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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:

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"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

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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;

schools located in the school district; and

(d) projections for the facilities

needed in order to maintain a full-day kindergarten program;

(6) the construction project:

(a) is in compliance with the statewide

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adequacy standards adopted pursuant to the Public School

Capital Outlay Act; and

(b) is appropriately integrated into

the school district five-year facilities plan;

(7) the school district is financially able

to pay for the construction; and

(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

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(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

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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 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

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is needed for nonrecurring expenditures, including capital

outlay.

D. Beginning with fiscal year 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), 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), 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), 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), seven

percent of the budgeted expenditures; and

(5) if the current year program cost is two

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hundred million dollars ($200,000,000) or more, 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 limit calculated

pursuant to Subsection E of this section, then the reduction

pursuant to this subsection shall equal twenty percent of the

allowable limit; and

(2) for other school districts and charter

schools, if the excess cash balance is greater than eighteen

percent of the allowable limit, then the reduction pursuant

to this subsection shall equal eighteen percent of the

allowable limit.

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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.

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.

K. For the purposes of this section, "operational

cash balance" means the allowable, unrestricted, unreserved

operational cash balance and the emergency reserve.

L. For the purposes of this section, "allowable,

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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 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

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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 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

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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

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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

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authorized in this subsection shall revert to the fund.

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.

I. Up to seven million five hundred thousand

dollars ($7,500,000) from the fund may be expended annually

by the council in fiscal years 2006 through 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

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charter schools, in the district; or

(b) six hundred dollars ($600)

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 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 eightieth day of the school year, the MEM

shall be adjusted to reflect the full-time-equivalent

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enrollment on that date.

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

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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

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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.

B. Except as provided in Sections 22-24-4.3,

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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,

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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

concept that may maximize the dollar effect of the state

grant assistance;

(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;

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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

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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

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(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 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

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

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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

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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;

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

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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 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

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interest and principal on outstanding school district general

obligation bonds; or

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;

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

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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 have a smaller deviation from the

statewide adequacy standards than other district facilities

included in the application; and

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(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

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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."

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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. 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

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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. 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,

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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

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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

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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

(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.

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

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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, deputies and all other employees of the

authority shall be exempt from 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

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plans;

(b) procurement of architectural and

engineering services;

construction activities; and

(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

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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;

contracts entered into by the council to correct the

outstanding deficiencies;

(d) may conduct on-site inspections

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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

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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

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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

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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) an additional amount certified to the

secretary by the public school capital outlay council. No

later than June 1 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

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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 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 sixty dollars

($60.00) in fiscal year 2006, ninety dollars ($90.00) in

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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

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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;

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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;

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."

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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;

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(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;

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(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

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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

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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.