pg_0001

SFC/SB 395

Page 1

AN ACT

RELATING TO PUBLIC SCHOOL FACILITIES; PROVIDING THAT CERTAIN

SCHOOL CONSTRUCTION PROJECTS MAY BE EXEMPTED FROM SOME STATE

OVERSIGHT; AMENDING THE PUBLIC SCHOOL CAPITAL OUTLAY ACT TO

CHANGE THE CRITERIA FOR OFFSETTING AMOUNTS FROM STATE GRANTS,

TO REQUIRE SPACE UTILIZATION TO BE CONSIDERED, TO ALLOW

ADDITIONAL GRANTS TO CERTAIN SCHOOL DISTRICTS, TO INCREASE

GRANTS TO SCHOOLS FOR LEASE PAYMENTS, TO ALLOW CERTAIN

FACILITIES TO BE PURCHASED WITH STATE GRANTS AND TO EXTEND

THE TIME FOR WHICH CERTAIN EXPENDITURES MAY BE MADE; AMENDING

THE PUBLIC SCHOOL CAPITAL IMPROVEMENTS ACT TO INCREASE THE

STATE DISTRIBUTION; AMENDING THE PUBLIC SCHOOL BUILDINGS ACT

TO ALLOW REVENUE TO BE USED FOR PROJECT MANAGEMENT, TO

INCREASE THE PERIOD FOR WHICH A TAX MAY BE IMPOSED AND TO

AUTHORIZE DIRECT PAYMENT OF REVENUE TO CHARTER SCHOOLS;

ALLOWING CHARTER SCHOOLS AND SCHOOL DISTRICTS TO ENTER INTO

LEASE AGREEMENTS; ALLOWING CERTAIN TYPES OF LEASE-PURCHASE

ARRANGEMENTS TO BE FUNDED WITH CERTAIN STATE GRANTS AND

CERTAIN TAX REVENUES; CREATING THE PUBLIC SCHOOL FACILITY

OPPORTUNITY FUND; AUTHORIZING GRANTS FROM THE FUND TO CERTAIN

SCHOOL DISTRICTS FOR CERTAIN PURPOSES; PROVIDING THAT A

PORTION OF THE UNENCUMBERED BALANCE OF CERTAIN GENERAL FUND

APPROPRIATIONS SHALL REVERT TO THE FUND; PROVIDING THAT A

PORTION OF EACH SPECIAL APPROPRIATION FOR A PUBLIC SCHOOL

SHALL BE SET ASIDE AND TRANSFERRED TO THE FUND; PROVIDING

pg_0002

SFC/SB 395

Page 2

THAT CERTAIN COMPONENTS MAY BE SEPARATELY PRICED IN SCHOOL

CONSTRUCTION CONTRACTS; RECOMPILING A CERTAIN SECTION OF THE

PUBLIC SCHOOL CODE; RECONCILING MULTIPLE AMENDMENTS TO THE

SAME SECTION OF LAW IN LAWS 2006; MAKING APPROPRIATIONS.

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 by Laws 2006, Chapter 94,

Section 54 and by Laws 2006, Chapter 95, Section 1) is

amended to read:

"22-20-1. SCHOOL CONSTRUCTION--APPROVAL OF THE PUBLIC

SCHOOL FACILITIES AUTHORITY--COMPLIANCE WITH STATEWIDE

ADEQUACY STANDARDS--STATE CONSTRUCTION AND FIRE STANDARDS

APPLICABLE.--

A. Except as provided in Subsection D of this

section, each local school board or governing body of a

charter school 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

pg_0003

SFC/SB 395

Page 3

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

obstructions to attending the attendance centers, such as

railroad tracks, rivers and limited-access highways; and

(6) 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 or by the charter school;

(3) the construction is feasible;

(4) the cost of the construction is

reasonable;

pg_0004

SFC/SB 395

Page 4

(5) the school district or charter school

has submitted a five-year facilities plan that includes:

(a) enrollment projections;

(b) a current preventive maintenance

plan;

schools chartered by the school district, if applicable, or

the capital needs of the charter school if it is

state-chartered; 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

adequacy standards adopted pursuant to the Public School

Capital Outlay Act; and

(b) is appropriately integrated into

the school district or charter school five-year facilities

plan;

(7) the school district or charter school 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 or charter school.

