NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

The LFC is only preparing FIRs on bills referred to the Senate Finance Committee, the Senate Ways and Means Committee, the House Appropriations and Finance Committee and the House Taxation and Revenue Committee. The chief clerks are responsible for preparing and issuing all other bill analyses.

Only the most recent FIR version, excluding attachments, is available on the Intranet. Previously issued FIRs and attachments may be obtained from the LFC office in Room 416 of the State Capitol Building.

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to HB476, SB173, SB692, and SB717

SOURCES OF INFORMATION

State Department of Public Education (SDE)

Public School Insurance Authority (PSIA)

Educational Retirement Board (ERB)

SUMMARY

Synopsis of SFl Amendment #3

The Senate Floor Amendment #3 in effect, repeals the current "sunset" provision of the Public Employee Bargaining Act, thus allowing the act to remain in effect indefinitely.

Synopsis of SFl Amendment #2

The Senate Floor Amendment #2 adds the word "statewide," to clarify that only 15 start-up and 5 conversion charter schools may be established throughout the state each year.

Synopsis of SFl Amendment #1

Senate Floor Amendment #1 strikes the section of the bill which created a charter school reserve fund, strikes the section of the bill which allowed school districts to receive funding for additional program units and strikes the appropriations to the charter school stimulus fund, charter reserve fund, and to SDE for transportation expenses.

Synopsis of SEC Amendment

The Senate Education Committee amendment strikes language in the original bill which allowed employees of a charter school the same right to organize and bargain collectively as other public school employees pursuant to the Public Employee Bargaining Act. The amendment now allows employees to organize and bargain collectively with the governing body of the charter school.

Synopsis of Bill

Senate Bill 192 repeals section 22-8A-1 through 22-8A-7, cited as the Charter School Act, enacts the 1999 Charter Schools Act, appropriates $1,000.0 for the charter school stimulus fund, appropriates $1,000.0 for the charter school reserve fund, and appropriates $180.0 to SDE for transportation expenses incurred by charter schools.

Significant Issues

• •A charter school is considered a conversion school or a start-up school within a school district authorized by the local school board. A conversion school is defined as an existing public school within a school district. A start-up school is defined as a public school developed by one or more parents, teachers or community members and authorized to become a charter school.

• •The purpose of the Charter Schools Act is to enable individual schools to restructure their educational curriculum to encourage and use innovative teaching methods; to allow innovative forms of measuring student learning and achievement; to address the needs of all students; to create new professional opportunities for teachers; to improve student achievement; to encourage parental and community involvement in the schools; and to provide parents and students with an educational alternative to create new, innovative and more flexible ways of educating students.

• •Charter schools must be accredited by SBE.



• •Charter schools are subject to all federal and state laws prohibiting discrimination.



• •A charter school may negotiate with a local school district to provide transportation.



• •A charter school may negotiate with a local school district for capital expenditures.



• •A charter school shall be a nonsectarian, nonreligious and non-home-based public school that operates within a public school district.



• •Charter schools cannot charge tuition or have admission requirements.



• •A charter school may negotiate with the local district for transportation and facilities.



• •The SBE shall waive requirements relating to individual class load and teaching load, length of school day, staffing patterns, subject areas and the purchase of instructional materials. The SBE may also waive other provisions of the Public School Code relating to graduation requirements, driver's education, evaluation standards for school personnel, and principal duties.



• •Charter schools are excluded from the requirement of procurement through the state purchasing agent but not from the requirements of the Procurement Code.

• •No more than 15 start-up and 5 conversion schools may be established per year. The number of charter slots remaining in that year will be transferred to succeeding years up to a maximum of 75 start-up and 25 conversion schools in any five-year period.



• •The Educational Retirement Act is amended to include employees of a charter school.



• •The Public School Insurance Authority Act is amended to require charter schools to participate in the authority unless a charter school is granted a waiver.



• •Charter school employees will be subject to background checks.



• •Each charter school is required to submit a school-based budget to its local school board.



• •School districts must flow the charter school's share of the State Equalization Guarantee (SEG) within five days after the district receives its monthly SEG allotment.

FISCAL IMPLICATIONS

This bill requires the amount of funding allocated to the charter school shall be no less than 99 percent of the school-generated program cost.

Senate Bill 192 creates the "Charter School Stimulus Fund" and appropriates $1,000.0 to the fund for start-up or conversion charter schools to cover initial costs associated with renovating or remodeling existing buildings and structures. The funds may be expended in fiscal year 2000 and subsequent fiscal years. The fund shall consist of money appropriated by the legislature and grants, gifts, devises and donations from any public or private source. SDE will administer the fund and may use up to three percent of the fund for administrative costs.

Senate Bill 192 creates the "Charter School Reserve Fund" and appropriates $1,000.0 for allocation to school districts whose students have transferred to charter schools in fiscal year 2000 and subsequent fiscal years. SDE will administer the fund and may use up to three percent of the fund for administrative costs. Money in the fund shall not revert to the general fund at the end of the fiscal year.

SDE estimates that approximately 4 percent or 1,613 students currently enrolled in private and home schools may transfer to a charter school. Using the 1997-98 per student program cost of $3,881 multiplied by 1,613 students, the estimated additional program cost required would be $6,259.7, thus the Charter School Reserve Fund may need an additional $5,259.7 for students that transfer to charter schools during the first year.

Senate Bill 192 also appropriates $180.0 from the general fund to SDE for transportation expenses incurred by charter schools. Any unexpended or unencumbered balance remaining at the end of fiscal year 2000 shall revert to the general fund. SDE indicates the $180.0 appropriation would be sufficient for four 71-passenger buses available for charter schools.

ADMINISTRATIVE IMPLICATIONS

Currently, .25 FTE at the State Department of Education is assigned to charter school issues. Included in the FY2000 appropriation request is $59.7 for an additional position for alternative education, however the department estimates that approximately 60 percent of the duties would be related to charter schools.

OTHER SUBSTANTIVE ISSUES

According to SDE, at the federal level, charter school legislation has been amended to provide approximately $100.0 million for states that allow for an increase in the number of charter schools per year. Under the current charter school act, New Mexico will not be eligible for federal charter school funds.

According to PSIA, assuming the risk from new charter school employees is not significant or the demographics does not differ from the existing population, the inclusion of new charter school employees would serve to increase the current risk pool thus increasing the cost of insurance premiums. PSIA also indicates that the agency would not be affected by charter schools in Albuquerque since the school district is not covered by PSIA.

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