budget request for the 2024 session that the Risk Management Division fund is short of projected liability by $86 million.

“We’re making sure that if we owe, that we pay what we owe,” Doucette said.

Gov. Michelle Lujan Grisham’s budget asks for $24.8 million special appropriation in the executive budget for the Risk Management Division. An additional $20 million special appropriation for settlements involving CYFD would also go to the fund, according to the executive budget proposal.

Waiting on a budget

The House Appropriations and Finance Committee moved to adopt the Legislative Finance Committee Recommendation for the General Services Department during a meeting on Jan. 17.

The total budget for the agency is about $160 million dollars. The differences between the Legislative Finance Committee recommendation and the executive budget are about $145,000, a difference of 1%.**

Doucette said the agency performs an assessment to estimate potential settlements with state agencies and seeks that amount from the general fund. However, the past year has seen large settlement figures, outstripping what was set aside to pay them.

“The concern I have, this is the first year, we’ve exceeded our assessment,” Doucette said, adding that he didn’t know if it was an anomaly or if it signals a trend, saying the agency would need more data.

Six state agencies account for 86% of all settlement dollars spent in New Mexico in the past five years.

The top five are the University of New Mexico Hospital, CYFD, the Department of Public Safety, New Mexico Department of Transportation.

Risk Management Division paid out about $80 million on behalf of the five state entities since  2019.

The sixth, is New Mexico State University which paid out $8 million dollars to settle hazing allegations in June 2023.

Children, Youth and Family Services the upcoming settlements include two wrongful death lawsuits and several physical and sexual abuse cases, secretary Teresa Casados told the Finance Committee on Jan. 22.

Those settlements are not yet public.

“Those are obligations we know we’re going to pay out,” said Doucette. “They are not on the Sunshine Portal yet, because we have not cut the check.”

Doucette said the agency would put forward recommendations for further action, potentially as a rule change or law suggestion.

“I’m going to see if we need to start doing special assessments of these entities that are taking the vast majority of the fund,” Doucette said.

“We’re going to put a lot of emphasis on loss prevention,” he said. “Especially some of these agencies that were paying out some of these dollars.”

Sen. William Burt (R-Alamogordo) asked if the legislature is putting “too much budget” into both the agency and Risk Management Division to cover the liability.

Both appropriations would be under the control of the Risk Management Division, said Cecilia Mavrommatis, an analyst with the New Mexico Department of Finance and Administration.



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