C. Within thirty days after the receipt of an

application filed pursuant to this section, the director or

pg_0005

SFC/SB 395

Page 5

the director's designee shall in writing notify the local

school board or governing body of a charter school making the

application and the department of approval or disapproval of

the application.

D. By rule, the public school capital outlay

council may:

(1) exempt classes or types of construction

from the application and approval requirements of this

section; or

(2) exempt classes or types of construction

from the requirement of approval but, if the council

determines that information concerning the construction is

necessary for the maintenance of the facilities assessment

database, require a description of the proposed construction

project and related information to be submitted to the public

school facilities authority.

E. A local school board or governing body of a

charter school 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

pg_0006

SFC/SB 395

Page 6

claim shall not be increased by inclusion of the insurance

proceeds in the construction contract; and

(2) insurance claims settlements shall

continue to be governed by insurance policies, memoranda of

coverage and rules related to them.

F. 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 or charter school.

G. The provisions of Subsection F 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.

H. As used in this section, "construction" means

any project for which the construction industries division of

the regulation and licensing department requires permitting

and for which the estimated total cost exceeds two hundred

thousand dollars ($200,000)."

Section 2. A new section of the Procurement Code is

enacted to read:

pg_0007

SFC/SB 395

Page 7

"SCHOOL CONSTRUCTION PROJECTS--SEPARATE PRICING REQUIRED

IN CERTAIN CIRCUMSTANCES.--Prior to submitting a bid or

proposal for a state or local public works project for the

construction of a public school facility, if the central

purchasing office or a responsible bidder or responsible

offeror determines that there is only one source for a

specific service, construction or item of tangible personal

property that is required in the specifications, then the

central purchasing office, responsible bidder or responsible

offeror may require any bid or offer submitted by a

subcontractor or supplier to separately price the specific

service, construction or item of tangible personal property."

Section 3. Section 22-24-4 NMSA 1978 (being Laws 1975,

Chapter 235, Section 4, as amended) is amended to read:

"22-24-4. PUBLIC SCHOOL CAPITAL OUTLAY FUND CREATED--

USE.--

A. The "public school capital outlay fund" is

created. Balances remaining in the fund at the end of each

fiscal year shall not revert.

B. Except as provided in Section 22-24-5.8 NMSA

1978 and 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

pg_0008

SFC/SB 395

Page 8

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

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.

pg_0009

SFC/SB 395

Page 9

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

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

pg_0010

SFC/SB 395

Page 10

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

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. The fund may be expended annually by the

council in fiscal years 2006 through 2020 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

pg_0011

SFC/SB 395

Page 11

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

charter schools, in the district; or

(b) seven hundred dollars ($700)

multiplied by the number of MEM using the leased classroom

facilities; provided that in fiscal year 2009 and in each

subsequent fiscal year, this amount shall be adjusted by the

percentage increase between the penultimate calendar year and

the immediately preceding calendar year of the consumer price

index for the United States, all items, as published by the

United States department of labor; and provided further 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

pg_0012

SFC/SB 395

Page 12

revert to the fund;

(4) if the lease payments are made pursuant

to a financing agreement under which the facilities may be

purchased for a price that is reduced according to the lease

payments made:

(a) a grant shall not be made unless

the council determines that the leased facilities meet the

statewide adequacy standards; and

(b) neither a grant nor any provision

of the Public School Capital Outlay Act creates a legal

obligation for the school district or charter school to

continue the lease from year to year or to purchase the

facilities nor does it create a legal obligation for the

state to make subsequent grants pursuant to the provisions of

this subsection;

(5) the total amount expended from the fund

pursuant to this subsection shall not exceed:

