45th legislature - STATE OF NEW MEXICO - first session, 2001

RELATING TO PUBLIC SCHOOLS; PROVIDING CRITERIA AND PROCEDURES FOR FUNDING PUBLIC SCHOOL CAPITAL OUTLAY PROJECTS FOR PUBLIC SCHOOL BUILDINGS; AUTHORIZING THE ISSUANCE OF SHORT-TERM SEVERANCE TAX BONDS, SUPPLEMENTAL SEVERANCE TAX BONDS AND STATEWIDE PUBLIC SCHOOL GENERAL OBLIGATION BONDS; CREATING THE PUBLIC SCHOOL CAPITAL OUTLAY TASK FORCE; MAKING APPROPRIATIONS; DECLARING AN EMERGENCY.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. Section 7-27-12 NMSA 1978 (being Laws 1961, Chapter 5, Section 10, as amended) is amended to read:

"7-27-12. WHEN SEVERANCE TAX BONDS TO BE ISSUED.--

A. The state board of finance shall issue and sell all severance tax bonds when authorized to do so by any law that sets out the amount of the issue and the recipient of the money.

B. The state board of finance shall also issue and sell severance tax bonds authorized by Sections 72-14-36 through 72-14-42 NMSA 1978, and such authority as has been given to the interstate stream commission to issue and sell such bonds is transferred to the state board of finance. The state board of finance shall issue and sell all severance tax bonds only when so instructed by resolution of the governing body or executive head of the recipient of the bond money.

C. Except as provided in Subsection D of this section, proceeds from supplemental severance tax bonds shall be used only for public school [critical] capital outlay projects pursuant to the Public School Capital Outlay Act or [for infrastructure renovation and expansion at the state's public post-secondary educational institutions and other institutions confirmed as state educational institutions in Article 12, Section 11 of the constitution of New Mexico pursuant to a plan developed and approved by the commission on higher education to fund the highest priority significant needs identified by the commission.

D. The state board of finance shall issue and sell all supplemental severance tax bonds when authorized to do so by any law that sets out the amount of the issue and names the public school capital outlay council or the commission on higher education as the recipient of the money. The state board of finance shall issue and sell supplemental severance tax bonds only when so instructed by resolution of the public school capital outlay council or by resolution of the commission on higher education pursuant to certification by the governing bodies of the appropriate educational institutions] the Public School Capital Improvements Act.

D. Proceeds from supplemental severance tax bonds issued pursuant to Paragraph (2) of Subsection A of Section 19 of Chapter 6 of Laws 1999 (1st S.S.) shall be used for the purposes specified in that paragraph.

E. Except as provided in Subsection F of this section, the state board of finance shall issue and sell all supplemental severance tax bonds when so instructed by resolution of the public school capital outlay council pursuant to Section 7-27-12.2 NMSA 1978.

F. The state board of finance shall issue and sell supplemental severance tax bonds authorized by Paragraph (2) of Subsection A of Section 19 of Chapter 6 of Laws 1999 (1st S.S.) when so instructed by resolution of the commission on higher education pursuant to certification by the governing bodies of the appropriate educational institutions."

Section 2. A new section of the Severance Tax Bonding Act, Section 7-27-12.2 NMSA 1978, is enacted to read:

"7-27-12.2. [NEW MATERIAL] SUPPLEMENTAL SEVERANCE TAX BONDS--PUBLIC SCHOOL CAPITAL OUTLAY PROJECTS.--

A. The public school capital outlay council is authorized to certify by resolution that proceeds of supplemental severance tax bonds are needed for public school capital outlay projects pursuant to Section 22-24-5 NMSA 1978 or for the state distribution for public school capital improvements pursuant to the Public School Capital Improvements Act. The resolution shall specify the total amount needed.

B. The state board of finance may issue and sell supplemental severance tax bonds in compliance with the Severance Tax Bonding Act when the public school capital outlay council certifies by resolution the need for the issuance of the bonds. The amount of the bonds sold at each sale shall not exceed the lesser of the amount certified by the council or the amount that may be issued pursuant to the restrictions of Section 7-27-14 NMSA 1978.

C. The state board of finance shall schedule the issuance and sale of the bonds in the most expeditious and economical manner possible.

D. The proceeds from the sale of the bonds are appropriated as follows:

(1) in fiscal year 2002, the proceeds are appropriated to the public school capital outlay fund for the purpose of making awards of grant assistance pursuant to Section 22-24-5 NMSA 1978; and

(2) in fiscal year 2003 and subsequent fiscal years:

(a) the amount certified by the superintendent of public instruction as necessary to make the full distribution pursuant to Section 22-25-9 NMSA 1978 is appropriated to the public school capital improvements fund for the purpose of carrying out the provisions of the Public School Capital Improvements Act; and

(b) the remainder of the proceeds is appropriated to the public school capital outlay fund for the purpose of making awards of grant assistance pursuant to Section 22-24-5 NMSA 1978."

