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

SPONSOR Boitano

DATE TYPED 2/1/05

HB

SHORT TITLE Charter School Lease Agreements

SB SJR7

ANALYST Baca

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

See Narrative

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to Appropriation in the General Appropriation Act

SOURCES OF INFORMATION

LFC Files

Responses Received From

Public Education Department (PED)

SUMMARY

Synopsis of Bill

Senate Joint Resolution 7 proposes to amend Article 9, Section 11, of the New Mexico Constitu-

tion to allow the qualified electors of a school district to approve Lease-purchase agreements for

charter school facilities and excepting those agreements from the debt limitation of the school

district.

Significant Issues

If SJR7 is passed by the Legislature and subsequently approved by the voters, approved lease

purchase agreements for charter school to acquire classrooms and other necessary facilities will

not be included in this limitation and a school district’s bonding capacity will not be affected.

According to the PED, school districts have legal authority, with voter approval, to issue general

obligation bonds for the purpose of erecting, remodeling, making additions to and furnishing

school buildings, purchasing or improving school grounds, purchasing computer software and

hardware for student use in public schools or any combination of these purposes as stated in the

Senate Joint Resolution 7 -- Page 2

election question to the voters. Enacting this resolution will expand the purposes for which a

school district may incur debt, which will include the lease purchase agreements for charter

schools.

Article 9, Section 11, of the New Mexico Constitution limits a school district’s issuance of gen-

eral bond obligations to six percent of the school district’s assessed valuation. Authority is given

to levy against all taxable property (residential, non-residential and oil/gas/copper) within a

school district a tax as necessary to pay the interest and principal on general obligation bonds

issued by the school district as payments become due. Yield control provisions do not apply to

tax rates needed to pay off general obligation bond debt service.

SJR7 provides that a school district may create a debt for lease purchase agreements for charter

schools as long as the district submits the resolution to the people for their approval or rejection

at the next general election or at any special election prior to that date that may be called for that

purpose.

PERFORMANCE IMPLICATIONS

PED reports no performance implications.

FISCAL IMPLICATIONS

The PED reports that on a statewide basis, charter schools spend an estimated $5, 228.0 million

for the leasing of classroom facilities.

ADMINISTRATIVE IMPLICATIONS

School districts will have to implement the provisions of SJR.

LB/yr