(a) seven million five hundred thousand

dollars ($7,500,000) in fiscal year 2007; and

(b) in fiscal year 2008 and each

subsequent fiscal year, the maximum amount for the previous

fiscal year adjusted by the percentage increase between the

penultimate calendar year and the immediately preceding

calendar year of the consumer price index for the United

States, all items, as published by the United States

pg_0013

SFC/SB 395

Page 13

department of labor; and

(6) as used in this subsection:

(a) "MEM" means: 1) the average

full-time-equivalent enrollment using leased classroom

facilities on the eightieth and one hundred twentieth days of

the prior school year; or 2) 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

enrollment on that date; and

(b) "classroom facilities" or

"classroom space" includes the space needed, as determined by

the minimum required under the statewide adequacy standards,

for the direct administration of school activities.

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

pg_0014

SFC/SB 395

Page 14

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

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

pg_0015

SFC/SB 395

Page 15

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

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

pg_0016

SFC/SB 395

Page 16

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 4. Section 22-24-4.1 NMSA 1978 (being Laws

2001, Chapter 338, Section 6, as amended) is amended to read:

"22-24-4.1. OUTSTANDING DEFICIENCIES--ASSESSMENT--

CORRECTION.--

A. No later than September 1, 2001, the council

shall define and develop guidelines, consistent with the

codes adopted by the construction industries commission

pursuant to the Construction Industries Licensing Act, for

school districts to use to identify outstanding serious

deficiencies in public school buildings and grounds,

including buildings and grounds of charter schools, that may

adversely affect the health or safety of students and school

personnel.

B. A school district shall use these guidelines to

complete a self-assessment of the outstanding health or

safety deficiencies within the school district and provide

cost projections to correct the outstanding deficiencies.

C. The council shall develop a methodology for

pg_0017

SFC/SB 395

Page 17

prioritizing projects that will correct the deficiencies.

D. After a public hearing and to the extent that

money is available in the fund for such purposes, the council

shall approve allocations from the fund on the established

priority basis and, working with the school district and

pursuant to the Procurement Code, enter into construction

contracts with contractors to correct the deficiencies.

E. In entering into construction contracts to

correct deficiencies pursuant to this section, the council

shall include such terms and conditions as necessary to

ensure that the state money is expended in the most prudent

manner possible and consistent with the original purpose.

F. Any deficiency that may adversely affect the

health or safety of students or school personnel may be

corrected pursuant to this section, regardless of the local

effort or percentage of indebtedness of the school district.

G. It is the intent of the legislature that all

outstanding deficiencies in public schools and grounds that

may adversely affect the health or safety of students and

school personnel be identified and awards made pursuant to

this section no later than June 30, 2005, and that funds be

expended no later than June 30, 2007, provided that the

council may extend the expenditure period upon a

determination that a project requires the additional time

because existing buildings need to be demolished or because

pg_0018

SFC/SB 395

Page 18

of other extenuating circumstances."

Section 5. Section 22-24-4.4 NMSA 1978 (being Laws

2005, Chapter 274, Section 7) is amended to read:

"22-24-4.4. SERIOUS ROOF DEFICIENCIES--CORRECTION.--

A. To complete the program to correct outstanding

deficiencies, those serious deficiencies in the roofs of

public school facilities identified pursuant to Section

22-24-4.1 NMSA 1978 as adversely affecting the health or

safety of students and school personnel shall be corrected

pursuant to this section, regardless of the local effort or

percentage of indebtedness of the school district, subject to

the following provisions:

(1) if the council determines that the

school district has excess capital improvement funds received

pursuant to the Public School Capital Improvements Act, the

cost of correcting the deficiencies shall first come from the

school district's excess funds, and if the excess funds are

insufficient to correct the deficiencies, the difference

shall be paid from the public school capital outlay fund; and

(2) if the school district refuses to pay

its share of the cost of correcting deficiencies as

determined pursuant to Paragraph (1) of this subsection,

future distributions from the public school capital

improvements fund pursuant to Section 22-25-9 NMSA 1978 shall

not be made to the school district but shall be made to the

pg_0019

SFC/SB 395

Page 19

public school capital outlay fund until the public school

capital outlay fund is reimbursed in full for the school

district's share.

