Committee Substitute for SB0450FCS

SENATE FINANCE COMMITTEE SUBSTITUTE FOR

SENATE EDUCATION COMMITTEE SUBSTITUTE FOR

SENATE BILL 450

47th legislature - STATE OF NEW MEXICO - second session, 2006

AN ACT

RELATING TO SCHOOLS; REQUIRING A FACILITIES PLAN FOR ALL SCHOOL DISTRICTS; AMENDING THE PUBLIC SCHOOL CAPITAL OUTLAY ACT TO ALLOW EXPENDITURES FOR CERTAIN ABANDONED FACILITIES, FIVE-YEAR FACILITIES PLANS AND CORRECTION OF DEFICIENCIES AT CERTAIN STATE EDUCATIONAL INSTITUTIONS, TO CHANGE THE LIMITATIONS ON EXPENDITURES FOR CERTAIN LEASE PAYMENTS AND TO PROVIDE, UNDER CERTAIN CIRCUMSTANCES, A LOCAL MATCH PROVISION FOR QUALIFIED HIGH PRIORITY PROJECTS; AMENDING THE PUBLIC SCHOOL CAPITAL IMPROVEMENTS ACT TO INCREASE THE STATE DISTRIBUTION AND AUTHORIZE ADDITIONAL EXPENDITURES; EXEMPTING CERTAIN EMPLOYEES FROM THE PERSONNEL ACT; EASING CERTAIN RESTRICTIONS ON SCHOOL DISTRICT CASH BALANCES; CREATING A FUND TO PROVIDE START-UP COSTS FOR NEW SCHOOLS; PROVIDING FUNDING TO IMPROVE THE INDOOR AIR QUALITY OF PUBLIC SCHOOLS; PROVIDING FOR STUDIES OF CERTAIN LOCAL GOVERNMENT ACTIONS ON SCHOOL REVENUE AND OF ADDITIONAL CHARTERING AUTHORITIES FOR CHARTER SCHOOLS; ALLOWING THE PUBLIC SCHOOL FACILITIES AUTHORITY TO BE A CENTRAL PURCHASING OFFICE; PROVIDING FOR AN ONGOING FACILITY INFORMATION MANAGEMENT SYSTEM; MAKING APPROPRIATIONS; DECLARING AN EMERGENCY.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

Section 1. Section 22-20-1 NMSA 1978 (being Laws 1967, Chapter 16, Section 270, as amended) is amended to read:

"22-20-1. SCHOOL CONSTRUCTION--APPROVAL OF THE PUBLIC SCHOOL FACILITIES AUTHORITY--COMPLIANCE WITH STATEWIDE ADEQUACY STANDARDS--STATE CONSTRUCTION AND FIRE STANDARDS APPLICABLE.--

A. Each local school board shall secure the approval of the director of the public school facilities authority or the director's designee prior to the construction or letting of contracts for construction of any school building or related school structure or before reopening an existing structure that was formerly used as a school building but that has not been used for that purpose during the previous year. A written application shall be submitted to the director requesting approval of the construction, and, upon receipt, the director shall forward a copy of the application to the secretary. The director shall prescribe the form of the application, which shall include the following:

(1) a statement of need;

(2) the anticipated number of students affected by the construction;

(3) the estimated cost;

(4) a description of the proposed construction project;

(5) a map of the area showing existing school attendance centers within a five-mile radius and any obstructions to attending the attendance centers, such as railroad tracks, rivers and limited-access highways; and

(6) such other information as may be required by the director.

B. The director or the director's designee shall give approval to an application if the director or designee reasonably determines that:

(1) the construction will not cause an unnecessary proliferation of school construction;

(2) the construction is needed in the school district;

(3) the construction is feasible;

(4) the cost of the construction is reasonable;

(5) the school district has submitted a five-year facilities plan that includes:

(a) enrollment projections;

(b) a current preventive maintenance plan;

(d) projections for the facilities needed in order to maintain a full-day kindergarten program;

[(5)] (6) the construction project:

(a) is in compliance with the statewide adequacy standards adopted pursuant to the Public School Capital Outlay Act; and

(b) [if relevant] is appropriately integrated into the school district [master] five-year facilities plan;

[(6)] (7) the school district is financially able to pay for the construction; and

[(7)] (8) the secretary has certified that the construction will support the educational program of the school district.

C. Within thirty days after the receipt of an application filed pursuant to this section, the director or the director's designee shall in writing notify the local school board making the application and the department of approval or disapproval of the application.

D. A local school board shall not enter into a contract for the construction of a public school facility, including contracts funded with insurance proceeds, unless the contract contains provisions requiring the construction to be in compliance with the statewide adequacy standards adopted pursuant to the Public School Capital Outlay Act, provided that, for a contract funded in whole or in part with insurance proceeds:

(1) the cost of settlement of any insurance claim shall not be increased by inclusion of the insurance proceeds in the construction contract; and

(2) insurance claims settlements shall continue to be governed by insurance policies, memoranda of coverage and rules related to them.

E. Public school facilities shall be constructed pursuant to state standards or codes promulgated pursuant to the Construction Industries Licensing Act and rules adopted pursuant to Section 59A-52-15 NMSA 1978 for the prevention and control of fires in public occupancies. Building standards or codes adopted by a municipality or county do not apply to the construction of public school facilities, except those structures constructed as a part of an educational program of a school district.

F. The provisions of Subsection E of this section relating to fire protection shall not be effective until the public regulation commission has adopted the International Fire Code and all standards related to that code.

G. As used in this section, "construction" means any project for which the construction industries division of the regulation and licensing department requires permitting."

Section 2. Section 22-8-41 NMSA 1978 (being Laws 1967, Chapter 16, Section 99, as amended) is amended to read:

"22-8-41. RESTRICTION ON OPERATIONAL FUNDS--EMERGENCY ACCOUNTS--CASH BALANCES.--

A. A school district shall not expend money from its operational fund for the acquisition of a building site or for the construction of a new structure, unless the school district has bonded itself to practical capacity or the secretary determines and certifies to the legislative finance committee that the expending of money from the operational fund for this purpose is necessary for an adequate public educational program and will not unduly hamper the school district's current operations.

B. A school district or charter school may budget out of cash balances carried forward from the previous fiscal year an amount not to exceed five percent of its proposed operational fund expenditures for the ensuing fiscal year as an emergency account. Money in the emergency account shall be used only for unforeseen expenditures incurred after the annual budget was approved and shall not be expended without the prior written approval of the secretary.