Section 3. Section 7-27-27 NMSA 1978 (being Laws 1961, Chapter 5, Section 27, as amended) is amended to read:

"7-27-27. PURPOSE AND INTENT.--The purpose of the Severance Tax Bonding Act is to establish the authority who shall issue and sell all severance tax bonds [and supplemental severance tax bonds] for financing specific projects authorized by the legislature and all supplemental severance tax bonds pursuant to Section 7-27-12.2 NMSA 1978 and to guarantee redemption of such bonds by revenue derived from the receipts from taxes levied upon natural resource products severed and saved from the soil and such other money as the legislature may from time to time determine. It is intended that projects to be financed from the fund shall include [but not be limited to] the construction of buildings for state institutions and water resource projects; and it is further intended that the income from water resource projects in excess of the amount required for operation and maintenance of the project shall be used to repay the severance tax bonding fund."

Section 4. Section 22-24-4 NMSA 1978 (being Laws 1975, Chapter 235, Section 4, as amended) is amended to read:

"22-24-4. FUND CREATED--USE.--

A. There is created the "public school capital outlay fund". Balances remaining in the fund at the end of each fiscal year shall not revert.

B. Money in the fund may be used only for capital expenditures deemed by the council necessary for an adequate educational program.

C. The council may authorize the purchase by the property control division of the general services department of property to be loaned to school districts to meet a temporary requirement. Payment for these purchases shall be made from the fund. Title and custody to the property shall rest in the property control division. The council shall authorize the lending of the property to school districts upon request and upon finding that sufficient need exists. Application for use or return of state-owned portable classroom buildings shall be submitted by school districts to the council. Expenses of maintenance of the property while in the custody of the property control division shall be paid from the fund; expenses of maintenance and insurance of the property while in the custody of a school district shall be the responsibility of the school district. The council may authorize the permanent disposition of the property by the property control division with prior approval of the state board of finance.

D. Applications for assistance from the fund shall be made by local school districts to the council in accordance with requirements of the council.

E. The council shall review all requests for assistance from the fund and shall allocate funds only for those capital outlay projects [that cannot be financed by the school district from other sources and] that meet the criteria of the Public School Capital Outlay Act.

F. Money in the fund shall be disbursed by warrant of the department of finance and administration on vouchers signed by the secretary of finance and administration following certification by the council that an application has been approved."

Section 5. A new section of the Public School Capital Outlay Act, Section 22-24-4.1 NMSA 1978, is enacted to read:

"22-24-4.1. [NEW MATERIAL] OUTSTANDING DEFICIENCIES--ASSESSMENT--CORRECTION.--

A. The council shall:

(1) develop guidelines for defining and identifying outstanding deficiencies in public school buildings and grounds that may adversely affect the health or safety of students and school personnel or that are in substantive violation of a federal, state or local law or ordinance;

(2) work with local school boards to complete their self-assessment of the needs and costs of public school capital outlay projects that will correct outstanding deficiencies;

(3) develop a methodology for prioritizing applications for grant assistance for projects that will correct outstanding deficiencies; and

(4) after a public hearing, and to the extent that money is available in the fund for such purposes, approve applications for allocations from the fund on the established priority basis.

B. All school districts are eligible to apply for and receive grant assistance pursuant to this section.

C. To the extent that money is available in the fund for grant assistance pursuant to this section, all deficiencies in public school buildings and grounds, as defined by the council pursuant to Subsection A of this section, shall be identified and corrected pursuant to this section no later than June 30, 2004."

Section 6. Section 22-24-5 NMSA 1978 (being Laws 1975, Chapter 235, Section 5, as amended) is amended to read:

"22-24-5. [FUND--DISTRIBUTION] PUBLIC SCHOOL CAPITAL OUTLAY PROJECTS--APPLICATION--GRANT ASSISTANCE.--

A. Unless a certification has been made pursuant to Subsection C of this section, for public school capital outlay projects not wholly funded pursuant to Section 22-24-4.1 NMSA 1978, the council shall approve an application for grant assistance from the fund when the council determines that:

(1) a [critical] need exists requiring action;

(2) the residents of the school district have provided available resources to the school district to meet its capital outlay requirements;

(3) the school district has used its capital resources in a prudent manner;

[(4) the school district is in a county or counties which have participated in a reappraisal program and the reappraised values are on the tax rolls or will be used for the tax year 1979 as certified by the property tax division of the taxation and revenue department;

(5)] (4) the school district has provided insurance for buildings of the school district in accordance with the provisions of Section 13-5-3 NMSA 1978;

[(6) unless a determination and certification have been made pursuant to Subsection D of this section]

(5) the school district;

(a) is indebted at not less than [seventy-five] fifty percent of the total debt authorized by law; or

(b) within the last three years, was indebted at the level required in Subparagraph (a) of this paragraph and received a grant pursuant to this section for the initial stages of a project and currently has a critical need for an additional grant to complete the same project; and

[(7)] (6) the school district has submitted a five-year facilities plan that includes enrollment projections.