B. It is the intent of the legislature that all

awards for correcting outstanding deficiencies in public

school roofs that may adversely affect the health and safety

of students and school personnel be made pursuant to this

section no later than September 30, 2005 and that funds be

expended no later than September 30, 2008."

Section 6. 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,

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;

pg_0020

SFC/SB 395

Page 20

(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,

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;

flexible utilization of space; and

pg_0021

SFC/SB 395

Page 21

(d) any other financing or construction

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;

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

pg_0022

SFC/SB 395

Page 22

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

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

pg_0023

SFC/SB 395

Page 23

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

(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

pg_0024

SFC/SB 395

Page 24

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 or 22-24-5.8 NMSA 1978 and except as adjusted

pursuant to Paragraph (6) or (8) 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; 2)

"total project cost" means the total amount necessary to

complete the public school capital outlay project less any

insurance reimbursement received by the school district for

the project; and 3) in the case of a state-chartered charter

school that has submitted an application for grant assistance

pursuant to this section, the "value calculated for the

subject school district" means the value calculated for the

pg_0025

SFC/SB 395

Page 25

school district in which the state-chartered charter school

is physically located;

(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, is calculated;

provided that: 1) 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; 2) the total shall exclude any educational

technology appropriation made prior to January 1, 2005 unless

the appropriation was on or after January 1, 2003 and not

previously used to offset distributions pursuant to the

Technology for Education Act; 3) the total shall exclude any

appropriation previously made to the subject school district

that is reauthorized for expenditure by another recipient; 4)

the total shall exclude one-half of the amount of any

appropriation made or reauthorized after January 1, 2007 if

pg_0026

SFC/SB 395

Page 26

the purpose of the appropriation or reauthorization is to

fund, in whole or in part, a capital outlay project that,

when prioritized by the council pursuant to this section

either in the immediately preceding funding cycle or in the

current funding cycle, ranked in the top one hundred fifty

projects statewide; and 5) unless the grant award is made to

the state-chartered charter school or unless the

appropriation was previously used to calculate a reduction

pursuant to this paragraph, the total shall exclude

appropriations made after January 1, 2007 for nonoperating

purposes of a specific state-chartered charter school,

regardless of whether the charter school is a state-chartered

charter school at the time of the appropriation or later opts

to become a state-chartered charter school;

(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

pg_0027

SFC/SB 395

Page 27

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

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

pg_0028

SFC/SB 395

Page 28

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

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

pg_0029

SFC/SB 395

Page 29

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

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

pg_0030

SFC/SB 395

Page 30

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

(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

pg_0031

SFC/SB 395

Page 31

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. The acquisition of a facility by a school

district or charter school pursuant to a financing agreement

that provides for lease payments with an option to purchase

for a price that is reduced according to lease payments made

may be considered a public school capital outlay project and

eligible for grant assistance under this section pursuant to

the following criteria:

(1) no grant shall be awarded unless the

council finds that, prior to the purchase of the facility by

the school district or charter school, the facility will

equal or exceed the statewide adequacy standards and the

building standards for public school facilities;

(2) no grant shall be awarded unless the

school district and the need for the facility meet all of the

requirements for grant assistance pursuant to the Public

School Capital Outlay Act;

(3) the total project cost shall equal the

total payments that would be due under the agreement if the

school district or charter school would eventually acquire

title to the facility;

(4) the portion of the total project cost to

pg_0032

SFC/SB 395

Page 32

be paid from the fund may be awarded as one grant, but

disbursements from the fund shall be made from time to time

as lease payments become due;

(5) the portion of the total project cost to

be paid by the school district or charter school may be paid

from time to time as lease payments become due; and

(6) neither a grant award nor any provision

of the Public School Capital Outlay Act creates a legal

obligation for the school district or charter school to

continue the lease from year to year or to purchase the

facility.