C. In addition to the emergency account, school districts or charter schools may also budget operational fund cash balances carried forward from the previous fiscal year for operational expenditures, exclusive of salaries and payroll, upon specific prior approval of the secretary. The secretary shall notify the legislative finance committee in writing of [his] the secretary's approval of such proposed expenditures. For fiscal years 2004 and 2005, with the approval of the secretary, a school district or charter school may budget so much of its operational cash balance as is needed for nonrecurring expenditures, including capital outlay.

D. [Notwithstanding the provisions of Subsection C of this section] Beginning with fiscal year [2006] 2007, prior to approval of a school district's or charter school's budget, the secretary shall verify that the reductions from the state equalization guarantee distribution have been taken pursuant to this section.

E. The allowable limit for a school district's or charter school's ending operational cash balance is:

(1) if the current year program cost is less than five million dollars ($5,000,000), [nine] fifteen percent of the budgeted expenditures;

(2) if the current year program cost is five million dollars ($5,000,000) or more but less than ten million dollars ($10,000,000), [seven and one-half] twelve percent of the budgeted expenditures;

(3) if the current year program cost is ten million dollars ($10,000,000) or more but less than twenty-five million dollars ($25,000,000), [six] nine percent of the budgeted expenditures;

(4) if the current year program cost is twenty-five million dollars ($25,000,000) or more but less than two hundred million dollars ($200,000,000), [four and one-half] seven percent of the budgeted expenditures; and

(5) if the current year program cost is two hundred million dollars ($200,000,000) or more, [for fiscal year 2004, two and one-half percent of the budgeted expenditures and, for subsequent fiscal years, three] five percent of the budgeted expenditures.

F. Except as otherwise provided in this section, for the 2006 and subsequent fiscal years, the secretary shall reduce the state equalization guarantee distribution, calculated pursuant to Section 22-8-25 NMSA 1978, to each school district or charter school by an amount equal to the school district's or charter school's excess cash balance. As used in this section, "excess cash balance" means the difference between a school district's or a charter school's actual operational cash balance and the allowable limit calculated pursuant to Subsection E of this section. Provided, however, that:

(1) for a school district or charter school with a current year program cost that exceeds two hundred million dollars ($200,000,000), if the excess cash balance is greater than twenty percent of the allowable, unrestricted, unreserved operational cash balance and the emergency reserve, then the reduction pursuant to this subsection shall equal twenty percent of the allowable, unrestricted, unreserved operational cash balance and the emergency reserve; and

(2) for other school districts and charter schools, if the excess cash balance is greater than eighteen percent of the allowable, unrestricted, unreserved operational cash balance and the emergency reserve, then the reduction pursuant to this subsection shall equal eighteen percent of the allowable, unrestricted, unreserved operational cash balance and the emergency reserve.

G. In developing budgets, school districts and charter schools shall not budget current year cash balances without the approval of the secretary.

H. A school district or charter school whose enrollment growth exceeds one percent from the prior year and whose facility master plan includes the addition of a new school within two years may request from the secretary a waiver of up to fifty percent of the reduction otherwise required by Subsection F of this section.

I. Upon application by a school district, the secretary may waive all or a portion of the reduction otherwise required by Subsection F of this section if the secretary finds that the school district's excess balance is needed to provide the local match required under the Public School Capital Outlay Act or to recoup an amount paid as the district's share pursuant to Section 22-24-5.7 NMSA 1978.

[I.] J. Notwithstanding the provisions of Subsection F of this section, for fiscal year 2004, the reduction from the state equalization guarantee distribution shall be the greater of the amount calculated pursuant to that subsection or ten dollars ($10.00) per MEM.

[J.] K. For the purposes of this section, "operational cash balance" means the allowable, unrestricted, unreserved operational cash balance and the emergency reserve.

[K.] L. For the purposes of this section, "allowable, unrestricted, unreserved operational cash balance and the emergency reserve" means the proportional share not attributable to revenue derived from the school district property tax, forest reserve funds and impact aid for which the state takes credit in determining a school district's or charter school's state equalization guarantee distribution."

Section 3. A new section of the Public School Code is enacted to read:

"22-24-11. [NEW MATERIAL] NEW SCHOOL DEVELOPMENT FUND--DISTRIBUTION.--

A. The "new school development fund" is created in the state treasury. The fund shall consist of appropriations, gifts, grants, donations and bequests made to the fund. Income from the fund shall be credited to the fund, and money in the fund shall not revert or be transferred to any other fund at the end of a fiscal year. Money in the fund is appropriated to the department for the purposes of making distributions pursuant to Subsection B of this section. Expenditures from the fund shall be made on warrant of the secretary of finance and administration pursuant to vouchers signed by the secretary.

B. Upon application to the department by a school district and subject to the availability of funds, the department may approve a distribution to the school district from the new school development fund to supplement district funds needed to pay for supplies, equipment and operating costs unique to the first year of operation of a new school, provided that the department shall not approve a distribution unless it determines that there are no other reasonably available federal, private or other public sources for the needed funding."

Section 4. Section 22-24-4 NMSA 1978 (being Laws 1975, Chapter 235, Section 4, as amended) is amended to read:

"22-24-4. FUND CREATED--USE.--

A. There is created the "public school capital outlay fund". Balances remaining in the fund at the end of each fiscal year shall not revert.

B. Except as provided in Subsections G through [K] L of this section, money in the fund may be used only for capital expenditures deemed by the council necessary for an adequate educational program.

C. The council may authorize the purchase by the public school facilities authority of portable classrooms to be loaned to school districts to meet a temporary requirement. Payment for these purchases shall be made from the fund. Title and custody to the portable classrooms shall rest in the public school facilities authority. The council shall authorize the lending of the portable classrooms to school districts upon request and upon finding that sufficient need exists. Application for use or return of state-owned portable classroom buildings shall be submitted by school districts to the council. Expenses of maintenance of the portable classrooms while in the custody of the public school facilities authority shall be paid from the fund; expenses of maintenance and insurance of the portable classrooms while in the custody of a school district shall be the responsibility of the school district. The council may authorize the permanent disposition of the portable classrooms by the public school facilities authority with prior approval of the state board of finance.

