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

SPONSOR Gardner

ORIGINAL DATE

LAST UPDATED

2/21/07

HB 938

SHORT TITLE Earmarked Funds as Credit for Qwest Customers

SB

ANALYST Earnest

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

NFI

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Office of the Attorney General (OAG)

Public Education Department (PED)

SUMMARY

Synopsis of Bill

House Bill 938 would state the Legislature’s refusal to appropriate Qwest’s $5 million donation

to the Public Education Department for the Strong Project as provided in the settlement

agreement between Qwest and the state. By not appropriating the $5 million, it will be returned

to Qwest’s customers as credits.

FISCAL IMPLICATIONS

The Public Education Department would not have an additional $5 million for the STONG

project.

SIGNIFICANT ISSUES

The Alternative Form of Regulation (AFOR) settlement agreement, known as the Second

Amended Settlement Agreement (SASA), signed by Qwest, the NM Attorney General, General

Services Department, NM Internet Professionals Association and PRC Staff, was approved by

House Bill 938 – Page

2

the PRC and became effective February 2, 2007. The bulk of the $270 Million settlement

addresses telecommunication infrastructure improvements throughout NM. Of this amount, $5

million is devoted to the Public Education Department for the STRONG project, a version of the

executive’s laptop initiative. The $5 million is subject to legislative appropriation.

PED indicates that the $5 million would be used for public schools statewide designated as

Restructing-2 (or “R-2 School"), which are schools that have failed to meet Adequate Yearly

Progress (AYP) for six consecutive years. Specifically, the funds would have been applied

toward technology intervention and teacher professional development and to administrator

professional development—as required under the federal No Child Left Behind Act for states to

take strong corrective actions.

OTHER SUBSTANTIVE ISSUES

The total amount required for settlement of the AFOR I cases is $270 million and includes:

•

$81.3 million for high speed internet access, including additional penetration into rural

areas.

•

$33 million for redundant and diverse routes project, i.e. wire center upgrades

•

$30 million for cable improvements for basic phone service

•

$50 million for advanced telecommunications technologies projects

•

$60 for network improvement and capacity augmentation projects and cost overruns of

other projects listed above

•

$5 million over three years for PED’s STRONG project.

The original settlement agreement, announced in July 2006, included $15 million over three

years for the STRONG Project. It was not subject to legislative appropriations.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

Status quo. The $5 million is still subject to legislative appropriation. If not appropriated,

credits will be provided to Qwest customers.

BE/mt