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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 2/19/05

HB 730

SHORT TITLE UNM Dual Fiber Optic Network Infrastructure

SB

ANALYST Hanika-Ortiz

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

$4,000.0

Recurring

GF

Relates to Appropriation for Commission on Higher Education in the General Appropriation Act.

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

See Narrative

SOURCES OF INFORMATION

LFC Files

Responses Received From

Commission on Higher Education

Office of Information Technology Management

SUMMARY

Synopsis of Bill

HB 730 appropriates $4 million from the general fund to the Board of Regents of the University

of New Mexico for expenditure in FY06 and FY07 for the implementation of the dual fiber optic

network infrastructure related to the national LambdaRail (NLR) project.

Significant Issues

The NLR project is a major initiative of U.S. research universities and private sector technology

companies to provide a national scale infrastructure for research and experimentation in network-

House Bill 730-- Page 2

ing technologies and applications. The $1 million payment for FY04 has been processed, with a

current funding need of $4 million.

The goal of HB 730 is to ensure that the NLR network infrastructure will not bypass New Mex-

ico, but will traverse the State from El Paso through Albuquerque to Denver.

The very high speed connectivity provided by the NLR enhances New Mexico State University,

New Mexico Tech and The University of New Mexico’s opportunities to develop research part-

nerships with other major universities in the United States and abroad and to compete for re-

gional and national funded initiatives in areas such as homeland security, microelectronics, ecol-

ogy, advanced materials research, and telemedicine.

The NLR can provide New Mexico’s national labs with very high speed connectivity to other

labs and research institutes in the United States.

The NLR can be used by New Mexico companies to collaborate in economic development initia-

tives with other entities across the country where high-speed connectivity is a requirement.

K through 12 and higher education in New Mexico will benefit by being able to engage in next

generation teaching and learning technologies. They will be able to do this by using advanced

tools made available by the NLR such as virtual reality, visualization and distributed multimedia

tools.

PERFORMANCE IMPLICATIONS

The University of New Mexico shall submit a plan for program evaluation, including specific

program goals and criteria for assessing program effectiveness to the Legislative Finance Com-

mittee and the Commission on Higher Education by October 1, 2005. The institution shall also

submit a program evaluation to the Legislative Finance Committee and the Commission on

Higher Education by June 30, 2008 detailing the benefits to the State of New Mexico from hav-

ing this program implemented for a three-year period.

FISCAL IMPLICATIONS

In the CHE report, this proposal was ranked second out of six new or expansion research and

public service items submitted to the CHE by the University of New Mexico. The program was

not recommended for expansion by the CHE at that time.

The appropriation of $4 million contained in this bill is a recurring expense to the general fund.

Any unexpended or unencumbered balance remaining at the end of FY07 shall revert to the gen-

eral fund.

OTHER SUBSTANTIVE ISSUES

CHE notes that higher education institutions receive indirect cost revenues from federal contracts

and grants. The institution has the flexibility to choose which projects are supported with these

funds. A great deal of this money is used as seed money to develop new research and public ser-

vices projects at institutions. A portion of the indirect cost revenue, or earned overhead, is used

to support items such as the salaries of the accountants responsible for monitoring the contracts

House Bill 730 - Page 3

and grants, or for paying utilities and other expenses required to maintain the space where the

contract and grant activities are housed.

The higher education funding formula allows institutions to retain 100% of this indirect cost

revenue. One of the purposes of retaining these funds is to provide seed money and matching

funds for projects such as the one proposed in this bill.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL.

Potential loss of New Mexico membership in NLR.

BW/sb