NOTE: As provided in LFC policy, this report is intended only for use by the standing finance committees of the legislature. The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used for other purposes.

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F I S C A L I M P A C T R E P O R T

SPONSOR:	Nava		DATE TYPED:	2/13/03		HB
SHORT TITLE:		Enrollment Growth Program Units Calculation				SB	231/aSFC
					ANALYST:		L. Baca

APPROPRIATION

Appropriation Contained

Estimated Additional Impact

Recurring

or Non-Rec

Fund

Affected

FY03

FY04

FY03

FY04

NFI

Recurring

(Parenthesis ( ) Indicate Expenditure Decreases)

Identical to HB 169a Enrollment Growth Program Units,

Relates to SB 17, Enrollment Growth Program Units

SOURCES OF INFORMATION

Responses Received From

State Department of Education (SDE)

SUMMARY

Synopsis of SFC Amendment

The amendments adopted by The Senate Finance Committee strike the appropriation and modify the formula to use a factor of 1.5 instead of Adjusted Average Units Per MEM. The formula for determining enrollment growth units will now read as follows:

((Current Year MEM - Previous Year MEM) - (Current Year MEM x .01)) X 1.5 + Units

The General Appropriation Act includes $4.5 million for enrollment growth in the appropriation for Public School Support.

Synopsis of Original Bill

Senate Bill 231 amends the Public School Finance Act to change the calculation for determining enrollment growth units based on adjusted average units per MEM plus an additional .50 unit for a school district experiencing an increase in MEM of 1.0 percent or greater from the 40^th day of the preceding year; and appropriates $6,300.0 to the State Department of Education to fund the increase in enrollment growth units.

This bill was submitted on behalf of the Legislative Education Study Committee (LESC).

Significant Issues

Since the shift to prior year funding of school districts during the 1999-2000 school year, this proposed change is the third modification to the method for distributing state support to school districts for enrollment growth. This change provides a stable and more comprehensive approach to recognizing membership growth and returns “consistency” to funding enrollment growth. The LESC and the State Board of Education support this approach.

Utilizing this method, those districts with increasing enrollments as defined in statute receive the funding need to provide the instructional needs of the additional students. Based on a table provided by the SDE, 49 school districts will not be affected by the change, 34 will receive increases in funding, and 17 will generate fewer units and funding. (See attached tables prepared by SDE.)

The enrollment growth calculation for this method is described by SDE as follows:

“The bill would change the calculation of growth units based on the difference between the current year 40 day MEM and the prior year 40 day MEM. For districts experiencing a growth rate of one percent or greater, additional growth units would be calculated by multiplying the difference in MEM greater than one percent by the current year statewide average number of adjusted program units per student. Additionally, districts experiencing a growth rate of one percent or greater would also be entitled to marginal growth units calculated by multiplying all new students by a factor of 0.50.”

FISCAL IMPLICATIONS

The appropriation of $6,300.0 contained in this bill is a recurring expense to the general fund. Any unexpended or unencumbered balance remaining at the end of fiscal year 2004 shall revert to the general fund.

Based on 2002-2003 40th day membership and units adjusted for the implementation of full-day kindergarten and on the 2002-2003 initial unit value of $2,896.01, the estimated additional funding needed for FY 2004 is $6,300.0

DUPLICATION, RELATIONSHIP

SB 231is identical to HB 169, Enrollment Growth Program Units;

Is similar to SB 17, Enrollment Growth Program Units, a different approach to funding enrollment growth which uses two calculations for computing enrollment growth:

1) the total number of new students in a growing district is multiplied by the statewide average number of units per MEM on the current year 40th day report;

2) in a district with a growth rate greater than one percent, the difference in MEM greater than one percent is multiplied by a .5 marginal growth factor.

The calculations in HB 169, SB 231 and SB 17 are adjusted to exclude full-day kindergarten membership for the first year that full-day kindergarten is implemented in a school as required in the bills.

TECHNICAL ISSUES

The bill contains a reversion clause. Historically, however, funds flowing through the New Mexico Public School Funding Formula have not reverted.

OTHER SUBSTANTIVE ISSUES

In the bill, MEM is defined as the 40^th day school district membership, including early childhood full-time equivalent membership and special education membership, but excluding full-day kindergarten membership for the first full year that full-day kindergarten is implemented.

LRB/yr/ls