D. Applications for assistance from the fund shall be made by school districts to the council in accordance with requirements of the council. Except as provided in Subsection K of this section, the council shall require as a condition of application that a school district have a current five-year facilities plan, which shall include a current preventive maintenance plan to which the school adheres for each public school in the school district.

E. The council shall review all requests for assistance from the fund and shall allocate funds only for those capital outlay projects that meet the criteria of the Public School Capital Outlay Act.

F. Money in the fund shall be disbursed by warrant of the department of finance and administration on vouchers signed by the secretary of finance and administration following certification by the council that an application has been approved or an expenditure has been ordered by a court pursuant to Section 22-24-5.4 NMSA 1978. At the discretion of the council, money for a project shall be distributed as follows:

(1) up to ten percent of the portion of the project cost funded with distributions from the fund or five percent of the total project cost, whichever is greater, may be paid to the school district before work commences with the balance of the grant award made on a cost-reimbursement basis; or

(2) the council may authorize payments directly to the contractor.

G. Balances in the fund may be annually appropriated for the core administrative functions of the public school facilities authority pursuant to the Public School Capital Outlay Act and, in addition, balances in the fund may be expended by the public school facilities authority, upon approval of the council, for project management expenses; provided that:

(1) the total annual expenditures from the fund pursuant to this subsection shall not exceed five percent of the average annual grant assistance authorized from the fund during the three previous fiscal years; and

(2) any unexpended or unencumbered balance remaining at the end of a fiscal year from the expenditures authorized in this subsection shall revert to the fund.

[H. Up to one million two hundred fifty thousand dollars ($1,250,000) of the balances of the fund may be expended in fiscal years 2003 and 2004 by the council for the purpose of updating and refining the statewide assessment study required by Section 22-24-5 NMSA 1978 and for the training of state and local officials on the use of the database and other data-management-related issues identified by the council.

I.] H. Up to thirty million dollars ($30,000,000) of the fund may be allocated annually by the council in fiscal years 2006 and 2007 for a roof repair and replacement initiative with projects to be identified by the council pursuant to Section 22-24-4.3 NMSA 1978; provided that all money allocated pursuant to this subsection shall be expended prior to September 1, 2008.

[J.] I. Up to [four million dollars ($4,000,000)] seven million five hundred thousand dollars ($7,500,000) from the fund may be expended annually by the council in fiscal years [2005] 2006 through [2009] 2010 for grants to school districts for the purpose of making lease payments for classroom facilities, including facilities leased by charter schools. The grants shall be made upon application by the school districts and pursuant to rules adopted by the council; provided that, an application on behalf of a charter school shall be made by the school district but, if the school district fails to make an application on behalf of a charter school, the charter school may submit its own application. The following criteria shall apply to the grants:

(1) the amount of a grant to a school district shall not exceed:

(a) the actual annual lease payments owed for leasing classroom space for schools, including charter schools, in the district; or

(b) [three hundred dollars ($300) for fiscal year 2005 and] six hundred dollars ($600) [for fiscal years 2006 through 2009] multiplied by the number of MEM using the leased classroom facilities; provided that, if the total grants awarded pursuant to this paragraph would exceed the total annual amount available, the rate specified in this subparagraph shall be reduced proportionately;

(2) a grant received for the lease payments of a charter school may be used by that charter school as a state match necessary to obtain federal grants pursuant to the federal No Child Left Behind Act of 2001;

(3) at the end of each fiscal year, any unexpended or unencumbered balance of the appropriation shall revert to the fund; and

(4) as used in this subsection, "MEM" means: (a) the average full-time-equivalent enrollment using leased classroom facilities on the [fortieth] eightieth and one hundred twentieth days of the prior school year; or

(b) in the case of an approved charter school that has not commenced classroom instruction, the estimated full-time-equivalent enrollment that will use leased classroom facilities in the first year of instruction, as shown in the approved charter school application; provided that, after the [fortieth] eightieth day of the school year, the MEM shall be adjusted to reflect the full-time-equivalent enrollment on that date.

[K.] J. In addition to other authorized expenditures from the fund, up to one percent of the average grant assistance authorized from the fund during the three previous fiscal years may be expended in each fiscal year by the public school facilities authority to reimburse the state fire marshal, the construction industries division of the regulation and licensing department and local jurisdictions having authority from the state to permit and inspect projects for expenditures made to permit and inspect projects funded in whole or in part under the Public School Capital Outlay Act. The authority shall enter into contracts with the state fire marshal, the construction industries division or the appropriate local authorities to carry out the provisions of this subsection.

K. Pursuant to guidelines established by the council, allocations from the fund may be made to assist school districts in developing and updating five-year facilities plans required by the Public School Capital Outlay Act; provided that:

(1) no allocation shall be made unless the council determines that the school district is willing and able to pay the portion of the total cost of developing or updating the plan that is not funded with the allocation from the fund. Except as provided in Paragraph (2) of this subsection, the portion of the total cost to be paid with the allocation from the fund shall be determined pursuant to the methodology in Paragraph (5) of Subsection B of Section 22-24-5 NMSA 1978; or

(2) the allocation from the fund may be used to pay the total cost of developing or updating the plan if:

(a) the school district has fewer than an average of six hundred full-time-equivalent students on the eightieth and one hundred twentieth days of the prior school year; or

(b) the school district meets all of the following requirements: 1) the school district has fewer than an average of one thousand full-time-equivalent students on the eightieth and one hundred twentieth days of the prior school year; 2) the school district has at least seventy percent of its students eligible for free or reduced-fee lunch; 3) the state share of the total cost, if calculated pursuant to the methodology in Paragraph (5) of Subsection B of Section 22-24-5 NMSA 1978, would be less than fifty percent; and 4) for all educational purposes, the school district has a residential property tax rate of at least seven dollars ($7.00) on each one thousand dollars ($1,000) of taxable value, as measured by the sum of all rates imposed by resolution of the local school board plus rates set to pay interest and principal on outstanding school district general obligation bonds.

L. Upon application by a school district, allocations from the fund may be made by the council for the purpose of demolishing abandoned school district facilities provided that:

(1) the costs of continuing to insure an abandoned facility outweigh any potential benefit when and if a new facility is needed by the school district;

(2) there is no practical use for the abandoned facility without the expenditure of substantial renovation costs; and

(3) the council may enter into an agreement with the school district under which an amount equal to the savings to the district in lower insurance premiums are used to fully or partially reimburse the fund for the demolition costs allocated to the district."