B. The council shall consider all applications for assistance from the fund and, after a public hearing, shall either approve or deny the application. Applications for grant assistance shall only be accepted by the council after a school district has complied with the provisions of this section. The council shall list all applications in order of priority, and all allocations shall be made on a priority basis, except:

(1) twenty million dollars ($20,000,000) of the proceeds from supplemental severance tax bonds issued annually in fiscal years 2001 through [2003] 2004 shall be set aside for allocation solely for projects in school districts that are eligible for funding from the fund and that receive grants from the federal government as assistance to areas affected by federal activity authorized in accordance with Title 20 of the United States Code, commonly known as "PL 874 funds" or "impact aid"; and

(2) in the case of an emergency, the order of priority shall first reflect those projects [which] that have been previously funded but are not as yet completed, excluding expansion of those projects and contingent upon maintenance of the required local support.

[C. Money in the fund shall be disbursed by warrant of the department of finance and administration on vouchers signed by the secretary of finance and administration following certification by the council that the application has been approved.

D. If the council makes a determination and certifies to the state board that after January 1, 2001, either a constitutional amendment has been adopted that provides additional or supplemental revenue sources for public school capital outlay funding or another long-term revenue source exists that is expected to exceed sixty million dollars ($60,000,000) per year, then, in all subsequent application and allocation cycles]

C. If the secretary of state certifies that the amendment to the constitution of New Mexico proposed by the first regular session of the forty-fifth legislature and entitled "A JOINT RESOLUTION PROPOSING TO AMEND THE CONSTITUTION OF NEW MEXICO TO PROVIDE FOR AN ONGOING LIMITED AUTHORIZATION FOR STATEWIDE PUBLIC SCHOOL GENERAL OBLIGATION BONDS FOR THE PURPOSE OF ACQUIRING, CONSTRUCTING, EXPANDING OR REPAIRING PUBLIC SCHOOL BUILDINGS AND TO PROVIDE LIMITS ON THE TOTAL AMOUNT OF SUCH BONDS THAT MAY BE OUTSTANDING AND LIMITS ON THE PROPERTY TAX THAT MAY BE LEVIED TO PAY THE PRINCIPAL AND INTEREST DUE ON THE BONDS" has been adopted by the people, then, effective July 1, 2004, the following provisions apply:

(1) all school districts are eligible to apply for funding from the fund, regardless of percentage of indebtedness;

(2) priorities for funding shall be [given to those capital projects that:

(a) are necessary for health and safety;

(b) were previously funded by the council but are not yet completed;

(c) are for school districts with low assessed valuation compared to other districts;

(d) provide necessary classrooms due to student population increases or that improve existing school facilities, including portable classroom facilities that have been used for a long period of time; and

(e) are renovation projects that will forestall substantial capital outlay costs in the future

rather than new construction, unless health and safety concerns require new construction;

(3) in establishing the priority for capital projects to be funded, the council shall consider:

(a) the school district's total assessed valuation per student;

(b) the school district's remaining bonding capacity;

(c) other sources of revenue available to the school district for capital outlay projects; and

(d) whether the project is shown as a priority project in the school district's most recent five-year facilities plan] determined by using the statewide adequacy standards developed pursuant to Subsection D of this section;

[(4)] (3) after consulting with the staff architect of the property control division of the general services department, the council shall establish criteria [and standards] to be used in public school capital outlay projects that receive grant assistance pursuant to the Public School Capital Outlay Act. In establishing the criteria, [and standards] the council shall consider:

(a) the feasibility of using design, build and finance arrangements for public school capital outlay projects;

(b) the potential use of more durable construction materials that may reduce long-term operating costs; and

(c) any other financing or construction concept that may maximize the dollar effect of the state grant assistance;

[(5)] (4) no more than ten percent of the combined total of grants in a funding cycle shall be used for retrofitting existing facilities for technology infrastructure;

[(6)] (5) a project approved and ranked by the council shall be funded within available resources in accordance with [the following formula:

(school district final prior year assessed valuation per MEM ÷ the state average final prior year assessed valuation per MEM) x 0.5. The product is subtracted from 1.0 and the difference is then multiplied by seventy-five percent. The product of that calculation added to (the percent of bonding capacity used x 0.25) equals the percentage of the cost of the approved project to be funded from the fund. "MEM" means the total enrollment of students attending public school in a school district in the final funded prior school year, with kindergarten being counted as 0.5. In those instances in which the formula provides less than 0.1, 0.1 shall be used as the state's share; and] a formula established by law;

[(7)] (6) in those instances in which a school district has used all of its local resources, the council may fund the total amount of a project; and

(7) no application for grant assistance from the fund shall be approved unless the council determines that:

(a) the public school capital outlay project is needed;

(b) the school district has used its capital resources in a prudent manner;

(c) the school district has provided insurance for buildings of the school district in accordance with the provisions of Section 13-5-3 NMSA 1978;

(d) the school district has submitted a five-year facilities plan that includes enrollment projections;

(e) the school district is willing to pay any portion of the total cost of the public school capital outlay project that, according to the formula established by law, is not funded with grant assistance from the fund; and

(f) the school district has agreed, in writing, to comply with any reporting requirements or conditions imposed by the council pursuant to Section 22-24-5.1 NMSA 1978.

