NOTE: As provided in LFC policy, this report is
intended only 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 for
other purposes.
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|
SPONSOR: |
Lopez |
DATE TYPED: |
|
HB |
|
||
|
SHORT TITLE: |
Child Care Facility Loan Act |
SB |
358/aSPAC/aSFC |
||||
|
|
ANALYST: |
Chabot |
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APPROPRIATION
|
Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
||
|
FY03 |
FY04 |
FY03 |
FY04 |
|
|
|
|
|
|
TBD |
Non-Recurring |
Child
Care Facility Revolving Loan Fund |
(Parenthesis
( ) Indicate Expenditure Decreases)
REVENUE
|
Estimated Revenue |
Subsequent Years Impact |
Recurring or
Non-Rec |
Fund Affected |
|
|
FY03 |
FY04 |
|
|
|
|
|
None |
|
Non-Recurring |
General
Fund |
|
|
TBD |
|
Non-Recurring |
Child
Care Facility Revolving Loan Fund |
(Parenthesis ( ) Indicate Revenue Decreases)
LFC Files
Responses
Received From
Children,
Youth and Families Department (CYFD)
SUMMARY
Synopsis of the SFC Amendment
The
Senate Finance Committee amendment to Senate Bill 358 as amended strikes the
appropriation from the bill. The Child
Care Facility Revolving Loan Fund would still be created in DFA and a some
revenue may be received from gifts, grants and donations that could be used to
fulfill the purpose of the bill.
Synopsis
of the SPAC Amendment
The Senate Public Affairs Committee Amendment to Senate Bill 358 establishes the New Mexico Finance Authority (NMFA) as the administrator of the Child Care Facility Revolving Loan Fund. CYFD, in conjunction with NMFA, shall adopt rules to administer and implement the act. Loans are to be made at the “lowest legally permissible” interest rates for the longest amount of time.
Synopsis
of Original Bill
Senate Bill 358
appropriates $250.0 from the general fund to Child Care Facility Revolving Loan
Fund for the purpose of making low-interest loans to licensed child care
providers to support the physical improvement, repair, safety and maintenance
of facilities. Money in the fund is appropriated
to the CYFD that shall administer the fund.
Not more than 20 percent of the fund may be loaned to a single provider
in a single loan.
Significant
Issues
Page 3, line 5-6 states “Loans from the fund are
to be made at the very lowest possible interest rate for the longest amount of
time”. This is extremely vague and could
result in loans being provided with little chance of repayment. A revolving loan fund should be structured
such that loan repayments and interest replenish the fund so that additional
loans can be made. This provision could
jeopardize the self-sustainability of the fund.
No FTE or administrative expenses are provided
for in this bill. If CYFD is to
implement a new program that has not been done by the agency, it will need
staffing to carry out the provisions of this bill. The agency states that they have no in-house
expertise to set interest rates and manage a loan program.
FISCAL IMPLICATIONS
The appropriation of
$250.0 contained in this bill is a non-recurring expense to the general fund.
Any unexpended or unencumbered balance remaining in the Child Care Facility
Revolving Loan Fund at the end of a fiscal year shall not revert to the general
fund.
ADMINISTRATIVE IMPLICATIONS
CYFD currently
administers no loan programs and would have to establish policy and procedures
for administering a loan program with existing resources.
TECHNICAL ISSUES
Loan programs are usually assigned to the New
Mexico Finance Authority (NMFA) because it has staff and expertise to
effectively manage them.
The bill makes no provisions for loan defaults
and collection of obligations from those provided low-cost loans.
POSSIBLE QUESTIONS