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

SPONSOR Miera

ORIGINAL DATE

LAST UPDATED

1/31/06

HB 210

SHORT TITLE State Support Reserve Fund Uses For Schools

SB

ANALYST Aguilar

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

$10,000.0

Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates SSB-58

Relates to Appropriation in the General Appropriation Act

SOURCES OF INFORMATION

LFC Files

Responses Received From

Public Education Department (PED)

Department of Finance and Administration (DFA)

SUMMARY

Synopsis of Bill

House Bill 210 appropriates $10 million from the general fund to the state support reserve fund

for the purpose of supporting the state equalization guarantee distribution and, providing for the

emergency needs of school districts over and above emergency distributions provided to districts

in financial need.

FISCAL IMPLICATIONS

The appropriation of $10 million contained in this bill is a recurring expense to the general fund.

Any unexpended or unencumbered balance remaining at the end of fiscal year 2006 and subse-

quent fiscal years shall not revert to the general fund.

This bill provides for continuing appropriations. The LFC has concerns with including continu-

House Bill 210 – Page 2

ing appropriation language in the statutory provisions for newly created funds, as earmarking

reduces the ability of the legislature to establish spending priorities.

SIGNIFICANT ISSUES

The State-support Reserve Fund was created in statute to augment the appropriations for the state

equalization guarantee to ensure, to the extent of the amount undistributed in the fund, that the

maximum figures for such distribution established by law will not be reduced. The law creating

the fund (22-8-31 NMSA 1978) expresses the intent of the Legislature that the fund is reim-

bursed in the amount of the yearly distribution by appropriation in the year following the distri-

bution, so that the fund at the beginning of each fiscal year will have a credit balance of at least

$10 million.

The House Appropriations and Finance Committee Substitute for House Bills 2, 3, 4, 5, 6, and

78 contains appropriations for the state support reserve fund for its intended purpose, $5 million

in emergency supplemental funding and $6.8 million for three tiered transition. Schools will

have considerable resources if necessary to meet emergency needs. The LFC is concerned the

additional uses provided for in the bill could lead to recurring appropriations of up to $10 million

annually.

HB210 changes the intent of the fund by broadening its stated purpose to provide for emergency

needs of school districts over and above the emergency distributions available through other

statutory mechanisms, including the public school funding formula.

ADMINISTRATIVE IMPLICATIONS

DFA notes the administrative implications of HB210 are unclear, but because the bill broadens

the intent of the Fund for use as an additional source of emergency funds available to school dis-

tricts and requires the Secretary of Public Education to certify that a school district has exhausted

its resources, including supplemental distributions, as a condition of receiving funds through the

proposed mechanism, some administrative impact to the Public Education Department (PED)

would occur. PED would have the added responsibility of implementing the certification proc-

ess.

PA/nt