D. After consulting with the public school capital outlay task force and other experts, no later than July 1, 2004, the council shall develop statewide adequacy standards that establish the minimum acceptable level for the physical condition and capacity of buildings, the educational suitability of facilities and the need for technological infrastructure. The amount of outstanding deviation from the standards shall be used by the council in evaluating and prioritizing public school capital outlay projects.

E. It is the intent of the legislature that grant assistance made pursuant to this section allow every school district to meet the standards developed pursuant to Subsection D of this section; provided, however, that nothing in the Public School Capital Outlay Act or the development of standards pursuant to that act prohibits a school district from using local funds to exceed the statewide adequacy standards.

F. Upon request, the council shall work with, and provide assistance and information to, the public school capital outlay task force as the task force develops a recommendation for a formula for determining the amount of grant assistance that an approved project may receive from the fund.

[E.] G. The council shall promulgate such rules as are necessary to carry out the provisions of the Public School Capital Outlay Act.

H. No later than September 1 of each year, the council shall prepare a report summarizing its activities during the previous fiscal year. The report shall describe in detail all projects funded, the progress of projects previously funded but not completed, the criteria used to prioritize and fund projects and all other council actions. The report shall be submitted to the legislative finance committee, the legislative education study committee, the state board and the governor."

Section 7. A new section of the Public School Capital Outlay Act, Section 22-24-5.1 NMSA 1978, is enacted to read:

"22-24-5.1. [NEW MATERIAL] COUNCIL ASSISTANCE AND OVERSIGHT.--In providing grant assistance pursuant to the Public School Capital Outlay Act, the council shall:

A. assist school districts in identifying critical capital outlay needs and in preparing grant applications;

B. take such actions as are necessary to assist school districts in implementing the projects for which grants are made, including assistance with the preparation of requests for bids or proposals, contract negotiations and contract implementation;

C. take such actions as are necessary to ensure cost savings and efficiencies for those school districts that are not large enough to maintain their own construction management staff, including bundling projects between two or more school districts and using common construction management firms, architects or other professionals; and

D. include such reporting requirements and conditions and take such actions as are necessary to ensure that the grants are expended in the most prudent manner possible and consistent with the original purpose for which they were made. In order to ensure compliance with the intent of this subsection, the council may:

(1) access the premises of a project and review any documentation relating to a project;

(2) withhold all or part of the amount of grant assistance available for a project; and

(3) if it determines that a project is repeatedly in substantial noncompliance with any reporting requirement or condition, take over the direct administration of the project until the project is completed."

Section 8. Section 22-25-9 NMSA 1978 (being Laws 1975 (S.S.), Chapter 5, Section 9, as amended by Laws 1988, Chapter 64, Section 44 and also by Laws 1988, Chapter 66, Section 2) is amended to read:

"22-25-9. STATE DISTRIBUTION TO SCHOOL DISTRICT IMPOSING TAX UNDER CERTAIN CIRCUMSTANCES.--

A. The [director] state superintendent shall distribute to any school district that has imposed a tax under the Public School Capital Improvements Act an amount from the public school capital improvements fund that is equal to the amount by which the revenue estimated to be received from the imposed tax, at the rate certified by the department of finance and administration in accordance with Section 22-25-7 NMSA 1978, assuming a one hundred percent collection rate, is less than an amount calculated by multiplying the school district's first forty-days' total program units [times thirty-five dollars ($35.00)] by the dollar amount specified in Subsection B of this section and further multiplying the product obtained by the tax rate approved by the qualified electors in the most recent election on the question of imposing a tax under the Public School Capital Improvements Act. The distribution shall be made each year that the tax is imposed in accordance with Section 22-25-7 NMSA 1978; provided that no state distribution from the public school capital improvements fund may be used for capital improvements to any administration building of a school district. In the event that sufficient funds are not available in the public school capital improvements fund to make the state distribution provided for in this section, the dollar per program unit figure shall be reduced as necessary.