Section 5. Section 22-24-5 NMSA 1978 (being Laws 1975, Chapter 235, Section 5, as amended) is amended to read:

"22-24-5. PUBLIC SCHOOL CAPITAL OUTLAY PROJECTS--APPLICATION--GRANT ASSISTANCE.--

A. Applications for grant assistance, the approval of applications, the prioritization of projects and grant awards shall be conducted pursuant to the provisions of this section [provided, however, that the order of priority in the two years beginning July 1, 2004 shall first reflect those specific projects that were partially funded by the council in September 2003 but are not as yet completed, excluding any expansion of the scope of those projects and contingent upon maintenance of the required local support. In that transition period, such projects shall be funded regardless of any deviation from the statewide adequacy standards; provided that the amount of the award received shall not exceed the amount necessary to meet the statewide adequacy standards, including projected enrollment growth].

B. Except as provided [in Subsection A of this section and] in Sections 22-24-4.3 [and], 22-24-5.4 and

22-24-5.6 NMSA 1978, the following provisions govern grant assistance from the fund for a public school capital outlay project not wholly funded pursuant to Section 22-24-4.1 NMSA 1978:

(1) all school districts are eligible to apply for funding from the fund, regardless of percentage of indebtedness;

(2) priorities for funding shall be determined by using the statewide adequacy standards developed pursuant to Subsection C of this section; provided that:

(a) the council shall apply the standards to charter schools to the same extent that they are applied to other public schools; and

(b) in an emergency in which the health or safety of students or school personnel is at immediate risk or in which there is a threat of significant property damage, the council may award grant assistance for a project using criteria other than the statewide adequacy standards;

(3) the council shall establish criteria to be used in public school capital outlay projects that receive grant assistance pursuant to the Public School Capital Outlay Act. In establishing the criteria, the council shall consider:

(a) the feasibility of using design, build and finance arrangements for public school capital outlay projects;

(b) the potential use of more durable construction materials that may reduce long-term operating costs; and

(4) no more than ten percent of the combined total of grants in a funding cycle shall be used for retrofitting existing facilities for technology infrastructure;

(5) except as provided in Paragraph (6) or (8) of this subsection, the state share of a project approved and ranked by the council shall be funded within available resources pursuant to the provisions of this paragraph. No later than May 1 of each calendar year, a value shall be calculated for each school district in accordance with the following procedure:

(a) the final prior year net taxable value for a school district divided by the MEM for that school district is calculated for each school district;

(b) the final prior year net taxable value for the whole state divided by the MEM for the state is calculated;

(c) excluding any school district for which the result calculated pursuant to Subparagraph (a) of this paragraph is more than twice the result calculated pursuant to Subparagraph (b) of this paragraph, the results calculated pursuant to Subparagraph (a) of this paragraph are listed from highest to lowest;

(d) the lowest value listed pursuant to Subparagraph (c) of this paragraph is subtracted from the highest value listed pursuant to that subparagraph;

(e) the value calculated pursuant to Subparagraph (a) of this paragraph for the subject school district is subtracted from the highest value listed in Subparagraph (c) of this paragraph;

(f) the result calculated pursuant to Subparagraph (e) of this paragraph is divided by the result calculated pursuant to Subparagraph (d) of this paragraph;

(g) the sum of the property tax mill levies for the prior tax year imposed by each school district on residential property pursuant to Chapter 22, Article 18 NMSA 1978, the Public School Capital Improvements Act, the Public School Buildings Act, the Education Technology Equipment Act and Paragraph (2) of Subsection B of Section 7-37-7 NMSA 1978 is calculated for each school district;

(h) the lowest value calculated pursuant to Subparagraph (g) of this paragraph is subtracted from the highest value calculated pursuant to that subparagraph;

(i) the lowest value calculated pursuant to Subparagraph (g) of this paragraph is subtracted from the value calculated pursuant to that subparagraph for the subject school district;

(j) the value calculated pursuant to Subparagraph (i) of this paragraph is divided by the value calculated pursuant to Subparagraph (h) of this paragraph;

(k) if the value calculated for a subject school district pursuant to Subparagraph (j) of this paragraph is less than five-tenths, then, except as provided in Subparagraph (n) or (o) of this paragraph, the value for that school district equals the value calculated pursuant to Subparagraph (f) of this paragraph;

(l) if the value calculated for a subject school district pursuant to Subparagraph (j) of this paragraph is five-tenths or greater, then that value is multiplied by five-hundredths;

(m) if the value calculated for a subject school district pursuant to Subparagraph (j) of this paragraph is five-tenths or greater, then the value calculated pursuant to Subparagraph (l) of this paragraph is added to the value calculated pursuant to Subparagraph (f) of this paragraph. Except as provided in Subparagraph (n) or (o) of this paragraph, the sum equals the value for that school district;

(n) in those instances in which the calculation pursuant to Subparagraph (k) or (m) of this paragraph yields a value less than one-tenth, one-tenth shall be used as the value for the subject school district;

(o) in those instances in which the calculation pursuant to Subparagraph (k) or (m) of this paragraph yields a value greater than one, one shall be used as the value for the subject school district;

(p) except as provided in Section

22-24-5.7 NMSA 1978 and except as reduced pursuant to Paragraph (6) of this subsection, the amount to be distributed from the fund for an approved project [1) in calendar year 2005, shall equal the total project cost multiplied by a fraction the numerator of which is the value calculated for the subject school district in 2005 plus the value calculated for that district in 2004 and the denominator of which is two; and 2) in calendar year 2006 and each subsequent calendar year] shall equal the total project cost multiplied by a fraction the numerator of which is the value calculated for the subject school district in the current year plus the value calculated for that school district in each of the two preceding years and the denominator of which is three; and

(q) as used in this paragraph: 1) "MEM" means the average full-time-equivalent enrollment of students attending public school in a school district on the [fortieth] eightieth and one hundred twentieth days of the prior school year; and 2) "total project cost" means the total amount necessary to complete the public school capital outlay project less any insurance reimbursement received by the school district for the project;

(6) the amount calculated pursuant to Subparagraph (p) of Paragraph (5) of this subsection shall be reduced by the following procedure:

