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 Nava

ORIGINAL DATE

LAST UPDATED

02/09/06

HB

SHORT TITLE College Affordability Endowment Fund

SB 43

ANALYST Williams

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

$50,000.0 Non-recurring *

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

* Potential for continued requests until college affordability endowment fund corpus reaches

$250 million.

Relates to Appropriation in HB 2, Section 5 of $49 million.

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

FY08

$50,000.0

Non-recurring

College af-

fordability en-

dowment fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Higher Education Department (HED)

Public Education Department (PED)

New Mexico Association of Community Colleges (NMACC)

SUMMARY

Synopsis of Bill

Endorsed by the Legislative Education Study Committee.

Senate Bill 43 – Page

2

Senate Bill 43 appropriates $50 million from the general fund to the college affordability en-

dowment fund for the purpose of initiating the College Affordability Act.

FISCAL IMPLICATIONS

The appropriation of $50 million contained in this bill is a non-recurring expense to the general

fund. Any unexpended or unencumbered balance remaining at the end of fiscal year 2007 shall

not revert to the general fund.

SIGNIFICANT ISSUES

Note awards under the College Affordability program could be used to address expenses, such as

room, board, books and supplies as well as tuition.

PED notes the bill “may encourage New Mexico students who have financial needs to enroll in

and complete educational programs at public postsecondary educational institutions in New

Mexico.”

PERFORMANCE IMPLICATIONS

HED notes the program will demonstrate “increased college participation and completion, espe-

cially among low-income and first-generation college students and students in Adult Basic Edu-

cation.”

A report by the United States General Accounting Office found part-time, adult students tend to

exhibit weaker persistence and graduation rates.

ADMINISTRATIVE IMPLICATIONS

HED notes the program will follow the federal eligibility requirements established for Pell grants

to determine student need.

OTHER SUBSTANTIVE ISSUES

Currently, the state’s two largest need-based student financial aid programs are the student incen-

tive grant and work study program with total amounts awarded in 2004-2005 of $11.8 million

and $6.5 million, respectively.

NMACC notes “according to an ECS (Education Commission of the States) report, Bridging the

Gap, about 37 of 100 9

th

grade students attend college, but only 14 of 100 from low income

families. Further, a CCSSE (Community College Survey of Student Engagement) report cites

that financial burden is the biggest barrier (among barriers faced by students) for students to re-

main in college to obtain a credential or degree.”

NMACC notes awards under the College Affordability program would be capped at $1,000 per

student per semester.

Senate Bill 43 – Page

3

POSSIBLE QUESTIONS

1.

Given the wide range of student eligibility and expense eligibility under the College

Affordability program, is there a plan to prioritize needs.

2.

How many students would receive scholarships/grants in the first year of the program if

the $50 million appropriation to the endowment fund recommendation of the LFC and

the Executive is enacted.

3.

How will additional funds for the endowment fund be obtained. What is the target

amount of funding for the endowment fund.

4.

How will performance outcomes of the new program be measured.

5.

Who would evaluate student eligibility to determine awards ---- HED or the institutions.

6.

How would HED and institutions administer the provisions of the bill.

AW/yr