B. In calculating the state distribution pursuant to Subsection A of this section, the following amounts shall be used:

(1) for fiscal years 2002 through 2004, fifty dollars ($50.00) per program unit;

(2) for fiscal year 2005, seventy dollars ($70.00) per program unit;

(3) for fiscal year 2006, ninety dollars ($90.00) per program unit; and

(4) for fiscal year 2007 and thereafter, the amount per program unit certified to the state superintendent by the public school capital outlay council. No later than June 1, 2006 and each June 1 thereafter, the council shall calculate and certify the amount necessary to maintain the state distribution at approximately the same amount as the revenue estimated to be received from the imposed tax.

C. In making distributions pursuant to this section, the state superintendent shall include such reporting requirements and conditions as are required by rule of the public school capital outlay council. The council shall adopt such requirements and conditions as are necessary to ensure that the distributions are expended in the most prudent manner possible and consistent with the original purpose as specified in the authorizing resolution. Copies of reports or other information received by the state superintendent in response to the requirements and conditions shall be forwarded to the council."

Section 9. Laws 1999 (1st S.S.), Chapter 6, Section 19 is amended to read:

"Section 19. SUPPLEMENTAL SEVERANCE TAX BONDS--PURPOSE FOR WHICH ISSUED--APPROPRIATION OF PROCEEDS.--

A. The state board of finance may issue and sell supplemental severance tax bonds in compliance with the Severance Tax Bonding Act in the following amounts for the following purposes upon the following certification:

(1) an amount not exceeding one hundred million dollars ($100,000,000) when the public school capital outlay council certifies by resolution the need for the issuance of the bonds for public school critical capital outlay projects pursuant to the Public School Capital Outlay Act; and

(2) an amount not exceeding twenty-five million dollars ($25,000,000) when the commission on higher education certifies by resolution the need for the issuance of the bonds for infrastructure renovation and expansion at the state's public post-secondary educational institutions or other educational institutions confirmed in Article 12, Section 11 of the constitution of New Mexico pursuant to a plan developed and approved by the commission on higher education to fund the highest priority significant needs identified by the commission.

[C.] B. The state board of finance shall schedule the issuance and sale of the bonds in the most expeditious and economical manner possible upon a finding by the board that the projects have been developed sufficiently to justify the issuance and that the projects can proceed to contract within a reasonable time. The state board of finance shall further take the appropriate steps necessary to comply with the Internal Revenue Code of 1986, as amended.

[D.] C. The proceeds from the sale of the bonds pursuant to Paragraph (1) of Subsection A of this section are appropriated to the public school capital outlay fund to carry out the provisions of the Public School Capital Outlay Act. If the public school capital outlay council has not certified the need for the issuance of the bonds by the end of fiscal year [2004] 2001, authorization provided in this section shall expire. Any unexpended or unencumbered balance remaining from the proceeds of bonds issued pursuant to Paragraph (1) of Subsection A of this section at the end of fiscal year 2006 shall revert to the severance tax bonding fund.

[E.] D. The proceeds from the sale of the bonds in Paragraph (2) of Subsection A of this section are appropriated to the commission on higher education for distribution to the governing bodies of the educational institutions who have certified projects for funding with the bond proceeds. If the commission on higher education has not certified the need for the issuance of the bonds by the end of fiscal year 2004, authorization provided in this section shall expire. Any unexpended or unencumbered balance remaining from the proceeds of bonds issued pursuant to Paragraph (2) of Subsection A of this section at the end of fiscal year 2006 shall revert to the severance tax bonding fund."

Section 10. [NEW MATERIAL] PUBLIC SCHOOL CAPITAL OUTLAY TASK FORCE--CREATION--STAFF.--

A. The "public school capital outlay task force" is created. The task force consists of eighteen members as follows:

(1) the dean of the university of New Mexico school of law;

(2) the secretary of finance and administration or his designee;

(3) the state investment officer or his designee;

(4) the superintendent of public instruction or his designee;

(5) the chairmen of the legislative finance committee, the senate education committee and the house education committee or their designees;

(6) a minority party member of the house of representatives, appointed by the New Mexico legislative council;

(7) a minority party member of the senate, appointed by the New Mexico legislative council;

(8) two public members who have expertise in education and finance appointed by the speaker of the house of representatives;

(9) two public members who have expertise in education and finance appointed by the president pro tempore of the senate;

(10) three public members who have expertise in education and finance appointed by the governor; and

(11) two members representing school districts that receive grants from the federal government as assistance to areas affected by federal activity authorized in accordance with Title 20 of the United States Code, appointed by the New Mexico legislative council in consultation with the governor.

B. The chair of the task force shall be appointed by the New Mexico legislative council.  The public school capital outlay task force shall meet at the call of the chair but no less than six times each fiscal year.

C. The public members of the public school capital outlay task force shall receive per diem and mileage pursuant to the Per Diem and Mileage Act.

D. The legislative council service, with assistance from the department of finance and administration, the investment office, the state department of public education, the legislative education study committee and the legislative finance committee, shall provide staff for the public school capital outlay task force.

