Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance

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

if they are used for other purposes.

Current FIRs (in HTML & Adobe PDF formats) are a vailable on the NM Legislative Website (legis.state.nm.us).

Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and

attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.

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

SPONSOR Sharer

DATE TYPED 02/22/05 HB

SHORT TITLE Adult Basic Education Workload Funding

SB 804

ANALYST Williams

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

$843.6

Recurring; cost

could escalate

over time being

workload driven

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to House Bill 764 and House Bill 833

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

Policy Development and Institutional Financial Oversight Program

SOURCES OF INFORMATION

LFC Files

Commission on Higher Education

SUMMARY

Synopsis of Bill

Senate Bill 804 appropriates $843.6 thousand from the general fund to the commission on higher

education to enhance funding for the adult basic education program. The bill proposes full fund-

ing for a new funding formula driven by a definition of workload.

Significant Issues

The new formula is contained within CHE Regulations of the New Mexico Administrative Code:

Title 5, Chapter 3, Part 13, Allocation and Distribution of the Adult Basic Education Fund was

adopted in 2004. In the new formula, the calculation of the operating base for each state admin-

istrative site is modified to be a flat fee (currently $51,775 that would increase for each year

there is a compensation increase by the legislature). The previous formula utilized a base for

each state administrative site according to a percentage of expenditures for instruction. The

change establishes the base at the amount the higher education funding formula utilized for stu-

Senate Bill 804 -- Page 2

dent services.

The program currently funds 23 educational institutions including nineteen state public, post-

secondary institutions, three tribal colleges and one public high school. CHE reports the cost per

weighted headcount was $225 in FY04. CHE notes the current program serves less than 5 per-

cent of the eligible adult population.

FISCAL IMPLICATIONS

The appropriation of $843.6 thousand contained in this bill is a recurring expense to the general

fund. Any unexpended or unencumbered balance remaining at the end of FY06 would revert to

the general fund.

For several years, the adult basic education received a flat general fund appropriation of $5 mil-

lion. After administration of the program was transferred from the Public Education Department

to CHE, an additional $35 thousand appropriation to CHE from the general fund for administra-

tion purposes was initiated. The program also received $1 million in TANF funds in FY05. For

FY06, the executive budget recommendation holds general fund appropriation for ABE, but

eliminates all TANF funding. The LFC recommendation increases the general fund appropria-

tion in FY06 by over $400 thousand to partially address a recommended reduction in TANF

funds of $750 thousand.

The cost associated with full funding of the new formula could escalate over time. Specifically,

the formula is calculated:

•

The total statewide cost for program is determined annually by adding all reported ex-

penditures from restricted and unrestricted sources for all state administrative sites for the

second preceding year

•

An operating base for each state administrative site is established at a rate equivalent to a

student services staffing unit of the higher education funding formula for serving up to

the first 75 students. The dollar amount may be adjusted annually for compensation in-

creases awarded by the legislature.

•

The cost per weighted headcount is the total cost above the base divided by the total

headcount above the base

•

Funding above the base for each state administrative site is their headcount above the

base times the cost per weighted headcount calculated above

•

Formula funding amount is the combination of the base amount plus funding above the

base.

If full formula funding is not available, a proportionate share is distributed to each state adminis-

trative site.

POSSIBLE QUESTIONS

1.

What is the mission of the program.

2.

What program outcomes are evident.

AW/lg