Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance

committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

if they are used for other purposes.

Current FIRs (in HTML & Adobe PDF formats) are a vailable on the NM Legislative Website (legis.state.nm.us).

Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and

attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.

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

SPONSOR Nava

ORIGINAL DATE

LAST UPDATED

1/25/06

HB

SHORT TITLE State Support Reserve Fund for Use in Schools

SB 58

ANALYST Aguilar

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

$10,000.0

Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates an appropriation contained in HB-3

Duplicates House Bill 210

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of finance and Administration (DFA)

Public Education Department (PED)

SUMMARY

Synopsis of Bill

Senate Bill 58 appropriates $10 million from the general fund for expenditures in FY06 and sub-

sequent fiscal years to the State Support Reserve Fund to augment appropriations to the State

Equalization Guarantee distribution and to provide for emergency needs of school districts over

and above emergency distributions provided.

FISCAL IMPLICATIONS

The State Support Reserve Fund was created in statute to augment the appropriations to the state

equalization guarantee to prevent to the extent possible the reduction of the unit value in a given

year. Further, the bill expresses the intent of the Legislature that the Fund is reimbursed in the

amount of the yearly distribution by appropriation in the year following the distribution, so that

the fund at the beginning of each fiscal year will have a credit balance of at least $10,000 mil-

lion.

Senate Bill 58 – Page 2

Senate Bill 58 changes the intent of the Fund by broadening its stated purpose to provide for

emergency needs of school districts over and above the emergency distributions available

through other statutory mechanisms, including the public school funding formula. Given con-

cerns raised in legislative testimony regarding district hold harmless issues pertaining to the

three-tier career ladder, and small school issues among others, concerns are raised that this could

lead to a recurring appropriation of up to $10 million annually.

The appropriation of $10 million contained in this bill is a recurring expense to the general. Any

unexpended or unencumbered balance remaining at the end of a fiscal shall not revert to the gen-

eral fund.

This bill provides for continuing appropriations. The LFC has concerns with including continu-

ing appropriation language in the statutory provisions, as earmarking reduces the ability of the

legislature to establish spending priorities.

SIGNIFICANT ISSUES

It is projected that there will be fewer credits for the state in future years. If credits come in less

than the amount used to establish the unit value, the unit value would decrease and reduce school

district funding. This appropriation would be used to offset the decrease and maintain the unit

value. If a school district were to receive less funding this would create a shortfall in their oper-

ating budget and a need for emergency funding to uphold district obligations.

PA/yr