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 Carraro

ORIGINAL DATE

LAST UPDATED

2/13/07

HB

SHORT TITLE Emergency Public School Facility Fund

SB 602

ANALYST Wilson

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

$600,000.0

Non-Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

FY09

$400.0

Non-Recurring

Emergency

Public School

Capital Outlay

Act

$200.0

Non-Recurring

Public School

Maintenance

Act

(Parenthesis ( ) Indicate Revenue Decreases)

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY07

FY08

FY09 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total

$0.1

$0.1

$0.1

$0.1 Recurring General

Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to HB 499

SOURCES OF INFORMATION

LFC Files

Responses Received From

Public Education Department (PED)

Senate Bill 602 – Page

2

SUMMARY

Synopsis of Bill

Senate Bill 602 appropriates $400,000,000 from the general fund to the emergency public school

facility fund for expenditure in fiscal years 2007 and subsequent fiscal years for the purpose of

funding new or expanded school facilities in high-growth areas of the state pursuant to the

provisions of the Public School Capital Outlay Act.

Senate Bill 602 appropriates $200,000,000 from the general fund to the public school

maintenance fund for expenditure in fiscal years 2007 and subsequent fiscal years for the

purpose of making allocations for maintenance of public school facilities pursuant to the

provisions of the Public School Capital Outlay Act.

The bill declares an emergency

FISCAL IMPLICATIONS

The appropriation of $600,000,000contained in this bill is a recurring expense to the general

fund. Any unexpended or unencumbered balance remaining at the end of a fiscal year shall not

revert to the general fund.

This bill creates two new funds and provides for continuing appropriations. The LFC has

concerns with including continuing appropriation language in the statutory provisions for newly

created funds, as earmarking reduces the ability of the legislature to establish spending priorities.

PED notes that the State and the legislature have made a substantial commitment to funding

infrastructure for public schools statewide. In the last five years approximately $737,500,000

has been allocated through Public School Capital Outlay Council (PSCOC) funding. The

majority of the deficiencies within school districts can be associated to inadequate or deferred

maintenance. With great needs and limited resources, this additional funding of $200,000,000

will assist school districts in protecting our state’s investments. However, this new proposed

program duplicates that of the Public School Capital Improvements Act (PSCIA). The PSCIA

currently generates approximately $83,500,000from local taxes and an additional $17,500,000 of

state-guaranteed funds. There may also be some equity issues with the program (see substantive

issues).

The current PSCOC funding is not sufficient to bring public schools’ facilities to their preferred

condition. The assessment of New Mexico school facilities two years ago showed a total

estimated cost of $2,300,000,000 for the life-cycle building renewal and repair needs. This was

the amount that was needed to bring up all schools in New Mexico to the current state adequacy

standards. This estimate includes categories such as life, safety, health, adequacy and space

(overcrowding/high growth) The additional $400,000,000 allocated in this bill to the fund will

assist the state in meeting the repair needs of school districts much faster by taking care of the

high-growth areas. Current revenue estimates show that approximately $173,000,000 will be

available from Supplemental Severance Tax Bonds (SSTB) this year. Due to all the additional

programs within the act, the PSCOC should have about $140,000,000 available for construction

projects. There is an apparent need for funding high-growth areas; however, there may also be

equity issues with this program (see substantive issues).

Senate Bill 602 – Page

3

These two allocations will use the majority of all the available sources for capital projects for this

legislative session.

SIGNIFICANT ISSUES

This bill creates a new section to the PSCOA by creating a “Public School Maintenance Fund"

(PSMF) in the state treasury. Allocations are to be made by the PSCOC for public school

maintenance projects. All districts are eligible to apply and no local match is required

.

The PSCOC shall develop rules that specify the application requirements, how the applications

will be prioritized, ensure the funds allocated are consistent with a district preventative

maintenance plan and ensure funds are expended in a prudent manner.

The bill creates another section to the PSCOA creating the “Emergency Public School Facility

Fund" (EPSFF) in the state treasury. Allocations are to be made by the PSCOC for making

grants for new or expanded schools in high-growth areas. The PSCOC shall adopt guidelines to

identify the high critical growth areas adversely affecting education.

The Public School Facilities Authority (PSFA) shall assist these school districts in developing

plans to alleviate the crowding. After criteria for prioritizing needed facilities the PSCOC shall

make allocations and work with the school districts and enter into construction contracts. A

school district will qualify for these funds regardless of their bonded indebtedness. Before the

PSCOC can make an allocation they must ensure the building is insured, the district has

submitted a five-year facilities plan with enrollment projections and a current maintenance plan

adopted by the PSCOC.

The five-year facilities plan must also include the capital needs of charter schools and projections

for the facilities needed in order to maintain a full-day kindergarten program. A school district

must also agree in writing to agree with any reporting requirements or conditions imposed by the

PSCOC.

ADMINISTRATIVE IMPLICATIONS

This bill does not include any additional programs to be administered by the PED; therefore, any

changes can be achieved with existing staff. However, the creation of two additional programs

may affect the workload of the PSFA.

RELATIONSHIP

Related to HB 499, Public School Capital Outlay making an appropriation of $500,000,000 to

the PSCOF; however, the appropriation is for all projects.

OTHER SUBSTANTIVE ISSUES

As a result of the Zuni lawsuit filed by the Zuni Public Schools, the Eleventh Judicial Court

ordered the State to establish and implement a uniform funding system for capital improvements

in New Mexico school districts. In response to the judges’ order many changes were made to the

PSCOA. One of the major changes was the implementation of the state and local share formula

Senate Bill 602 – Page

4

that is based upon a district’s local tax efforts, wealth and membership. This bill creates the

PSMF, allowing for allocations without a local match. This may pose an equity issue and

jeopardize the uniform system developed by the Public School Capital Outlay Oversight

Committee in response to the Zuni lawsuit. Currently, the court has not completed its oversight.

The EPSF is also created with no specific guidelines. The PSCOC would have to ensure that the

adopted methodology is consistent with the current standards-based process to ensure the

uniformity which was ordered by the courts. Creating special funding for specific school

districts may jeopardize the uniformity. In the current standards-based system, school districts

are ranked in a database and the state goes down the list and funds as many needs as available

revenues will allow. There are currently nine categories used to rank a school building and each

category is weighted differently. Currently, space or growth is the second-highest weighted

category. In essence, if a school is experiencing high growth and overcrowding this will be

reflected in the ranking of this database. A school district will rise higher on the list. The

current ranking system is already addressing the growth problem and it is relevant by looking at

the schools that are rising to the top. The problem is the available resources.

DW/nt