(a) the total of all legislative appropriations made after January 1, 2003 for nonoperating purposes either directly to the subject school district or to another governmental entity for the purpose of passing the money through directly to the subject school district, and not rejected by the subject school district, but excluding educational technology appropriations made prior to January 1, 2005 and reauthorizations of appropriations previously made to the subject school district, is calculated; provided that an appropriation made in a fiscal year shall be deemed to be accepted by a school district unless, prior to June 1 of that fiscal year, the school district notifies the department of finance and administration and the public education department that the district is rejecting the appropriation; provided further that the total shall be increased by an amount, certified to the council by the department, equal to the educational technology appropriations made to the subject school district on or after January 1, 2003 and prior to January 1, 2005 and not previously used to offset distributions pursuant to the Technology for Education Act;

(b) the applicable fraction used for the subject school district and the current calendar year for the calculation in Subparagraph (p) of Paragraph (5) of this subsection is subtracted from one;

(c) the value calculated pursuant to Subparagraph (a) of this paragraph for the subject school district is multiplied by the amount calculated pursuant to Subparagraph (b) of this paragraph for that school district;

(d) the total amount of reductions for the subject school district previously made pursuant to Subparagraph (e) of this paragraph for other approved public school capital outlay projects is subtracted from the amount calculated pursuant to Subparagraph (c) of this paragraph; and

(e) the amount calculated pursuant to Subparagraph (p) of Paragraph (5) of this subsection shall be reduced by the amount calculated pursuant to Subparagraph (d) of this paragraph;

(7) as used in Paragraphs (5) and (6) of this subsection, "subject school district" means the school district that has submitted the application for funding and in which the approved public school capital outlay project will be located;

(8) the council may adjust the amount of local share otherwise required if it determines that a school district has used all of its local resources. Before making any adjustment to the local share, the council shall consider whether:

(a) the school district has insufficient bonding capacity over the next four years to provide the local match necessary to complete the project and, for all educational purposes, has a residential property tax rate of at least ten dollars ($10.00) on each one thousand dollars ($1,000) of taxable value, as measured by the sum of all rates imposed by resolution of the local school board plus rates set to pay interest and principal on outstanding school district general obligation bonds;

(b) the school district: 1) has fewer than an average of eight hundred full-time-equivalent students on the [fortieth] eightieth and one hundred twentieth days of the prior school year; 2) has at least seventy percent of its students eligible for free or reduced-fee lunch; 3) has a share of the total project cost, as calculated pursuant to provisions of this section, that would be greater than fifty percent; and 4) for all educational purposes, has a residential property tax rate of at least seven dollars ($7.00) on each one thousand dollars ($1,000) of taxable value, as measured by the sum of all rates imposed by resolution of the local school board plus rates set to pay interest and principal on outstanding school district general obligation bonds; or

(c) the school district has: 1) an enrollment growth rate over the previous school year of at least two and one-half percent; 2) pursuant to its five-year facilities plan, will be building a new school within the next two years; and 3) for all educational purposes, has a residential property tax rate of at least ten dollars ($10.00) on each one thousand dollars ($1,000) of taxable value, as measured by the sum of all rates imposed by resolution of the local school board plus rates set to pay interest and principal on outstanding school district general obligation bonds; and

(9) no application for grant assistance from the fund shall be approved unless the council determines that:

(a) the public school capital outlay project is needed and included in the school district's

five-year facilities plan among its top priorities;

(b) the school district has used its capital resources in a prudent manner;

(c) the school district has provided insurance for buildings of the school district in accordance with the provisions of Section 13-5-3 NMSA 1978;

(d) the school district has submitted a five-year facilities plan that includes: 1) enrollment projections; 2) a current preventive maintenance plan that has been approved by the council pursuant to Section 22-24-5.3 NMSA 1978 and that is followed by each public school in the district; 3) the capital needs of charter schools located in the school district; and 4) projections for the facilities needed in order to maintain a full-day kindergarten program;

(e) the school district is willing and able to pay any portion of the total cost of the public school capital outlay project that, according to Paragraph (5), (6) or (8) of this subsection, is not funded with grant assistance from the fund; provided that school district funds used for a project that was initiated after September 1, 2002 when the statewide adequacy standards were adopted, but before September 1, 2004 when the standards were first used as the basis for determining the state and school district share of a project, may be applied to the school district portion required for that project;

(f) the application includes the capital needs of any charter school located in the school district or the school district has shown that the facilities of the charter school [has] have a smaller deviation from the statewide adequacy standards than other district facilities included in the application; and

(g) the school district has agreed, in writing, to comply with any reporting requirements or conditions imposed by the council pursuant to Section 22-24-5.1 NMSA 1978.

C. After consulting with the public school capital outlay oversight task force and other experts, the council shall regularly review and update statewide adequacy standards applicable to all school districts. The standards shall establish the acceptable level for the physical condition and capacity of buildings, the educational suitability of facilities and the need for technological infrastructure. Except as otherwise provided in the Public School Capital Outlay Act, the amount of outstanding deviation from the standards shall be used by the council in evaluating and prioritizing public school capital outlay projects.

D. It is the intent of the legislature that grant assistance made pursuant to this section allows every school district to meet the standards developed pursuant to Subsection C of this section; provided, however, that nothing in the Public School Capital Outlay Act or the development of standards pursuant to that act prohibits a school district from using local funds to exceed the statewide adequacy standards.

E. Upon request, the council shall work with, and provide assistance and information to, the public school capital outlay oversight task force.

F. The council may establish committees or task forces, not necessarily consisting of council members, and may use the committees or task forces, as well as existing agencies or organizations, to conduct studies, conduct surveys, submit recommendations or otherwise contribute expertise from the public schools, programs, interest groups and segments of society most concerned with a particular aspect of the council's work.

G. Upon the recommendation of the public school facilities authority, the council shall develop building standards for public school facilities and shall promulgate other such rules as are necessary to carry out the provisions of the Public School Capital Outlay Act.

H. No later than December 15 of each year, the council shall prepare a report summarizing its activities during the previous fiscal year. The report shall describe in detail all projects funded, the progress of projects previously funded but not completed, the criteria used to prioritize and fund projects and all other council actions. The report shall be submitted to the public education commission, the governor, the legislative finance committee, the legislative education study committee and the legislature."

