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.

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 Suite 101 of the State Capitol Building North.

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to SB 433, HB 438

SOURCES OF INFORMATION

LFC files

State Department of Education (SDE)

SUMMARY

Synopsis of Bill

House Bill 316 amends the Public School Finance Act (Section 22-8-25 NMSA 1978), it reduces the percent of federal "Impact Aid" the state uses in calculating the State Equalization Guarantee (SEG) to 65% from 75% requires that districts use 30% allows the use of 5% for operational purposes.

The bill specifies no effective date for the provisions of the bill to take effect. It must be concluded that the bill takes effect beginning in fiscal year 2001. (SDE shows fiscal year 2003 as the first fiscal year that the provisions would be in effect.)

Significant Issues

The analysis prepared by SDE staff states that: "If SB 316 were enacted, New Mexico would no longer qualify under federal law to take credit for eligible Impact aid revenues because the state would no longer meet the disparity test required by federal law." If the state is unable to take credit for any of the eligible funds, all Impact Aid funds would be kept by the receiving school district. Since the Public School Funding Formula uses credit for Impact Aid Funds to "equalize" support for all public schools, the "equalization" feature of the bill would be destroyed.

FISCAL IMPLICATIONS

It is estimated that a recurring $42,800 from the general fund would be need to maintain program funding for public schools.

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