AN ACT
RELATING TO PUBLIC SCHOOL
FINANCE; CHANGING THE BASIS FOR CALCULATING THE AMOUNT OF EXCESS CASH BALANCE
OF SCHOOL DISTRICTS AND CHARTER SCHOOLS.
BE IT ENACTED BY THE
LEGISLATURE OF THE STATE OF NEW MEXICO:
Section
1. Section 22-8-41 NMSA 1978 (being Laws
1967, Chapter 16, Section 99, as amended) is amended to read:
"22-8-41. RESTRICTION ON OPERATIONAL FUNDS--EMERGENCY
ACCOUNTS--CASH BALANCES.--
A. A school district shall not expend money from
its operational fund for the acquisition of a building site or for the
construction of a new structure, unless the school district has bonded itself
to practical capacity or the secretary determines and certifies to the
legislative finance committee that the expending of money from the operational
fund for this purpose is necessary for an adequate public educational program
and will not unduly hamper the school district's current operations.
B. A school district or charter school may
budget out of cash balances carried forward from the previous fiscal year an
amount not to exceed five percent of its proposed operational fund expenditures
for the ensuing fiscal year as an emergency account. Money in the emergency account shall be used only
for unforeseen expenditures incurred after the annual budget was approved and
shall not be expended without the prior written approval of the secretary.
C. In addition to the emergency account, school
districts or charter schools may also budget operational fund cash balances
carried forward from the previous fiscal year for operational expenditures,
exclusive of salaries and payroll, upon specific prior approval of the
secretary. The secretary shall notify
the legislative finance committee in writing of his approval of such proposed
expenditures. For fiscal years 2004 and
2005, with the approval of the secretary, a school district or charter school
may budget so much of its operational cash balance as is needed for
nonrecurring expenditures, including capital outlay.
D. Notwithstanding the provisions of Subsection
C of this section, beginning with fiscal year 2006, prior to approval of a
school district's or charter school's budget, the secretary shall verify that
the reductions from the state equalization guarantee distribution have been
taken pursuant to this section.
E. The allowable limit for a school district's
or charter school's ending operational cash balance is:
(1) if the current year program cost is less than
five million dollars ($5,000,000), nine percent of the budgeted expenditures;
(2) if the current year program cost is five
million dollars ($5,000,000) but less than ten million dollars ($10,000,000),
seven and one-half percent of the budgeted expenditures;
(3) if the current year program cost is ten
million dollars ($10,000,000) but less than twenty-five million dollars
($25,000,000), six percent of the budgeted expenditures;
(4) if the current year program cost is
twenty-five million dollars ($25,000,000) but less than two hundred million
dollars ($200,000,000), four and one-half percent of the budgeted expenditures;
and
(5) if the current year program cost is two
hundred million dollars ($200,000,000) or more, for fiscal year 2004, two and
one-half percent of the budgeted expenditures and, for subsequent fiscal years,
three percent of the budgeted expenditures.
F. Except as otherwise provided in this section,
for the 2006 and subsequent fiscal years, the secretary shall reduce the state
equalization guarantee distribution, calculated pursuant to Section 22-8-25
NMSA 1978, to each school district or charter school by an amount equal to the
school district's or charter school's excess cash balance. As used in this section, "excess cash
balance" means the difference between a school district's or a charter
school's actual operational cash balance and the allowable limit calculated
pursuant to Subsection E of this section.
Provided, however, that:
(1) for a school district or charter school with
a current year program cost that exceeds two hundred million dollars
($200,000,000), if the excess cash balance is greater than twenty percent of
the allowable unrestricted, unreserved operational cash balance and the emergency
reserve, then the reduction pursuant to this subsection shall equal twenty
percent of the allowable unrestricted, unreserved operational cash balance and
the emergency reserve; and
(2) for other school districts and charter
schools, if the excess cash balance is greater than eighteen percent of the
allowable unrestricted, unreserved operational cash balance and the emergency
reserve, then the reduction pursuant to this subsection shall equal eighteen
percent of the allowable unrestricted, unreserved operational cash balance and
the emergency reserve.
G. In developing budgets, school districts and
charter schools shall not budget current year cash balances without the
approval of the secretary.
H. A school district or charter school whose
enrollment growth exceeds one percent from the prior year and whose facility
master plan includes the addition of a new school within two years may request
from the secretary a waiver of up to fifty percent of the reduction otherwise
required by Subsection F of this section.
I. Notwithstanding the provisions of Subsection
F of this section, for fiscal year 2004, the reduction from the state
equalization guarantee distribution shall be the greater of the amount
calculated pursuant to that subsection or ten dollars ($10.00) per MEM.
J. For the purposes of this section,
"operational cash balance" means the allowable, unrestricted,
unreserved operational cash balance and the emergency reserve.
K. For the purposes of this section,
"allowable, unrestricted, unreserved operational cash balance and the
emergency reserve" means the proportional share not attributable to
revenue derived from the school district property tax, forest reserve funds and
impact aid for which the state takes credit in determining a school district's
or charter school's state equalization guarantee distribution."
HB 158
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