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March 21, 2022 HB 22-1228
Legislative Council Staff
Nonpartisan Services for Colorado’s Legislature
Revised Fiscal Note
(replaces fiscal note dated February 22, 2022)
Drafting Number:
Prime Sponsors:
LLS 22-0324
Rep. Roberts; Bockenfeld
Sen. Coram
Date:
Bill Status:
Fiscal Analyst:
March 21, 2022
Senate Judiciary
Annie Scott | 303-866-5851
Annie.Scott@state.co.us
Bill Topic: SUNSET CONTINUE REGULATE PRENEED FUNERAL CONTRACTS
Summary of
Fiscal Impact:
☒ State Revenue
☒ State Expenditure
☐ State Transfer
☒ TABOR Refund
☐ Local Government
☐ Statutory Public Entity
Sunset Bill. This bill continues the regulation of preneed funeral contracts in the
Department of Regulatory Agencies, which is scheduled to repeal on
September 1, 2022. State fiscal impacts include an increase in revenue and
expenditures from changes to the program under the bill, and the continuation of the
program's current revenue and expenditures. The program is continued through
September 1, 2029.
Appropriation
Summary:
For FY 2022-23, the bill requires an appropriation of $81,958 to the Department of
Regulatory Agencies.
Fiscal Note
Status:
The revised fiscal note reflects the reengrossed bill.
Table 1
State Fiscal Impacts Under HB 22-1228
1
New Impacts
Budget Year
FY 2022-23
Out Year
FY 2023-24
Revenue Cash Funds $105,560 $106,600
Expenditures Cash Funds $81,958 $81,596
Centrally Appropriated $23,492 $24,971
Total Expenditures $105,450 $106,567
Total FTE 0.9 FTE 1.0 FTE
Other Budget Impacts TABOR Refund $105,560 $106,600
Continuing Impacts
Revenue Cash Funds - $52,200
Expenditures Cash Funds - $20,051
Continuing FTE - 0.3 FTE
1
Table 1 shows the new impacts resulting from changes to the program under the bill and the continuing impacts
from extending the program beyond its current repeal date. The continuing program impacts will end if the bill is
not passed and the program is allowed to repeal. Page 2
March 21, 2022 HB 22-1228
Summary of Legislation
The regulation of preneed funeral contacts by the Division of Insurance (DOI) in the Department of
Regulatory Agencies (DORA) is scheduled to repeal on September 1, 2022. This bill continues the
regulation until September 1, 2029, and implements recommendations in the 2021 Sunset Review. The
bill makes several changes to the program, including:
directing the Commissioner of Insurance (commissioner) to set net worth and bond requirements
in rule;
allowing the commissioner to investigate records of the seller;
requiring that fees be set by the commissioner based on the cost of regulating the industry;
requiring that unclaimed funds be transferred to the Unclaimed Property Trust Fund; and
requiring that funeral establishments attest as to whether they sell preneed contracts.
Background
Preneed funeral contracts are agreements where individuals prepay for funeral goods and services.
The contracts can be backed by a trust or a life insurance policy. Contracts are sold by funeral homes,
brokers, or life insurance agents (sellers). Applicants for licensure to sell preneed funeral contracts
pay a $500 licensing fee, show proof of their net worth or post a surety bond, and complete a
fingerprint-based criminal history background check. Renewal fees range from $100 to $2,000 based
on the aggregate preneed contract price outstanding. As of December 31, 2020, there were 68 licensees
representing a total amount of outstanding preneed contracts of $246,535,326.
To review the 2021 Sunset Review, see:
https://drive.google.com/file/d/1t55Rc1eUWaFHC-d1VLcW6sxXC-PaxvW_/view
Continuing Program Impacts
Based on the 2021 Sunset Review of Preneed Funeral Contracts, DORA is expected to have annual
revenue of $52,200 and expenditures of $20,051 to administer the preneed funeral contracts program.
If this bill is enacted, current revenue and expenditures will continue for the program starting in
FY 2023-24. This continuing revenue is subject to the state TABOR limits. If this bill is not enacted,
the program will end on September 1, 2023, following a wind-down period, and state revenue and
expenditures will decrease starting in FY 2023-24 by the amounts shown in Table 1. The impact from
the changes to the program are discussed in the State Revenue and Expenditures sections below.
Assumptions
This fiscal note assumes that the bill will generate approximately 193 new applications from sellers
with multiple locations. Though sellers are currently allowed to file applications that include multiple
locations, under the bill each seller will be required to file an application for each location beginning
in FY 2022-23 to enable increased monitoring. It is also assumed that proactive monitoring is allowed
under the bill, a change from current law, under which monitoring is performed only at the time of a
complaint or other indication of noncompliance Page 3
March 21, 2022 HB 22-1228
State Revenue
Fee impact on pre-need funeral contract sellers. Colorado law requires legislative service agency
review of measures which create or increase any fee collected by a state agency. These fee amounts
are estimates only, actual fees will be set administratively by DORA based on cash fund balance,
estimated program costs, and the estimated number of licenses subject to the fee. Current fees
are based on a tiered system and only apply to the 67 licensees that exist under current law. It is
assumed that the current fee structure will remain in place for current licensees and will apply to new
licensees under the bill until rulemaking takes place to set a new fee structure that will reflect the
updated costs to regulate the industry. It is assumed that an average fee of $406 in FY 2022-23 and
$410 in FY 2023-24 will be required, equating to annual revenue of $105,560 in FY 2022-23 and $106,600
in FY 2023-24.
In addition, the bill may increase funds sent to the Unclaimed Property Trust Fund.
State Expenditures
The bill increases cash fund expenditures in DORA by $105,450 in FY 2022-23 and $106,567 in
FY 2023-24 from the Division of Insurance Cash Fund. Expenditures are shown in Table 2 and detailed
below.
Table 2
Expenditures Under HB 22-1228
Cost Components FY 2022-23 FY 2023-24
Department of Regulatory Agencies
Personal Services $74,543 $80,246
Operating Expenses $1,215 $1,350
Capital Outlay Costs $6,200 -
Centrally Appropriated Costs
1
$23,492 $24,971
Total $105,450 $106,567
Total FTE 0.9 FTE 1.0 FTE
1
Centrally appropriated costs are not included in the bill's appropriation.
Department of Regulatory Agencies. Beginning in 2022-23, the DOI will require 0.1 FTE to complete
the rulemaking necessary the bill. In addition, 0.5 FTE will be required to review applications for
compliance, and to communicate with applicants regarding discrepancies. Proactive monitoring and
oversight of sellers will require 0.5 FTE. Costs are adjusted to a September 1, 2022, start date.
Centrally appropriated costs. Pursuant to a Joint Budget Committee policy, certain costs associated
with this bill are addressed through the annual budget process and centrally appropriated in the Long
Bill or supplemental appropriations bills, rather than in this bill. These costs, which include employee
insurance and supplemental employee retirement payments, are shown in Table 2.
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March 21, 2022 HB 22-1228
Effective Date
The bill takes effect 90 days following adjournment of the General Assembly sine die, assuming no
referendum petition is filed.
State Appropriations
In FY 2022-23, the bill requires an appropriation of $81,858 from the Division of Insurance Cash Fund
the Department of Regulatory Agencies, and 0.9 FTE.
State and Local Government Contacts
Information Technology Regulatory Agencies Treasury
The revenue and expenditure impacts in this fiscal note represent changes from current law under the bill for each
fiscal year. For additional information about fiscal notes, please visit: leg.colorado.gov/fiscalnotes.