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F I S C A L I M P A C T R E P O R T

SPONSOR:	Picraux		DATE TYPED:	02/27/01		HB	762
SHORT TITLE:		Amend Education Trust Act				SB
					ANALYST:		Fernandez

APPROPRIATION

Appropriation Contained		Estimated Additional Impact		Recurring or Non-Rec	Fund Affected
FY01	FY02	FY01	FY02	Recurring or Non-Rec	Fund Affected
	NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates/Relates to Appropriation in The General Appropriation Act

SOURCES OF INFORMATION

Commission on Higher Education (CHE)

General Services Department (GSD)

SUMMARY

Synopsis of Bill

House Bill 762 amends a section of the Procurement Code to allow professional service contracts of the Education Trust Board to exceed 4 years. This bill also amends the Education Trust Act to allow the Education Trust Board to create separate trust funds or accounts for college investment agreements and prepaid tuition contracts. In addition, the Board shall specify by rule, the appropriate provisions for the term and termination of the agreements.

Significant Issues

According to CHE, the Education Trust Board has oversight for two programs set forth in the Education Trust Act. Those programs are: the College Savings Program and the Prepaid Tuition Program.

Funds deposited into the accounts is not public money, however the Education Trust Board is considered a state agency. GSD indicates that is not clear if the provisions of the Procurement Code apply to contracts with banks acting as custodians of the agreements.

TECHNICAL ISSUES

GSD offers the following amendment to the Procurement Code:

"The provisions of the Procurement Code shall not apply to college investment agreements entered into pursuant to Section 21-21K-5 NMSA 1978.

OTHER SUBSTANTIVE ISSUES

According to CHE, allowing the professional services contract to exceed four years will provide a longer commitment and greater stability for the investment provider in the operation and administration of funds for the Education Trust Act.

The Commission also indicates that by removing the ten-year limit on college investment agreements allows individuals pursing a postsecondary education to do so at any point. This approach would encourage more traditional and nontraditional students to pursue a college degree.

CTF/njw