A. The “group self-insurance fund” is created. The fund and any income produced by the fund shall be held in trust for the benefit of participating state agencies and their employees and local public bodies and their employees, deposited in a segregated account and invested by the director with the advice of the committee. Money in the fund shall be used solely for the purposes of the fund and shall not be used to pay any general or special obligation or debt of the state, other than as authorized by this section. Balances in the fund in excess of amounts needed for the purposes of the fund shall not be used to pay dividends or refunds, however described, to individual public employees or their dependents, but may be used, in the director’s discretion, to reduce future contributions, to provide additional benefits or as a reserve to stabilize premiums.

B. The fund shall consist of money appropriated to the fund, income from investment of the fund, employers’ contributions, employees’ contributions, insurance or reinsurance proceeds and other funds received by gift, grant, bequest or otherwise for deposit in the fund, including but not limited to refunds of amounts from prior state group life, vision, dental, health and disability insurance plans, all of which are hereby appropriated to and for the purposes of the fund.

C. Disbursements from the fund shall be made by warrant signed by the secretary of finance and administration upon vouchers signed by the director. Lump sum disbursements from the fund may be advanced, in the manner described in this subsection, to a professional claims administrator to be used to pay benefits. Such lump sum disbursements may be made not more than weekly in advance. The administrator shall keep any such lump sum advance in a segregated account and shall hold the advance in trust for the benefit of participating employees. On or before the last day of each month, the administrator shall prepare a request for replenishment of the lump sum disbursement in the amount actually paid out for benefits during the month. Not more than thirty days after the last day of each month, the administrator shall make and submit to the director a detailed report of expenditures of any such lump sum advance during the month.

D. Money in the fund may be used by and is hereby appropriated to the risk management division of the general services department:

(1)     to purchase life, vision, health, dental and disability insurance, or any combination of these, for state and local public body employees participating in the group self-insurance plan and their covered dependents, from an insurance company determined to be the best responsible bidder, as defined in the Procurement Code [13- 1-28 to 13-1-199 N.M. Stat. Ann.], after:

(a) requesting sealed proposals from three or more insurance agents licensed in New Mexico; or

(b) requesting sealed proposals in accordance with the provisions of the Procurement Code;

(2)     to contract with and pay one or more professional claims administrators; (3)     to contract with and pay private attorneys or law firms for advice and for

defense of contested claims determinations;

(4)     to contract with and pay qualified independent actuaries, financial auditors and claims management and procedures auditors;

(5)     to contract with and pay consultants, financial advisors and investment advisors for independent consulting and advice;

(6)     to pay reasonable investment commissions and expenses;

(7)     to make lump sum advances to any person or firm acting as a professional claims administrator, such advances to be used exclusively to pay benefits to participating employees;

(8)     to pay benefits to or for participating employees and their dependents;

and (9)     to pay any other costs and expenses incurred in carrying out this section;

(10)    as otherwise provided by law.

E. The fund shall be maintained in actuarially sound condition as evidenced by the annual written certification of an actuary qualified for such work that as of June 30 of the current year the fund was actuarially sound.

F. Annually on or before January 15, the director shall submit to the legislature a report on any group self-insurance plan created pursuant to Subsection A of Section 5 [10-7B-6 N.M. Stat. Ann.] of the Group Benefits Act, a financial audit of the fund and a claims management and procedures audit by a qualified claims auditor for the one-year period ending on June 30 immediately preceding the report. With respect to claims files, the claims audit may, in the director’s discretion, be limited to a random sampling.