Section 11. [NEW MATERIAL] PUBLIC SCHOOL CAPITAL OUTLAY TASK FORCE--DUTIES.--The public school capital outlay task force shall:

A. study and evaluate the progress and effectiveness of programs administered pursuant to the Public School Capital Outlay Act and the Public School Capital Improvements Act;

B. evaluate the existing revenue streams for funding public school capital outlay projects and recommend any changes that may be more cost-effective or appropriate;

C. no later than January 15, 2002, recommend to the legislature a formula for determining the amount of grant assistance that an approved public school capital outlay project may receive from the public school capital outlay fund. The recommended formula shall contain a sliding scale local matching requirement that takes into account the relative tax base of the school district and the relative local funding effort of the district and that results in an aggregate average participation rate by school districts statewide of approximately fifty percent;

D. monitor and assist the public school capital outlay council as it:

(1) defines outstanding public school capital outlay deficiencies pursuant to Section 22-24-4.1 NMSA 1978;

(2) works with school districts in conducting a self-assessment of the projects needed to correct the outstanding deficiencies and establishes criteria for addressing those needs;

(3) develops statewide adequacy standards that establish the minimum acceptable level for the physical condition and capacity of public school buildings, the educational suitability of educational facilities and the need for technological infrastructure; and

(4) develops guidelines and procedures for reporting requirements and conditions to ensure that the grants are expended in the most prudent manner possible and consistent with the original purpose for which they were made; and

E. no later than December 1 of each year, report the results of its analyses and its findings and recommendations to the governor and the legislature.

Section 12. [NEW MATERIAL] SHORT TITLE.--Sections 12 through 23 of this act may be cited as the "Statewide Public School General Obligation Bond Act".

Section 13. [NEW MATERIAL] PURPOSE.--For the purpose of providing funds for public school capital expenditures as authorized in Article 9, Section 8 of the constitution of New Mexico and in the Statewide Public School General Obligation Bond Act, general obligation indebtedness of the state is authorized.

Section 14. [NEW MATERIAL] AUTHORIZATION FOR BONDS--DESIGNATION.--

A. Pursuant to Article 9, Section 8 of the constitution of New Mexico, the public school capital outlay council is designated as the body authorized to certify that proceeds from statewide public school general obligation bonds are needed for public school capital outlay projects.

B. Subject to the provisions of Subsection D of this section, the public school capital outlay council is authorized to certify by resolution that proceeds of statewide public school general obligation bonds are needed for public school capital outlay projects pursuant to Section 22-24-5 NMSA 1978. The resolution shall specify the amount needed for each project.

C. Upon certification by the public school capital outlay council that proceeds from statewide public school general obligation bonds are needed for public school capital outlay projects and pursuant to the provisions of the Statewide Public School General Obligation Bond Act, the state board of finance shall issue statewide public school general obligation bonds in the amount certified by the council.

D. No certification shall be made pursuant to this section until the public school capital outlay council has estimated the total amount needed for public school capital outlay projects and the amount available from other revenue sources, including supplemental severance tax bond proceeds and legislative appropriations. A certification may be made only for the difference by which the total amount needed exceeds the amount available from other revenue sources.

Section 15. [NEW MATERIAL] BOND TERMS.--

A. The state board of finance, except as limited by the Statewide Public School General Obligation Bond Act, shall determine the terms, covenants and conditions of bonds issued pursuant to that act, including:

(1) date or dates of issue, denominations and maturities;

(2) principal amounts;

(3) rate or rates of interest; and

(4) provisions for redemption, including premiums, registration and refundability, whether the bonds are issued in one or more series and other covenants relating to the bonds and the issuance thereof.

B. The bonds shall be in such form as the state board of finance determines with an appropriate series designation and shall bear interest payable as set forth in the resolution of the state board of finance.

C. Payment of the principal of the bonds shall begin not more than two years after the date of their issuance. Both principal and interest shall be payable in lawful money of the United States at the office of the paying agent within or without the state as the state board of finance may direct.

D. The bonds shall be executed with the manual or facsimile signature of the governor or the state treasurer, and the seal or a facsimile of the seal of the state shall be placed on each bond, except for any series of bonds issued in book entry or similar form without the delivery of physical securities.

E. The bonds shall be issued in accordance with the provisions of the Statewide Public School General Obligation Bond Act, the Supplemental Public Securities Act and the Uniform Facsimile Signature of Public Officials Act and may be issued in accordance with the Public Securities Short-Term Interest Rate Act.

F. The full faith and credit of the state is pledged for the prompt payment when due of the principal of and interest on all bonds issued and sold pursuant to the Statewide Public School General Obligation Bond Act.

