Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance

committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

if they are used for other purposes.

Current FIRs (in HTML & Adobe PDF formats) are a vailable on the NM Legislative Website (legis.state.nm.us).

Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and

attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.

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

SPONSOR Moore

ORIGINAL DATE

LAST UPDATED

2/1/06

HB 301

SHORT TITLE Increase School District Cash Balances

SB

ANALYST Earp

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

Indeterminate

(See Narrative)

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates Senate Bill 95

Conflicts with Senate Bill 450 and House Bill 432

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Finance & Administration (DFA)

Public Education Department (PED)

SUMMARY

Synopsis of Bill

House Bill 301, sponsored by Representative Moore on behalf of the Funding Formula Study

Task Force, amends the Public School Finance Act to increase the allowable limits for a school

district or charter school’s ending operational cash balances based on the size of the district’s

current year budgeted program cost.

FISCAL IMPLICATIONS

The bill proposes to increase the current statutory limits on the cash balances of school districts

and charter schools according to each entities' program costs in increments as follows:

-Program cost of less than $5.0 million: increased from 9 to 15 % of budgeted expenditures;

-Program cost of $5.0 million or more, but less than $10.0 million: from 7.5% to 12 % of

budgeted expenditures;

House Bill 301 – Page

2

-Program cost of $10.0 million or more, but less than $25.0 million: from 6%% to 9% of

budgeted expenditures;

-Program cost of $25.0 million or more, but less than $200.0 million: from 4.5% to 7% of

budgeted expenditures; and

-Program cost of $200.0 million or more: from 3 % to 5% of budgeted expenditures.

The Public Education Department (PED) and Department of Finance & Administration (DFA)

report that, while HB 301 carries no appropriations, increasing school district and charter school

cash balance limits could have an indeterminate fiscal impact on statewide public school sup-

port funding since emergency supplemental funding flows through the Public Education De-

partment to districts and charter schools based on their certification of need. Historically there

is considerable variability across the 89 public school districts in cash balance management, de-

pending upon local conditions and interpretation of emergency needs.

SIGNIFICANT ISSUES

This bill conflicts with the provisions of House Bill 432 and Senate Bill 450. These duplicate

bills contain provisions which eliminate the statutory limitations on school district/charter school

operational cash balances.

ADMINISTRATIVE IMPLICATIONS

No significant administrative implications are apparent.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

Senate Bill 95 and House Bill 301 are duplicate measures.

This bill conflicts with House Bill 432 and Senate Bill 450 as noted in Significant Issues above.

OTHER SUBSTANTIVE ISSUES

PED notes that, with higher cash balance limits, school districts could carry forward higher cash

balances. This extra cash could pay for unforeseen non-recurring expenditures (i.e. increased en-

ergy costs) and allow districts to rely less on supplemental emergency funding.

Allowing school districts to carry larger cash balances would also provide greater flexibility in

the event of delays in the distribution of State Equalization Guarantee revenues or other unan-

ticipated cash flow issues.

DKE/nt