Section 6. A new section of the Public School Capital Outlay Act, Section 22-24-5.6 NMSA 1978, is enacted to read:

"22-24-5.6. [NEW MATERIAL] OUTSTANDING DEFICIENCIES AT CERTAIN STATE EDUCATIONAL INSTITUTIONS.--

A. In consultation with the higher education department and the applicable board of regents, and after reviewing the existing five-year facilities plan and the facilities condition assessment, the public school facilities authority shall verify the assessed outstanding health, safety or infrastructure deficiencies at the New Mexico school for the blind and visually impaired and the New Mexico school for the deaf and shall develop a plan to correct the deficiencies.

B. To the extent that money has been appropriated for such purposes, the council may approve allocations from the fund and, working with the higher education department and the applicable board of regents, enter into construction contracts to correct the deficiencies.

C. The council shall establish oversight functions for the public school facilities authority and such other guidelines and conditions as it deems necessary to ensure that the allocations from the fund pursuant to this section are expended in the most prudent manner possible and consistent with the original purpose.

D. As used in the Public School Capital Outlay Act, "public school capital outlay project", "capital outlay project" or "project" includes a program for the correction of deficiencies at the New Mexico school for the blind and visually handicapped or at the New Mexico school for the deaf pursuant to this section."

Section 7. A new section of the Public School Capital Outlay Act, Section 22-24-5.7 NMSA 1978, is enacted to read:

"22-24-5.7. [NEW MATERIAL] LOCAL MATCH PROVISIONS FOR QUALIFIED HIGH PRIORITY PROJECTS.--

A. For a qualified high priority project, if money has been specifically appropriated for the purposes of this section, and if the school district so requests, the money may be used to pay both the state share, as calculated by Paragraphs (5) and (6) of Subsection B of Section 22-24-5 NMSA 1978 and all or a portion of the district share, subject to the following criteria:

(1) the amount paid as the district's share plus any amount added pursuant to Paragraph (3) of this subsection shall be recouped by offsetting future allocations that otherwise would be made from the fund for the state share of projects qualifying for a grant award pursuant to Subsections B and C of Section 22-24-5 NMSA 1978;

(2) except as provided in Paragraph (6) of this subsection, once a project within a district has been funded pursuant to the provisions of this section, then, until the amount paid as the district's share plus any amount added pursuant to Paragraph (3) of this subsection is fully recouped, no standard-based grant awards from the fund shall be made to the district and the district shall be solely responsible for using its local resources to bring those facilities, that would otherwise be eligible for allocations from the fund pursuant to Section 22-24-5 NMSA 1978, up to the statewide adequacy standards;

(3) in determining the amount to be recouped pursuant to Paragraphs (1) and (2) of this subsection, any legislative appropriations for nonoperating purposes made either directly to the school district or to another governmental entity for the purpose of passing the money directly to the school district and not rejected by the school district shall be added to the amount advanced from the fund as the district's share for a project;

(4) the amount to be recouped pursuant to Paragraph (1) of this subsection may be reduced by payments from the school district with cash balances and other available district resources that may legally be used for such payments;

(5) allocations from the fund for the district share shall only be made if the council finds that the school district is likely to complete the project within thirty-six months after the allocation for the district share is made available to the district; and

(6) notwithstanding the requirements of Paragraph (2) of this section, two projects within a school district may be funded pursuant to this section before the recoupment process under that paragraph commences, if:

(a) both projects qualify pursuant to the provisions of Paragraph (2) of Subsection B of this section; or

(b) both projects qualify during the same awards cycle, beginning on or after July 1, 2006.

B. As used in this section, "qualified high priority project" means a project:

(1) that is approved for a grant award pursuant to Section 22-24-5 NMSA 1978 during an awards cycle occurring in 2006 and subsequent award cycles and:

(a) is located in a high-growth area, as designated by the council; or

(b) is a project for which the council has determined, pursuant to its weighted average conditions index, that the cost necessary to bring the existing facilities up to the statewide adequacy standards would be equal to or more than the cost of replacing the existing facility; or

(2) that was approved for a grant award pursuant to Section 22-24-5 NMSA 1978 during the 2004-2005 or 2005-2006 awards cycle but for which the school district, as of July 1, 2006, has not obtained funding for the district share and:

(a) is located in a high-growth area, as designated by the council; or

C. The council may designate an area that equals a contiguous attendance area of one or more existing schools as a "high-growth area" if the council determines that:

(1) within five years of the grant allocation decision, the estimated occupancy rate of the proposed new school would be seventy percent or more of the design capacity;

(2) at the time of the application, the attendance at the existing schools in the high-growth area from which students at the new school will be drawn is above design capacity; and

(3) for the period of five years after the grant allocation decision the attendance at those existing schools will be maintained at ninety-five percent or greater of design capacity."

Section 8. Section 22-24-9 NMSA 1978 (being Laws 2003, Chapter 147, Section 1, as amended) is amended to read:

"22-24-9. PUBLIC SCHOOL FACILITIES AUTHORITY--

CREATION--POWERS AND DUTIES.--

A. The "public school facilities authority" is created under the council. The authority shall be headed by a director, selected by the council, who shall be versed in construction, architecture or project management. The director may hire no more than two deputies with the approval of the council, and, subject to budgetary constraints set out in Subsection G of Section 22-24-4 NMSA 1978, shall employ or contract with such technical and administrative personnel as are necessary to carry out the provisions of this section. The director, [and] deputies and all other employees of the authority shall be exempt from the provisions of the Personnel Act [after July 1, 2006, all other employees of the authority shall be subject to the provisions of the Personnel Act].