E. In order to encourage private capital

investment in the construction of public school facilities,

the purchase of a privately owned school facility that is, at

the time of application, in use by a school district may be

considered a public school capital outlay project and

eligible for grant assistance pursuant to this section if the

council finds that:

(1) at the time of the initial use by the

school district, the facility to be purchased equaled or

exceeded the statewide adequacy standards and the building

standards for public school facilities;

(2) at the time of application, attendance

at the facility to be purchased is at seventy-five percent or

greater of design capacity and the attendance at other

pg_0033

SFC/SB 395

Page 33

schools in the school district that the students at the

facility would otherwise attend is at eighty-five percent or

greater of design capacity; and

(3) the school district and the capital

outlay project meet all of the requirements for grant

assistance pursuant to the Public School Capital Outlay Act;

provided that, when determining the deviation from the

statewide adequacy standards for the purposes of evaluating

and prioritizing the project, the students using the facility

shall be deemed to be attending other schools in the school

district.

F. 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.

G. Upon request, the council shall work with, and

provide assistance and information to, the public school

capital outlay oversight task force.

H. 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

pg_0034

SFC/SB 395

Page 34

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.

I. 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.

J. 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."

Section 7. A new section of the Public School Capital

Outlay Act, Section 22-24-5.8 NMSA 1978, is enacted to read:

"22-24-5.8. SUPPLEMENTAL FUNDING FOR PROJECTS IN

CERTAIN SCHOOL DISTRICTS.--

A. A school district receiving grant assistance

pg_0035

SFC/SB 395

Page 35

from the fund pursuant to Section 22-24-5 NMSA 1978 for a

public school capital outlay project shall receive an

additional grant from the fund in order for the project to

exceed the statewide adequacy standards if the school

district and proposed use of the additional grant qualify

pursuant to the provisions of Subsection B of this section.

B. A school district shall receive the additional

grant if the council determines that:

(1) in calculating the grant assistance from

the fund for the project pursuant to Section 22-24-5 NMSA

1978, the value calculated for the school district pursuant

to Subparagraph (k), (m), (n) or (o) of Paragraph (5) of

Subsection B of that section is equal to or greater than

seven-tenths;

(2) averaged over the previous four property

tax years, the school district had a residential property tax

rate of at least nine dollars ($9.00) 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;

(3) at least seventy percent of the students

in the school district are eligible for free or reduced-fee

lunch;

(4) for the next four years, the school

pg_0036

SFC/SB 395

Page 36

district will not have sufficient local resources to expend

on the project so it is unlikely that the project will ever

exceed the statewide adequacy standards; and

(5) the planned use of the additional grant

to exceed the statewide adequacy standards will enhance

public school education in the school district, will further

the school district's educational plan for student success

and is a prudent use of state money.

C. The amount of an additional grant awarded

pursuant to this section shall equal the total project cost

multiplied by the lesser of:

(1) the value calculated for the school

district pursuant to Subparagraph (k), (m), (n) or (o) of

Paragraph (5) of Subsection B of Section 22-24-5 NMSA 1978

minus six-tenths; or

(2) twenty-five hundredths.

D. All provisions of the Public School Capital

Outlay Act relating to the expenditure of other grants

awarded from the fund, including those provisions relating to

reporting, oversight, project access and accountability,

apply to the use and expenditure of additional grants made

pursuant to this section."

Section 8. A new section of the Public School Capital

Outlay Act, Section 22-24-12 NMSA 1978, is enacted to read:

"22-24-12. PUBLIC SCHOOL FACILITY OPPORTUNITY FUND--

pg_0037

SFC/SB 395

Page 37

PURPOSE--GRANTS FROM THE FUND.--

A. The legislature finds that for many years,

until relatively recently, educational facilities in a few

school districts in New Mexico were so inadequate because of

a lack of local resources and little support from the state

that the quality of education offered to students in those

school districts was extremely substandard. The legislature

further finds that, even under the current program to bring

all public school facilities up to a minimum statewide

adequacy standard, because of a continuing shortage in

available local resources, some school districts will not be

able to exceed that minimum in the foreseeable future and,

therefore, will not have the opportunity to provide their

students with the same quality of educational facilities as

students in school districts that have sufficient local

resources to surpass the minimum standards. The purpose of

this section is to partially correct those past inequities by

providing a program of state support for qualifying school

districts so that minimum statewide adequacy standards may be

exceeded on stand-alone projects on existing facilities.

