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committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

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

SPONSOR Miera

DATE TYPED 02/09/05 HB 3/a HEC

SHORT TITLE Education Appropriation Act

ANALYST Chabot

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

$2,138,725.4

Recurring General Fund

$1,300

Recurring Driver’s License

Fund

8,955.7

Recurring Other State

Funds

$392,761.5

Recurring Federal Funds

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Commission on Higher Education (CHE)

Corrections Department

Public Education Department (PED)

SUMMARY

Synopsis of HEC amendment

The House Education Amendment to House Bill 3 increases the appropriation from the general

fund by $16.5 million by increasing the appropriation for growth ($6.7 million), compensation

($517 thousand), deletes the increased appropriation principals ($783 thousand), decreases the

increase in the employer share contribution to the Educational Retirement Board by $300.9 thou-

sand and moves it to Categorical Public School Support for transportation employees, decreases

the appropriation for student assessment ($47.6 thousand), adds physical education ($4 million),

and increases the appropriation for educational assistants ($2.3 million). In related appropria-

tions recurring, Kindergarten Plus is increased $300.0 thousand. The amendment lists other spe-

cial appropriation on page 2 and includes changes in recommended language on pages 1 through

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House Bill 3/aHEC -- Page 2

Synopsis of Bill

House Bill 3 appropriates almost $2 billion from the general fund, $1.3 million from the drivers’

license fund, and recognizes $352 million in flow federal funds for the purpose of funding the 89

public school districts throughout the state. In addition, $141.7 from the general fund is provided

in categorical support for a total general fund recommendation for public school support of $2.1

billion. The appropriation to the Public Education Department is $11.6 million from general

fund, $671.7 from other state funds and $16.9 million from federal funds. An additional $6.7

million in recurring general fund is appropriated for related appropriations (see attached sum-

mary). Lastly, $8.3 million from other state funds and $23.8 million in federal funds is appropri-

ated to the nine Regional Education Cooperatives.

Significant Issues

The state equalization guarantee, also know as the “funding formula” is used to distribute funds

to the public schools. The bill funds an increase from the general fund over the FY05 appropria-

tion of $128.9 million, or 6.5 percent. The bill includes $10 million for growth, $3.65 million for

fixed costs, $17.5 million for insurance, $51.8 million for minimum salaries levels of $40 thou-

sand for level 2 and 3 teachers under three-tiered licensure, $783 thousand for minimum princi-

pal salaries currently in statute, $4 million to replace federal temporary assistance to needy fami-

lies from the general fund, $2 million for district student assessment costs, $2.5 million for ele-

mentary education fine arts, and $1.5 million to increase educational assistance minimum sala-

ries. The bill also includes a 1.25 percent compensation increase for public school employee ex-

cept teachers receiving salary increases as a result of minimum salary requirements of three-

tiered licensure, and a .75 percent increase in the employer contribution to the educational re-

tirement fund for all school employees.

The bill estimates projected credits of $58.6 million from federal impact aid and $1.3 million

from the driver’s license fund.

The bill provides an increase of $2 million in transportation funding and a total of $7.1 million in

categorical distributions; most of the increase results from not taking a cash balance increase in

the instructional material fund as was done in 2004.

The bill includes $6 million for special appropriations to the Public Education Department for

beginning teacher induction and membership ($900 thousand), family and youth services ($1.8

million), advanced placement ($381.6 thousand), teacher loan for service ($386.5 thousand), In-

dian Education Act ($2.5 million), and kindergarten plus ($100 thousand).

PERFORMANCE IMPLICATIONS

The bill includes 9 performance measures concentrating on proficiency in reading and language

arts and mathematics for 4

and 8

grade students, percent of classrooms being taught by

“highly qualified” teachers, and stakeholder experiences with local schools. The measures are in

line with federal No Child Left Behind requirements and are representative of improvements de-

sired in public school outcomes.

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House Bill 3/aHEC -- Page 3

FISCAL IMPLICATIONS

The appropriation of $2.1 billion contained in this bill is a recurring expense to the general fund.

Any unexpended or unencumbered balance remaining at the end of 2006 not distributed to

school districts by the Public Education Department shall revert to the general fund.

PED points out the following difference in the bill compared to the Executive recommendation

for public school support.

State Equalization Guarantee--$1,963,826.8 which is $42,960.5 higher than the Execu-

tive.

Public School Transportation--$100,053.1 which is $414.8 higher than the Executive.

Supplemental Distributions--$2,380.0 which is $2,715.0 lower than the Executive.

Instruction Materials Fund--$32,324.8 which is $1,824.8 higher than the Executive.

Education Technology Fund--$5,000.0 which is the same as the Executive.

Incentives for School Improvement Fund--$1,600.0 which is $50.0 lower than the Execu-

tive.

Apprenticeship--$650.0 which is the same as the Executive.

Beginning Teacher Induction and Mentorship--$900.0 which is the same as the Execu-

tive.

Core Curriculum Framework--$381.6 which is the same as the Executive

10.

Family and Youth Services--$1,800.0 which is the same as the Executive

11.

GRADS—Teen Pregnancy Prevention (replace TANF)—no funding which is $1,000.0

less than the Executive.

12.

Charter School Stimulus Fund—no funding which is $1,000.0 less than the Executive’s

non-recurring recommendation.

13.

Indian Education Act--$2,500.0 which is the same as the Executive.

14.

Kindergarten Plus--$100.0 which is the same as the Executive.

15.

Pre-Kindergarten Initiative—no funding which is $7,000.0 less than the Executive.

16.

School-based Health Clinics—no funding which is $3,000 less than the Executive.

17.

Teacher Loan for Service (to CHE)--$386.5 which is the same as the Executive.

The Executive recommended $46.8 million in non-recurring funds for various education-