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F I S C A L I M P A C T R E P O R T
SPONSOR Miera
ORIGINAL DATE
LAST UPDATED
1/31/06
HB 210
SHORT TITLE State Support Reserve Fund Uses For Schools
SB
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 SSB-58
Relates to Appropriation in the General Appropriation Act
SOURCES OF INFORMATION
LFC Files
Responses Received From
Public Education Department (PED)
Department of Finance and Administration (DFA)
SUMMARY
Synopsis of Bill
House Bill 210 appropriates $10 million from the general fund to the state support reserve fund
for the purpose of supporting the state equalization guarantee distribution and, providing for the
emergency needs of school districts over and above emergency distributions provided to districts
in financial need.
FISCAL IMPLICATIONS
The appropriation of $10 million contained in this bill is a recurring expense to the general fund.
Any unexpended or unencumbered balance remaining at the end of fiscal year 2006 and subse-
quent fiscal years shall not revert to the general fund.
This bill provides for continuing appropriations. The LFC has concerns with including continu-
pg_0002
House Bill 210 Page 2
ing appropriation language in the statutory provisions for newly created funds, as earmarking
reduces the ability of the legislature to establish spending priorities.
SIGNIFICANT ISSUES
The State-support Reserve Fund was created in statute to augment the appropriations for the state
equalization guarantee to ensure, to the extent of the amount undistributed in the fund, that the
maximum figures for such distribution established by law will not be reduced. The law creating
the fund (22-8-31 NMSA 1978) expresses the intent of the Legislature that the fund is reim-
bursed in the amount of the yearly distribution by appropriation in the year following the distri-
bution, so that the fund at the beginning of each fiscal year will have a credit balance of at least
$10 million.
The House Appropriations and Finance Committee Substitute for House Bills 2, 3, 4, 5, 6, and
78 contains appropriations for the state support reserve fund for its intended purpose, $5 million
in emergency supplemental funding and $6.8 million for three tiered transition. Schools will
have considerable resources if necessary to meet emergency needs. The LFC is concerned the
additional uses provided for in the bill could lead to recurring appropriations of up to $10 million
annually.
HB210 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.
ADMINISTRATIVE IMPLICATIONS
DFA notes the administrative implications of HB210 are unclear, but because the bill broadens
the intent of the Fund for use as an additional source of emergency funds available to school dis-
tricts and requires the Secretary of Public Education to certify that a school district has exhausted
its resources, including supplemental distributions, as a condition of receiving funds through the
proposed mechanism, some administrative impact to the Public Education Department (PED)
would occur. PED would have the added responsibility of implementing the certification proc-
ess.
PA/nt