B. The "public school facility opportunity fund"

is created in the state treasury. The fund shall consist of

transfers, appropriations, reversions, gifts, grants,

donations and bequests made to the fund. Income from the

fund shall be credited to the fund, and money in the fund

pg_0038

SFC/SB 395

Page 38

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 council for the purposes of making grants so that the

facilities of qualifying school districts may, pursuant to

the requirements of this section, exceed statewide adequacy

standards. Expenditures from the fund shall be made on

warrant of the secretary of finance and administration

pursuant to vouchers signed by the director of the public

school facilities authority.

C. A school district may apply for a grant from

the public school facility opportunity fund if the council

determines that:

(1) the project is included in the school

district's five-year facilities plan and the school district

meets all qualifications to apply for a grant pursuant to

Section 22-24-5 NMSA 1978 and meets the requirements of

Subparagraphs (b), (c), (d) and (g) of Paragraph (9) of

Subsection B of that section;

(2) the value calculated for the school

district pursuant to Subparagraph (k), (m), (n) or (o) of

Paragraph (5) of Subsection B of Section 22-24-5 NMSA 1978 is

equal to or greater than seven-tenths;

(3) averaged over the previous four property

tax years, the school district had a residential property tax

rate of at least nine dollars ($9.00) on each one thousand

pg_0039

SFC/SB 395

Page 39

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;

(4) at least seventy percent of the students

in the school district are eligible for free or reduced-fee

lunch; and

(5) for the next four years, the school

district will not have sufficient local resources to expend

on school district facilities for the purpose of exceeding

the statewide adequacy standards.

D. Applications for grant assistance from the

public school facility opportunity fund shall be made by

school districts to the council in accordance with the

requirements of the council. The council shall, pursuant to

criteria adopted by rule, evaluate applications and

prioritize those applications most in need of a grant from

the fund and, to the extent that money in the fund is

available, may award grants for those prioritized

applications. The evaluation criteria for school district

applications shall be primarily based upon the school

district's detailed description of how the proposed

facilities or improvements play an essential role in the

district's programmatic priorities and how they contribute to

meeting goals and objectives in the school district or the

pg_0040

SFC/SB 395

Page 40

school educational plan for student success.

E. All provisions of the Public School Capital

Outlay Act relating to the expenditure of grants awarded from

the public school capital outlay fund, including those

relating to reporting, oversight, project access and

accountability, apply to the use and expenditure of grants

made pursuant to this section. In addition, in awarding

grants pursuant to this section, the council may require

conditions and procedures necessary to ensure that the money

is expended in the most prudent manner."

Section 9. Section 6-5-10 NMSA 1978 (being Laws 1994,

Chapter 11, Section 1, as amended) is amended to read:

"6-5-10. STATE AGENCY REVERSIONS--DIRECTOR POWERS--

COMPLIANCE WITH FEDERAL RULES.--

A. Except as provided in Subsections B and C of

this section, all unreserved undesignated fund balances in

reverting funds and accounts as reflected in the central

financial reporting and accounting system as of June 30 shall

revert by September 30 to the general fund. The division may

adjust the reversion within forty-five days of release of the

audit report for that fiscal year.

B. The director of the division may modify a

reversion required pursuant to Subsection A of this section

if the reversion would violate federal law or rules

pertaining to supplanting of state funds with federal funds

pg_0041

SFC/SB 395

Page 41

or other applicable federal provisions.

C. Ten percent of all unreserved undesignated

balances in reverting funds and accounts as of the end of

each fiscal year from fiscal year 2009 through fiscal year

2013 shall not revert to the general fund but shall be

transferred to the public school facility opportunity fund to

be used for grants to school districts pursuant to Section

22-24-12 NMSA 1978."

