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

SPONSOR Arnold-Jones

DATE TYPED 10/08/05 HB 14

SHORT TITLE University Infrastructure Repair

SB

ANALYST Williams

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

$100,000.0 Non-recurring General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

No Responses Received

SUMMARY

Synopsis of Bill

House Bill 14 appropriates $100 million from the general fund to the Higher Education Depart-

ment for university infrastructure repair.

Significant Issues

Note that two-year colleges and branch campuses as well as special schools would not appear to

be eligible. The methodology to distribute funds is not indicated.

PERFORMANCE IMPLICATIONS

The bill does not address performance accountability requirements and reporting for the funding.

House Bill 14 -- Page 2

FISCAL IMPLICATIONS

The appropriation of $100 million contained in this bill is a non-recurring expense to the general

fund. Any unexpended or unencumbered balance remaining at the end of FY 07 would revert to

the general fund. The bill includes an emergency clause; therefore the fiscal impact would occur

in FY06.

OTHER SUBSTANTIVE ISSUES

Higher Education Department (HED) is required to submit a comprehensive funding request and

priorities list for higher education, including five-year capital plan, to Legislature by November 1

of each year; secretary designee will utilize same process utilized by CHE in previous years for

developing “significant need” list of projects for funding recommendations to the Legislature in

2006 utilizing FCI based on facility assessment. The facility assessment of 35 percent of the

building area of each campus (5,900,000 square feet) indicated $820.7 million was needed to re-

store all higher education facilities to good condition of which $364.8 million was needed for the

backlog of maintenance. An update of the analysis is in progress.

The Legislature typically funds more costly projects with GOB capacity; GF and STB funding

have been limited in past years; other revenues sources include: university revenue bonds, local

revenue bonds, federal funds, grants, foundations, cash balances, and BR&R and ER&R formu-

las; special schools cannot impose tax levy.

The higher education funding formula includes a transfer to plant funds to address facilities re-

newal and replacement (BR&R) needs. Building renewal & replacement formula (BR&R) cur-

rently generates only 40 percent of required funding for keeping facilities in good operating con-

dition. When fully funded, BRR would provide an annual amount to each public, post-secondary

institution of 3 percent of the replacement cost of eligible facilities. Legislation enacted in 2004

expanded the BR&R formula to the facilities of the agricultural research centers of NMSU. The

calculation is made based on a fixed database of eligible facilities and has not changed over time.

In FY05, BR&R funding at 40 percent provided $15.7 million to higher education institutions

and special schools.

AW/sb