HOUSE MEMORIAL 109

53rd legislature - STATE OF NEW MEXICO - first session, 2017

INTRODUCED BY

James E. Smith and Linda M. Trujillo

A MEMORIAL

REQUESTING THE LEGISLATIVE EDUCATION STUDY COMMITTEE TO STUDY DIFFERENT METHODOLOGIES FOR DETERMINING APPROPRIATE CASH BALANCES FOR DIFFERENT SCHOOL DISTRICTS AND CHARTER SCHOOLS.

     WHEREAS, historically, there have been several state budgetary circumstances that have influenced legislative decisions regarding cash balances of school districts, including charter schools; and

     WHEREAS, in 2003, the legislature passed an amendment to Section 22-8-41 NMSA 1978 to provide that, beginning with fiscal year 2006, there would be a tiered allowable limit on school district operational cash balances; and

     WHEREAS, over several years, the legislature has considered allowable cash balance limits trying to find the balance between what is necessary to allow school districts to open new schools, buy new-cycle textbooks and meet unforeseen emergencies and what could be considered excessive cash savings at the expense of the general fund and the legislative prerogative to appropriate; and

     WHEREAS, when the state is threatened with a fiscal crisis, like it is facing now, public school funding becomes a target because it is the largest single portion of the budget, and cash balances become an easy way to recoup significant cash to use for the budget; and

     WHEREAS, several alternative cash balance sweep proposals were considered in the 2016 special session and subsequently enacted; and

     WHEREAS, another, different sweep model was used in this session's solvency package, which was enacted without due consideration of the harm to some school districts; and

     WHEREAS, it has been proven over and over again that a "one size fits all" budgetary action, such as across-the-board percentage cuts to school cash balances, is an inefficient and ineffective way to go about appropriating and budgeting and ends up punishing some school districts and rewarding others; and

     WHEREAS, school districts need a more predictable and consistent understanding of the state's intention regarding school finance so they can plan effectively for both annual and exigent circumstances;

     NOW, THEREFORE, BE IT RESOLVED BY THE HOUSE OF REPRESENTATIVES OF THE STATE OF NEW MEXICO that the legislative education study committee be requested to study different methodologies for determining reasonable and appropriate school district cash balances; and

     BE IT FURTHER RESOLVED that the study include methods used by other states; research on the subject; a historical review of the amounts of cash balances kept by school districts and the uses to which cash balances have been put by school districts; the times and ways the legislature has limited cash balances; and the times and amounts it has swept school district cash balances for other uses; and

     BE IT FURTHER RESOLVED that the committee consider determining a cash balance floor below which school districts should not fall and also some type of appeal process, particularly when a school district knows in advance that it will have to use its current- or next-year cash balances for a particular purpose; and

     BE IT FURTHER RESOLVED that if the committee determines that cash balances should be severely limited, it should consider increases to emergency supplemental funding or another fund that school districts can apply to for planned or exigent needs; and

     BE IT FURTHER RESOLVED that the legislative finance committee, the public education department, the state auditor's office, any other state agency or institution, the school districts and charter schools and the coalition of school administrators be requested to assist the legislative education study committee as required; and

     BE IT FURTHER RESOLVED that copies of this memorial be transmitted to the chair and director of the legislative education study committee.

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