Section 16. [NEW MATERIAL] EXPENDITURES.--The proceeds from the sale of the bonds shall be expended solely for providing money for public school capital outlay projects in amounts not to exceed the amounts set forth in the certification of the public school capital outlay council and to pay expenses incurred under Section 18 of the Statewide Public School General Obligation Bond Act. Any proceeds from the sale of the bonds that are not required for those purposes shall be used for the purpose of paying the principal of and interest on the bonds.

Section 17. [NEW MATERIAL] SALE.--The bonds authorized under the Statewide Public School General Obligation Bond Act shall be sold by the state board of finance at such time and in such manner and amounts as the board may elect. The bonds may be sold at private sale or at public sale, in either case at not less than par plus accrued interest to the date of delivery. If sold at public sale, the state board of finance shall publish a notice of the time and place of sale in a newspaper of general circulation in the state and may also publish the notice in a recognized financial journal outside the state. The required publications shall be made once each week for two consecutive weeks prior to the date fixed for the sale, the last publication thereof to be at least five days prior to the date of the sale. The notice shall specify the amount, denomination, maturity and description of the bonds to be offered for sale and the place, date and hour at which the sealed bids shall be received. At the time and place specified in the notice, the state board of finance shall open the bids in public and shall award the bonds to the bidder or bidders offering the best price for the bonds. The state board of finance may reject any or all bids and readvertise and may waive any irregularity in a bid. All bids, except that of the state, shall be accompanied by a deposit of two percent of the principal amount of the bonds in a form acceptable to the state board of finance. The deposit of an unsuccessful bidder shall be returned upon rejection of the bid. The state board of finance may also sell the bonds or any part of the bonds to the state treasurer or state investment officer. The state treasurer or state investment officer is authorized to purchase any of the bonds for investment. The bonds are legal investments for any person or board charged with the investment of any public funds and may be accepted as security for any deposit of public money.

Section 18. [NEW MATERIAL] EXPENSES.--The expenses incurred by the state board of finance in or relating to the preparation and sale of the bonds shall be paid out of the proceeds from the sale of the bonds, and all rebate, penalty, interest and other obligations of the state relating to the bonds and bond proceeds under the Internal Revenue Code of 1986, as amended, shall be paid from earnings on bond proceeds or other money of the state, legally available for such payments.

Section 19. [NEW MATERIAL] TAX LEVY.--To provide for the payment of the principal of and interest on the bonds issued and sold pursuant to the provisions of the Statewide Public School General Obligation Bond Act, there shall be and there is hereby imposed and levied during each year in which any of the bonds are outstanding an ad valorem tax on all property in the state subject to property taxation for state purposes sufficient to pay the interest as it becomes due on the bonds, together with an amount sufficient to provide a sinking fund to pay the principal of the bonds as it becomes due and, if permitted by law, ad valorem taxes may be collected to pay administrative costs incident to the collection of such taxes. The taxes shall be imposed, levied, assessed and collected at the times and in the manner that other property taxes for state purposes are imposed, levied, assessed and collected. It is the duty of all tax officials and authorities to cause these taxes to be imposed, levied, assessed and collected.

Section 20. [NEW MATERIAL] STATE TREASURER--DUTIES.--The state treasurer shall keep separate accounts of all money collected pursuant to the taxes imposed and levied pursuant to the provisions of the Statewide Public School General Obligation Bond Act and shall use this money only for the purposes of paying the principal of and interest on the bonds as they become due and any expenses relating thereto.

Section 21. [NEW MATERIAL] IRREPEALABLE CONTRACT-- AUTHORITY FOR ISSUANCE.--An owner of bonds issued pursuant to the provisions of the Statewide Public School General Obligation Bond Act may, either at law or in equity, by suit, action or mandamus, enforce and compel the performance of the duties required by that act of any officer or entity mentioned in that act. The provisions of that act constitute an irrepealable contract with the owners of any of the bonds issued pursuant to that act for the faithful performance of which the full faith and credit of the state is pledged. Without reference to any other act of the legislature of the state, the Statewide Public School General Obligation Bond Act is full authority for the issuance and sale of the bonds authorized in that act, and such bonds shall have all the qualities of investment securities under the Uniform Commercial Code of the state, shall not be invalid for any irregularity or defect in the proceedings for the issuance and sale of the bonds and shall be incontestable in the hands of bona fide purchasers or holders thereof for value. All bonds issued under the provisions of that act, and the interest thereon, are exempt from taxation by the state and any subdivision or public body thereof.

Section 22. [NEW MATERIAL] BOND RESTRICTIONS.--No bonds shall be issued pursuant to the Statewide Public School General Obligation Bond Act if:

A. the total amount of outstanding bonds issued pursuant to that act would exceed two percent of the assessed valuation of all the property subject to taxation in the state as shown by the preceding general assessment; or

B. the annual tax levy necessary to pay the principal and interest due on all outstanding bonds issued pursuant to that act would exceed three mills on each dollar of assessed valuation.

