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

SPONSOR Rawson

DATE TYPED 03-04-05 HB

SHORT TITLE NMSU Manufacturing Sector Development Program SB 1063

ANALYST Woods

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

$184.0

Recurring General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to the appropriation for New Mexico State University in the General Appropriations Act.

Relates to SB301

SOURCES OF INFORMATION

LFC Files

New Mexico State University (NMSU)

New Mexico Commission on Higher Education (CHE)

SUMMARY

Synopsis of Bill

Senate Bill 1063 – Making an Appropriation for the Manufacturing Sector Development Pro-

gram at New Mexico State University – appropriates $184,000 from the general fund to the

Board of Regents of New Mexico State University for expenditure in FY06 to maintain and ex-

pand the Manufacturing Sector Development Program. Any unexpended or unencumbered bal-

ance remaining at the end of FY06 shall revert to the general fund.

Significant Issues

NMSU indicates that the Manufacturing Technology and Engineering Center (M-TEC) is housed

in NMSU’s College of Engineering. M-TEC directly supports economic development in two key

areas: technical workforce development through educational partnerships with high schools and

community colleges, and providing assistance to New Mexico businesses with product develop-

ment, engineering and manufacturing services that would otherwise not be available. M-TEC’s

base funding is as a Research and Public Service Project (RPSP). The Center leverages facilities,

Senate Bill 1063 -- Page 2

expertise and other resources of the university.

NMSU adds that the demand for M-TEC’s technical services has more than doubled every year

for the past four years. There are requests to expand educational programs across the state. This

growth in demand for services and budget cuts in RPSP programs have created both a significant

challenge and opportunity for M-TEC. A major barrier to economic development in the state is

the lack of a technically trained workforce. The proposed expansion of technical education pro-

grams within the public schools directly addresses this barrier and will act as a catalyst for eco-

nomic development. M-TEC designed and is currently implementing a model manufacturing

technology program in the Gadsden School District that will serve as a pilot program.

CHE notes that this expansion request was not in the list of priority projects submitted by NMSU

to the commission for review. Consequently, this request was not included in the commission’s

funding recommendation for FY06. However, CHE advises that the commission has recom-

mended funding in the amount of $408,000 for the Manufacturing Sector Development Program

within the overall general fund recommendations for Research and Public Service Projects.

PERFORMANCE IMPLICATIONS

NMSU suggests that the ability of M-TEC to provide the increased technical and educational

outreach activities that are needed is limited without the requested funding. The legislation sup-

ports new technical career paths while supporting economic development with new and expand-

ing business opportunities in New Mexico

FISCAL IMPLICATIONS

The appropriation of $184,000 contained in this bill is a recurring expense to the general fund.

Any unexpended or unencumbered balance remaining at the end of FY06 shall revert to the gen-

eral fund.

ADMINISTRATIVE IMPLICATIONS

New Mexico State University will retain oversight of this program and indicates that M-TEC

will use existing administrative staff operating within the existing university administrative

structure. Additional administrative resources are not required.

CONFLICT, DUPLICATION, COMPANIONSHIP OR RELATIONSHIP

Relates to the appropriation for New Mexico State University in the General Appropriations Act.

Relates to SB301 in that SB301 seeks to appropriate $350,000 from the general fund to the

Board of Regents of New Mexico State University for expenditure in FY06 to support the Manu-

facturing Technology and Engineering Center.

OTHER SUBSTANTIVE ISSUES

As general background, NMSU advises that M-TEC has a proven base of technical, educational

and administrative expertise and experience in the areas of manufacturing technology, engineer-

ing, product design and education. M-TEC operates six well-equipped manufacturing, product

Senate Bill 1063 -- Page 3

development and measurement laboratories that support the outreach activities. M-TEC is rec-

ognized as a leader in manufacturing related curriculum development and new product develop-

ment. The M-TEC designed “Chile Thinning Machine” has been licensed for production by two

New Mexico businesses and will be available to farmers in 2005, providing substantial cost sav-

ings to chile farmers.

Further, at present less than 7 percent of the employment base in New Mexico is in the manufac-

turing sector – a disproportionably small number when contrasted with most other states – indi-

cating a critical need to facilitate the growth of manufacturing in the state. A recent study by In-

dustry Week found that manufacturing salaries are generally 89 percent higher than retailing sala-

ries. Increasing the manufacturing sector of the state’s economy will improve the standard of

living.

CHE suggests – assuming that funding will continue beyond FY06 – that consideration might be

given to requiring the university to submit a plan for program evaluation, including specific pro-

gram goals and criteria for assessing program effectiveness to the Legislative Finance Committee

and the Commission on Higher Education by October 1, 2005. Further that the university should

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.

BFW/lg