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

SPONSOR Beam

DATE TYPED 02/11/05 HB 338

SHORT TITLE Higher Education Faculty Endowment Fund

SB

ANALYST Williams

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

$9,000.0

Non-recurring General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

$9,000.0

Non-recurring Faculty Endowment

Fund

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

LFC Files

Commission on Higher Education (CHE)

SUMMARY

Synopsis of Bill

House Bill 338 appropriates $9 million from the general fund to the Commission on Higher Edu-

cation for the faculty endowment fund for equal distribution to New Mexico State University,

University of New Mexico and New Mexico Institute of Mining and Technology.

Significant Issues

CHE notes the Faculty Endowment Fund was originally established for New Mexico's six uni-

versities and New Mexico’s school of medicine.

FISCAL IMPLICATIONS

The appropriation of $9.0 million contained in this bill is a non-recurring expense to the general

fund in FY06. Any unexpended or unencumbered balance remaining would not revert.

House Bill 338 -- Page 2

The Legislative Finance Committee budget recommendation includes $9 million in FY05 non-

recurring general fund special appropriations for the faculty endowment fund.

ADMINISTRATIVE IMPLICATIONS

CHE notes “To …draw down the appropriate State funds, the university will need to provide a

letter signed by the chair of the board of regents, the president, and the chief financial officer de-

claring:

1)

That an endowment account has been established for receipt both of the monies from

the Fund and the non-governmental matching monies;

2)

Which kind of endowment is being established (i.e., a chair, professorship, or faculty

development program);

3)

Administration of the Fund meets the requirements of Section 21-1-38 NMSA 1978;

4)

Identification of the source of the non-governmental monies and their permanent

commitment to the endowment”

TECHNICAL ISSUES

The bill is silent on the type of endowment that would be eligible for receipt of monies from the

fund. Further, a matching fund requirement is not specified; previous legislation specified differ-

ing matching requirements.

OTHER SUBSTANTIVE ISSUES

CHE notes:

“The General Appropriations Act (GAA) of 2002 allocated $10 million to the CHE to

implement the Faculty Endowment Fund established in Chapter 31 (Laws 2002).

Disbursements established were permanent chairs, professorships, and faculty

development programs at New Mexico's six universities and the New Mexico school of

medicine. Eight million dollars was made available for draw down in Fiscal Year 2003,

with an additional $2 million available in Fiscal Year 2004.

The statute, Chapter 31 (Laws 2002), required the university to match state monies "in

the amount that is equal to or greater than the amount authorized by statute (i.e. at least a

dollar-for-dollar amount) from non-governmental sources before June 30, 2005. Each to-

tal endowment must meet a minimum amount (50% from the State's Faculty Endowment

Fund, and at least 50% coming from nongovernmental funds):

1) Endowed chairs--$1,000,000 ($500,000 Fund and $500,000 Match)

2) Endowed professorships--$400,000 ($200,000 Fund and $200,000 Match)

3) Endowed faculty development programs--$75,000 ($37,500 Fund and $37,500 Match)

In conjunction with the $2M available in Fiscal Year 2004 draw down, the GAA of 2003

allocated $3 million to CHE to further implement the Fund through an additional three

endowed chairs, one each to NMSU, NMIMT, and UNM. As in prior legislation, these

chairs required match; however, statute established that a $500,000 match be raised for

each of these three additional endowed chairs.

”

AW/lg