Section 23. [NEW MATERIAL] APPROPRIATION OF PROCEEDS.--Proceeds from bonds sold pursuant to the Statewide Public School General Obligation Bond Act are appropriated to the public school capital outlay fund for the purpose of offering grant assistance pursuant to Section 22-24-5 NMSA 1978 for certified public school capital outlay projects.

Section 24. SHORT-TERM SEVERANCE TAX BONDS--PURPOSE--APPROPRIATION OF PROCEEDS.--The state board of finance may issue and sell severance tax bonds in fiscal years 2002 and 2003 in compliance with the Severance Tax Bonding Act in an amount not exceeding a total of one hundred million dollars ($100,000,000) when the public school capital outlay council certifies the need for the issuance of the bonds. The state board of finance shall schedule the issuance and sale of the bonds in the most expeditious and economical manner possible; provided that the term of the bonds shall not extend beyond the fiscal year in which they are issued. The proceeds from the sale of the bonds are appropriated to the public school capital outlay fund for the purpose of providing grant assistance for public school capital outlay projects that are needed to correct outstanding deficiencies pursuant to Section 22-24-4.1 NMSA 1978. Any unexpended or unencumbered balance remaining at the end of fiscal year 2006 shall revert to the severance tax bonding fund. If the public school capital outlay council has not certified the need for the issuance of the bonds by the end of fiscal year 2003, the authorization provided in this section shall expire.

Section 25. APPROPRIATIONS.--

A. Two million three hundred thousand dollars ($2,300,000) is appropriated from the general fund to the state department of public education for expenditure in fiscal years 2001 through 2003 for the purpose of completing the needs and cost assessment required by Paragraph (2) of Subsection A of Section 22-24-4.1 NMSA 1978. Any unexpended or unencumbered balance remaining at the end of fiscal year 2003 shall revert to the general fund.

B. Four hundred thousand dollars ($400,000) is appropriated from the general fund to the state department of public education for expenditure in fiscal year 2002 for the purpose of assisting the public school capital outlay council in performing those duties required of it pursuant to the Public School Capital Outlay Act. The appropriation may be expended by the department in the manner deemed by the department and council to be the most expedient and cost effective, including expenditures for employees and for contractual services. Any unexpended or unencumbered balance remaining at the end of fiscal year 2002 shall revert to the general fund.

C. Two hundred million dollars ($200,000,000) is appropriated from the general fund to the public school capital outlay fund for expenditures in fiscal years 2001 through 2004 for the purpose of providing grant assistance to school districts for the purpose of correcting deficiencies pursuant to Section 22-24-4.1 NMSA 1978. Any unexpended or unencumbered balance remaining at the end of fiscal year 2004 shall not revert but shall be used for the purpose of providing grant assistance pursuant to Section 22-24-5 NMSA 1978.

D. Fourteen million dollars ($14,000,000) is appropriated from the general fund to the public school capital improvements fund for expenditure in fiscal year 2002 and subsequent fiscal years for the purpose of making state distributions pursuant to the Public School Capital Improvements Act. Any unexpended or unencumbered balance remaining at the end of a fiscal year shall not revert.

E. Twenty thousand dollars ($20,000) is appropriated from the general fund to the legislative council service for expenditure in fiscal years 2001 and 2002 for the purpose of paying per diem and mileage for public members of the public school capital outlay task force. Any unexpended or unencumbered balance remaining at the end of fiscal year 2002 shall revert to the general fund.

Section 26. REPEAL.--Laws 2000, Chapter 95, Section 2 and Laws 2000 (2nd S.S.), Chapter 11, Section 3 are repealed.

Section 27. DELAYED REPEAL.--Sections 10 and 11 of this act are repealed effective January 1, 2004.

Section 28. EFFECTIVE DATES.--

A. The effective date of Sections 1 through 3 and 8 of this act is July 1, 2001.

B. The effective date of Sections 12 through 23 of this act is the January 1 following the date that the secretary of state certifies that the amendment to the constitution of New Mexico proposed by the first regular session of the forty-fifth legislature and entitled "A JOINT RESOLUTION PROPOSING TO AMEND THE CONSTITUTION OF NEW MEXICO TO PROVIDE FOR AN ONGOING LIMITED AUTHORIZATION FOR STATEWIDE PUBLIC SCHOOL GENERAL OBLIGATION BONDS FOR THE PURPOSE OF ACQUIRING, CONSTRUCTING, EXPANDING OR REPAIRING PUBLIC SCHOOL BUILDINGS AND TO PROVIDE LIMITS ON THE TOTAL AMOUNT OF SUCH BONDS THAT MAY BE OUTSTANDING AND LIMITS ON THE PROPERTY TAX THAT MAY BE LEVIED TO PAY THE PRINCIPAL AND INTEREST DUE ON THE BONDS" has been adopted by the people.

Section 29. EMERGENCY.--It is necessary for the public peace, health and safety that this act take effect immediately.