Section 10. PUBLIC SCHOOL APPROPRIATIONS FOR

NONOPERATING PURPOSES--SET ASIDE FOR PUBLIC SCHOOL FACILITY

OPPORTUNITY FUND.--Except for appropriations to or from the

public school capital outlay fund, three percent of each

appropriation made by the legislature on or after

July 1, 2007 for nonoperating purposes, either directly to a

school district or a public school or to another governmental

entity for the purpose of passing the money through directly

to a school district or a public school, shall be set aside

and transferred to the public school facility opportunity

fund, provided that the amount set aside and transferred

pursuant to this section shall not be included in a reduction

in the amount of a state grant calculated pursuant to

Paragraph (6) of Subsection B of Section 22-24-5 NMSA 1978.

The amount shall be set aside and transferred by the

secretary of finance and administration:

A. if the appropriation is from severance tax bond

pg_0042

SFC/SB 395

Page 42

proceeds, at the time the severance tax bonds are issued by

the state board of finance; or

B. if the appropriation is from the general fund,

at such time during the first fiscal year that the

appropriation may be expended as deemed appropriate by the

secretary.

Section 11. Section 22-24-7 NMSA 1978 (being Laws 2001,

Chapter 338, Section 12, as amended) is amended to read:

"22-24-7. PUBLIC SCHOOL CAPITAL OUTLAY OVERSIGHT TASK

FORCE--CREATION--STAFF.--

A. The "public school capital outlay oversight

task force" is created. The task force consists of

twenty-six 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 state investment officer or the

state investment officer's designee;

(4) the speaker of the house of

representatives or the speaker's designee;

(5) the president pro tempore of the senate

or the president pro tempore's designee;

(6) the chairs of the house appropriations

and finance committee, the senate finance committee, the

pg_0043

SFC/SB 395

Page 43

senate education committee and the house education committee

or their designees;

(7) two minority party members of the house

of representatives, appointed by the New Mexico legislative

council;

(8) two minority party members of the

senate, appointed by the New Mexico legislative council;

(9) a member of the interim legislative

committee charged with the oversight of Indian affairs,

appointed by the New Mexico legislative council, provided

that the member shall rotate annually between a senate member

and a member of the house of representatives;

(10) a member of the house of

representatives and a member of the senate who represent

districts with school districts receiving federal funds

commonly known as "PL 874" funds or "impact aid", appointed

by the New Mexico legislative council;

(11) two public members who have expertise

in education and finance appointed by the speaker of the

house of representatives;

(12) two public members who have expertise

in education and finance appointed by the president pro

tempore of the senate;

(13) three public members, two of whom are

residents of school districts that receive grants from the

pg_0044

SFC/SB 395

Page 44

federal government as assistance to areas affected by federal

activity authorized in accordance with Title 20 of the United

States Code, appointed by the governor; and

(14) three superintendents of school

districts or their designees, two of whom are from school

districts that receive grants from the federal government as

assistance to areas affected by federal activity authorized

in accordance with Title 20 of the United States Code,

appointed by the New Mexico legislative council in

consultation with the governor.

B. The chair of the public school capital outlay

oversight task force shall be elected by the task force. The

task force shall meet at the call of the chair, but no more

than four times per calendar year.

C. Non-ex-officio members of the task force shall

serve at the pleasure of their appointing authorities.

D. The public members of the public school capital

outlay oversight task force shall receive per diem and

mileage pursuant to the Per Diem and Mileage Act.

E. The legislative council service, with

assistance from the public school facilities authority, the

department of finance and administration, the public

education department, the legislative education study

committee and the legislative finance committee, shall

provide staff for the public school capital outlay oversight

pg_0045

SFC/SB 395

Page 45

task force."

Section 12. Section 22-25-1 NMSA 1978 (being Laws 1975

(S.S.), Chapter 5, Section 1) is amended to read:

"22-25-1. SHORT TITLE.-- Chapter 22, Article 25 NMSA

1978 may be cited as the "Public School Capital Improvements

Act"."