B. The authority shall:

(1) serve as staff to the council;

(2) as directed by the council, provide those assistance and oversight functions required of the council by Section 22-24-5.1 NMSA 1978;

(3) assist school districts with:

(a) the development and implementation of five-year facilities plans and preventive maintenance plans;

(b) procurement of architectural and engineering services;

(d) training programs;

(4) conduct ongoing reviews of five-year facilities plans, preventive maintenance plans and performance pursuant to those plans;

(5) as directed by the council, assist school districts in analyzing and assessing their space utilization options;

(6) ensure that public school capital outlay projects are in compliance with applicable building codes;

(7) conduct on-site inspections as necessary to ensure that the construction specifications are being met and periodically inspect all of the documents related to projects;

(8) require the use of standardized construction documents and the use of a standardized process for change orders;

(9) have access to the premises of a project and any documentation relating to the project;

(10) after consulting with the department, recommend building standards for public school facilities to the council and ensure compliance with building standards adopted by the council;

(11) notwithstanding the provisions of Subsection D of Section 22-24-6 NMSA 1978, account for all distributions of grant assistance from the fund for which the initial award was made after July 1, 2004, and make annual reports to the department, the governor, the legislative education study committee, the legislative finance committee and the legislature;

(12) maintain a database of the condition of school facilities and maintenance schedules; and

(13) ensure that outstanding deficiencies are corrected pursuant to Section 22-24-4.1 NMSA 1978. In the performance of this duty, the authority:

(a) shall work with school districts to validate the assessment of the outstanding deficiencies and the projected costs to correct the deficiencies;

(b) shall work with school districts to provide direct oversight of the management and construction of the projects that will correct the outstanding deficiencies;

(d) may conduct on-site inspections while the deficiencies correction work is being done to ensure that the construction specifications are being met and may periodically inspect all of the documents relating to the projects;

(e) may require the use of standardized construction documents and the use of a standardized process for change orders;

(f) may access the premises of a project and any documentation relating to the project; and

(g) shall maintain, track and account for deficiency correction projects separately from other capital outlay projects funded pursuant to the Public School Capital Outlay Act.

C. All actions taken by the authority shall be consistent with educational programs conducted pursuant to the Public School Code. In the event of any potential or perceived conflict between a proposed action of the authority and an educational program, the authority shall consult with the secretary.

D. A school district, aggrieved by a decision or recommendation of the authority, may appeal the matter to the council by filing a notice of appeal with the council within thirty days of the authority's decision or recommendation. Upon filing of the notice:

(1) the decision or recommendation of the authority shall be suspended until the matter is decided by the council;

(2) the council shall hear the matter at its next regularly scheduled hearing or at a special hearing called by the chair for that purpose;

(3) at the hearing, the school district, the authority and other interested parties may make informal presentations to the council; and

(4) the council shall finally decide the matter within ten days after the hearing."

Section 9. Section 22-25-2 NMSA 1978 (being Laws 1975 (S.S.), Chapter 5, Section 2, as amended) is amended to read:

"22-25-2. DEFINITIONS.--As used in the Public School Capital Improvements Act:

A. "program unit" means the product of the program element multiplied by the applicable cost differential factor, as defined in Section 22-8-2 NMSA 1978; and

B. "capital improvements" means expenditures, including payments made with respect to lease-purchase arrangements as defined in the Education Technology Equipment Act but excluding any other debt service expenses, for:

(1) erecting, remodeling, making additions to, providing equipment for or furnishing public school buildings;

(2) purchasing or improving public school grounds;

(3) maintenance of public school buildings or public school grounds, including payments under contracts for maintenance support services and expenditures for technical training and certification for maintenance and facilities management personnel, but excluding salary expenses of school district employees;

(4) purchasing activity vehicles for transporting students to extracurricular school activities; and

(5) purchasing computer software and hardware for student use in public school classrooms."

Section 10. Section 22-25-9 NMSA 1978 (being Laws 1975 (S.S.), Chapter 5, Section 9, as amended) is amended to read:

"22-25-9. STATE DISTRIBUTION TO SCHOOL DISTRICT IMPOSING TAX UNDER CERTAIN CIRCUMSTANCES.--

A. Except as provided in Subsection C or G of this section, the secretary shall distribute to any school district that has imposed a tax under the Public School Capital Improvements Act an amount from the public school capital improvements fund that is equal to the amount by which the revenue estimated to be received from the imposed tax, at the rate certified by the department of finance and administration in accordance with Section 22-25-7 NMSA 1978, assuming a one hundred percent collection rate, is less than an amount calculated by multiplying the school district's first forty days' total program units by the amount specified in Subsection B of this section and further multiplying the product obtained by the tax rate approved by the qualified electors in the most recent election on the question of imposing a tax under the Public School Capital Improvements Act. The distribution shall be made each year that the tax is imposed in accordance with Section 22-25-7 NMSA 1978; provided that no state distribution from the public school capital improvements fund may be used for capital improvements to any administration building of a school district. In the event that sufficient funds are not available in the public school capital improvements fund to make the state distribution provided for in this section, the dollar per program unit figure shall be reduced as necessary.

B. In calculating the state distribution pursuant to Subsection A of this section, the following amounts shall be used:

(1) the amount calculated pursuant to Subsection D of this subsection per program unit; and

(2) [for fiscal year 2006 and thereafter] an additional amount certified to the secretary by the public school capital outlay council. No later than June 1 [2005 and each June 1 thereafter] of each year, the council shall determine the amount needed in the next fiscal year for public school capital outlay projects pursuant to the Public School Capital Outlay Act and the amount of revenue, from all sources, available for the projects. If, in the sole discretion of the council, the amount available exceeds the amount needed, the council may certify an additional amount pursuant to this paragraph; provided that the sum of the amount calculated pursuant to this paragraph plus the amount in Paragraph (1) of this subsection shall not result in a total statewide distribution that, in the opinion of the council, exceeds one-half of the total revenue estimated to be received from taxes imposed pursuant to the Public School Capital Improvements Act.

C. For any fiscal year [2004 and thereafter] notwithstanding the amount calculated to be distributed pursuant to Subsections A and B of this section, except as provided in Subsection G of this section, a school district, the voters of which have approved a tax pursuant to Section 22-25-3 NMSA 1978, shall not receive a distribution less than the amount calculated pursuant to Subsection E of this section, multiplied by the school district's first forty days' total program units and further multiplying the product obtained by the approved tax rate.

D. For purposes of calculating the distribution pursuant to Subsection B of this section, the amount used in Paragraph (1) of that subsection shall equal [fifty dollars ($50.00) through fiscal year 2005] sixty dollars ($60.00) in fiscal year 2006, ninety dollars ($90.00) in fiscal year 2007 and in each subsequent fiscal year shall equal the amount for the previous fiscal year adjusted by the percentage increase between the next preceding calendar year and the preceding calendar year of the consumer price index for the United States, all items, as published by the United States department of labor.

E. For purposes of calculating the minimum distribution pursuant to Subsection C of this section, the amount used in that subsection shall equal five dollars ($5.00) through fiscal year 2005 and in each subsequent fiscal year shall equal the amount for the previous fiscal year adjusted by the percentage increase between the next preceding calendar year and the preceding calendar year of the consumer price index for the United States, all items, as published by the United States department of labor.

