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F I S C A L I M P A C T R E P O R T
SPONSOR Asbill
ORIGINAL DATE
LAST UPDATED
1/30/2007
HB
SHORT TITLE Public School Cash Balance Credits
SB 159
ANALYST Aguilar
APPROPRIATION (dollars in thousands)
Appropriation
Recurring
or Non-Rec
Fund
Affected
FY07
FY08
NFI **
(Parenthesis ( ) Indicate Expenditure Decreases)
Duplicates HB-59
SOURCES OF INFORMATION
LFC Files
Responses Received From
Public Education Department (PED)
SUMMARY
Synopsis of Bill
Senate Bill 159 raises the allowable limit on cash balances a school district may keep. The bill
also changes the basis for calculating excess cash balances by referring to the “unrestricted,
unreserved cash balance and emergency reserve" rather than the “allowable limit".
FISCAL IMPLICATIONS
The bill makes the following changes:
Districts with program costs less than $5 million, the allowable cash balance limit is
increased from 15% to 18%
of budgeted expenditures;
Districts with program costs between $10 million and $25 million, the allowable cash
balance limit raised from 9% to 10%
of budgeted expenditures.; and,
Districts with program costs between $25million and $200 million, the allowable cash
balance limit raised from 7% to 8%
of budgeted expenditures.
pg_0002
Senate Bill 159 – Page
2
Cash balance limits for all other districts remain the same.
** Because cash balances vary from year-to-year it is difficult to determine a finite annual fiscal
impact, however PED notes that in FY06, language contained in current statute resulted in seven
districts with excess cash balances that produced a cash balance credit of $814 thousand. Using
the same data, provisions contained in SB-159 would result in only three entities with excess
cash resulting in cash balance credits of $183 thousand.
SIGNIFICANT ISSUES
An LESC analysis indicates that provisions contained in a 2006 amendment to Section 22-8-41
NMSA 1978 changed the calculation of the upper limit of the cash balance credit from 18 (or 20)
percent of the allowable cash balance to 18 (or 20) percent of the allowable limit. For districts
and charter schools with cash balances greater than 18 (or 20) percent of the allowable limit, the
result is that the state now takes credit for a greater portion of the allowable cash balance from a
school district or charter school that has kept its cash balance closer to the allowable limit than it
does from a district or charter school that greatly exceeds the allowable limit. SB 159 corrects
this problem and also raises certain of the allowable limits to minimize any potential impact.
The bill also defines the allowable unrestricted, unreserved operational cash balance and the
emergency reserve as the total amount of cash balance and emergency reserve not attributable to
revenue derived from the school district property tax, forest reserve funds and impact aid for
which the state takes credit.
PA/mt