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 Marquardt

ORIGINAL DATE

LAST UPDATED

2/3/2006

HB 607

SHORT TITLE Military-Connected Student Impact Aid

SB

ANALYST McOlash

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

None

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to: HB 608

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/State Budget Division (SBD)

SUMMARY

Synopsis of Bill

House Bill 607 amends the Public School Finance Act to add a new cost factor and a methodol-

ogy for calculating additional units and funding for military-connected students within the Public

School Funding Formula.

The bill does not include an appropriation.

FISCAL IMPLICATIONS

Without an addition to the appropriation, HB 607 would redistribute approximately $17.6 million

to 11 districts while likely decreasing the distributions to the other 78 districts.

House Bill 607 - Page

2

SIGNIFICANT ISSUES

It is not entirely clear, but HB 607 attempts to add funding units for military-connected students,

presumably as defined by the federal Impact Aid Act. HB 607, Section 2 adds new material in an

attempt to establish the methodology for calculating these units. The methodology, however, is

confusing and probably incorrectly expressed. The statement (page 2, lines 9-12) provides for a

single calculation that “will equal seventy-five percent of the total amount generated by the total

number of military-connected students in the district. The word “amount” is undefined but, if the

word “units” is inserted instead, some calculations can be made. These calculations do not in-

volve cost differentials as indicated so the section would have to be rewritten.

Title VIII – Impact Aid defines military-connected students in two categories: 1. students resid-

ing on federal property with a parent(s) in the uniformed services; and 2. students with parent(s)

in the uniformed services but not living on federal land. There are a couple of other categories of

lesser importance for students with an accredited foreign military official parent(s).

The following estimate of the additional units and the increased distribution for the Clovis Mu-

nicipal Schools might clarify the concepts. In 2004-2005, federal Impact Aid data includes

1,055.7 Impact Aid students in average daily attendance (ADA) in Clovis. Of that number, 638.1

were military-connected students living and federal property, 369.9 military-connected students

not living on federal property, and 47.7 nonmilitary connected students living in low-rent hous-

ing. According to the same data, these 1,055.7 students represented 14.2% of the total district

ADA of 7,434.5.

Every year, the state calculates the average number of units per student for each district as a rela-

tive indication of district costs. In 2004-2005, Clovis generated an average of 1.74 units per indi-

vidual membership. Consequently, the 1,008.0 military-connected students would have gener-

ated 1,753.92 units. Seventy-five percent of those units equal 1,315.44. HB 607 would then add

those 1,315.44 units in 22-8-18, 11. With the 2004-2005 unit value of $3,035.15, the additional

Clovis units would have added approximately $4.0 million to the district distribution.

On a statewide level, the 4,051.8 military-connected students would have generated 7,738.94 ad-

ditional units (4,051.8 X 1.91 average units per student statewide). At 75%, the resulting 5,804.2

units would have redistributed approximately $17.6 million to the 89 districts.

When new units are added for some districts, the state appropriation is simply redistributed and

some districts receive increased funding (11 districts with military-connected students) while

others (78 districts) lose.

OTHER SUBSTANTIVE ISSUES

The conceptual basis of the Public School Funding formula was implemented in 1974 to recog-

nize various educational cost factors and to provide distributional equity for the public schools.

The cost factors relate to policy decisions about what students, programs, teacher, school and

district characteristics are important enough for disparate funding and cost differentials (weights)

have been developed to implement the relative funding differences.

For example, the state has recognized that regular students in grades 4-6 are the least costly to

educate and, therefore, the grade 4-6 membership is multiplied by a cost differential of 1.045 to

House Bill 607 - Page

3

determine grades 4-6 funding units. Students in grades 7-12, for various reasons, require more

resources and their membership is multiplied by a cost differential of 1.250. Various programs

and school/district and teacher characteristics are treated in a similar manner.

The term “unit” is simply a numerical expression of the number of students, etc., times the cost

differentials to standardize the relative costs and provide for distributional equity. Each district is

funded on the total number of units. The state, by the appropriation level, determines a single

unit value that, when multiplied by the number of units in a district, establishes the district fund-

ing amount.

At the same time, the accommodating system does not require expenditure equity in the sense

that formula dollars received by local districts are not earmarked for specific programs. Within

statutory and regulatory guidelines, school districts have the latitude to spend their dollars ac-

cording to local priorities.

POSSIBLE QUESTIONS

The addition of units and funding for a particular group of students implies that the group has

some unique characteristics requiring a different instructional program with additional costs. Dis-

tricts are funded by the state and the federal government for military-connected students. Do

these students and their needs differ in ways requiring different programs and a higher level of

funding.

Should these 11 districts reexamine their priorities and direct more resources to programs for

these students.

BMC/nt