F. In expending distributions made pursuant to this section, school districts shall give priority to maintenance projects, including payments under contracts for maintenance support services. In addition, distributions made pursuant to this section may be expended by school districts for the school district portion of the total project cost for roof repair or replacement required by Section 22-24-4.3 NMSA 1978.

G. If a serious deficiency in a roof of a public school facility has been corrected pursuant to Section 22-24-4.4 NMSA 1978 and the school district has refused to pay its share of the cost as determined by that section, until the public school capital outlay fund is reimbursed in full for the share attributed to the district, the distribution calculated pursuant to this section shall not be made to the school district but shall be made to the public school capital outlay fund.

H. In making distributions pursuant to this section, the secretary shall include such reporting requirements and conditions as are required by rule of the public school capital outlay council. The council shall adopt such requirements and conditions as are necessary to ensure that the distributions are expended in the most prudent manner possible and are consistent with the original purpose as specified in the authorizing resolution. Copies of reports or other information received by the secretary in response to the requirements and conditions shall be forwarded to the council."

Section 11. Section 13-1-99 NMSA 1978 (being Laws 1984, Chapter 65, Section 72, as amended) is amended to read:

"13-1-99. EXCLUDED FROM CENTRAL PURCHASING THROUGH THE STATE PURCHASING AGENT.--Excluded from the requirement of procurement through the state purchasing agent but not from the requirements of the Procurement Code are the following:

A. procurement of professional services;

B. small purchases having a value not exceeding one thousand five hundred dollars ($1,500);

C. emergency procurement;

D. procurement of highway construction or reconstruction by the department of transportation;

E. procurement by the judicial branch of state government;

F. procurement by the legislative branch of state government;

G. procurement by the boards of regents of state educational institutions named in Article 12, Section 11 of the constitution of New Mexico;

H. procurement by the state fair commission of tangible personal property, services and construction under ten thousand dollars ($10,000);

I. purchases from the instructional material fund;

J. procurement by all local public bodies;

K. procurement by regional education cooperatives;

L. procurement by charter schools; [and]

M. procurement by each state health care institution that provides direct patient care and that is, or a part of which is, medicaid certified and participating in the New Mexico medicaid program; and

N. procurement by the public school facilities authority."

Section 12. TEMPORARY PROVISION--SCHOOL DISTRICT REVENUE IMPACT STUDY GROUP--CREATION--STAFF.--

A. The "school district revenue impact study group" is created. The study group consists of sixteen members as follows:

(1) the secretary of finance and administration or the secretary's designee;

(2) the secretary of public education or the secretary's designee;

(3) the director of the public school facilities authority or the director's designee;

(4) two majority party members and one minority party member of the house of representatives, appointed by the New Mexico legislative council;

(5) two majority party members and one minority party member of the senate, appointed by the New Mexico legislative council;

(6) two representatives of developers, appointed by the New Mexico legislative council;

(7) a member of the Indian education advisory council, appointed by the chair of the council;

(8) a representative of the New Mexico municipal league;

(9) a representative of the New Mexico association of counties;

(10) a representative of the New Mexico school boards association; and

(11) a representative of the New Mexico superintendents association.

B. The chair of the study group shall be elected by the study group. The study group shall meet at the call of the chair.

C. Members of the study group shall serve from the time of their appointment through December 31, 2006. On January 1, 2007, the study group is terminated.

D. Public members of the study group shall receive per diem and mileage pursuant to the Per Diem and Mileage Act.

E. The study group shall:

(1) examine how actions by local governments in the acquisition of property that will be exempt from property taxes, such as acquiring projects with proceeds of industrial revenue bonds, affect school district revenues;

(2) examine whether the purposes of the Development Fees Act are served by the imposition of impact fees against school districts;

(3) examine whether, in communities where school facilities are often used by local governments, the school districts and local governments should share the cost of building and maintaining the facilities;

(4) examine alternatives that will ensure that local governments consider the interests of school districts when making decisions that will impact school district revenues and expenditures; and

(5) no later than December 31, 2006, report its findings and recommendations for policy and statutory changes to the public school capital outlay oversight task force, the legislative education study committee and the legislative finance committee.

F. The legislative council service, with assistance from the public education department, the public school facilities authority, the legislative education study committee and the legislative finance committee, shall provide staff for the study group.

Section 13. TEMPORARY PROVISION--CHARTERING AUTHORITY STUDY.--The legislative council service, in conjunction with the public education department, the department of finance and administration and the staffs of the legislative finance committee and the legislative education study committee, shall study the feasibility of allowing additional entities, including universities, tribal governments, the public education department and a separate chartering board, to approve the establishment of charter schools. No later than December 15, 2006, the results of the study shall be presented to the public school capital outlay oversight task force, the legislative finance committee and the legislative education study committee.

Section 14. APPROPRIATIONS.--

A. Two million five hundred thousand dollars ($2,500,000) is appropriated from the public school capital outlay fund to the public school facilities authority for expenditure in fiscal years 2006 through 2008 for continuing the development and implementation of a uniform web-based facility information management system for the public schools pursuant to the provisions of Section 22-24-5.3 NMSA 1978. Any unexpended or unencumbered balance remaining at the end of fiscal year 2008 shall revert to the public school capital outlay fund.

B. Three hundred thousand dollars ($300,000) is appropriated from the public school capital outlay fund to the public school facilities authority for expenditure in fiscal years 2007 and 2008 for the purpose of improving the indoor air quality of public schools by implementing the New Mexico indoor air quality tools for schools program pursuant to criteria developed by the public school facilities authority in consultation with the department of environment, the public education department, the department of health, the energy, minerals and natural resources department and the children, youth and families department. Any unexpended or unencumbered balance remaining at the end of fiscal year 2008 shall revert to the public school capital outlay fund.

C. Fifty thousand dollars ($50,000) is appropriated from legislative cash balances to the legislative council service for expenditure in fiscal years 2006 and 2007 for the purposes of paying per diem and mileage to the members of the school district revenue impact study group and for other expenses incurred in carrying out the provisions of Section 12 of this act. Any unexpended or unencumbered balance remaining at the end of fiscal year 2007 shall revert to legislative cash balances.

Section 15. EMERGENCY.--It is necessary for the public peace, health and safety that this act take effect immediately.

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