Section 13. 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) payments made pursuant to a financing

agreement entered into by a school district or a charter

school for the leasing of a building or other real property

with an option to purchase for a price that is reduced

according to payments made;

pg_0046

SFC/SB 395

Page 46

(3) purchasing or improving public school

grounds;

(4) 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;

(5) purchasing activity vehicles for

transporting students to extracurricular school activities;

(6) purchasing computer software and

hardware for student use in public school classrooms."

Section 14. 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,

pg_0047

SFC/SB 395

Page 47

assuming a one hundred percent collection rate, is less than

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

pg_0048

SFC/SB 395

Page 48

capital outlay projects pursuant to the Public School Capital

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 seventy dollars

pg_0049

SFC/SB 395

Page 49

($70.00) in fiscal year 2008 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:

(1) the total project cost for roof repair

or replacement required by Section 22-24-4.3 NMSA 1978; or

(2) payments made under a financing

agreement entered into by a school district or a charter

pg_0050

SFC/SB 395

Page 50

school for the leasing of a building or other real property

with an option to purchase for a price that is reduced

according to the payments made, if the school district has

received a grant for the state share of the payments pursuant

to Subsection D of Section 22-24-5 NMSA 1978.

G. If a serious deficiency in a roof of a public

school facility has been corrected pursuant to Section

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."

pg_0051

SFC/SB 395

Page 51

Section 15. Section 7-38-38.1 NMSA 1978 (being Laws

1986, Chapter 20, Section 116, as amended) is amended to

read:

"7-38-38.1. RECIPIENTS OF REVENUE PRODUCED THROUGH AD

VALOREM LEVIES REQUIRED TO PAY COUNTIES ADMINISTRATIVE CHARGE

TO OFFSET COLLECTION COSTS.--

A. As used in this section:

(1) "revenue" means money for which a county

treasurer has the legal responsibility for collection and

which is owed to a revenue recipient as a result of an

imposition authorized by law of a rate expressed in mills per

dollar or dollars per thousands of dollars of net taxable

value of property, assessed value of property or a similar

term, including but not limited to money resulting from the

authorization of rates and impositions under Subsection B and

Paragraphs (1) and (2) of Subsection C of Section 7-37-7 NMSA

1978, special levies for special purposes and benefit

assessments, but the term does not include any money

resulting from the imposition of taxes imposed under the

provisions of the Oil and Gas Ad Valorem Production Tax Act,

the Oil and Gas Production Equipment Ad Valorem Tax Act or

the Copper Production Ad Valorem Tax Act or money resulting

from impositions under Paragraph (3) of Subsection C of

Section 7-37-7 NMSA 1978; and

(2) "revenue recipient" means the state and

pg_0052

SFC/SB 395

Page 52

any of its political subdivisions, including charter schools,

but excluding institutions of higher education located in

class A counties and class B counties having more than three

hundred million dollars ($300,000,000) valuation, that are

authorized by law to receive revenue.

B. Prior to the distribution to a revenue

recipient of revenue received by a county treasurer, the

treasurer shall deduct as an administrative charge an amount

equal to one percent of the revenue received.

C. The "county property valuation fund" is

created. All administrative charges deducted by the county

treasurer shall be distributed to the county property

valuation fund.

D. Expenditures from the county property valuation

fund shall be made pursuant to a property valuation program

presented by the county assessor and approved by the majority

of the county commissioners."

Section 16. Section 22-8B-4 NMSA 1978 (being Laws 1999,

Chapter 281, Section 4, as amended) is amended to read:

"22-8B-4. CHARTER SCHOOLS' RIGHTS AND RESPONSIBILITIES--

OPERATION.--

A. A charter school shall be subject to all

federal and state laws and constitutional provisions

prohibiting discrimination on the basis of disability, race,

creed, color, gender, national origin, religion, ancestry or

pg_0053

SFC/SB 395

Page 53

need for special education services.

B. A charter school shall be governed by a

governing body in the manner set forth in the charter;

provided that a governing body shall have at least five

members; and provided further that no member of a governing

body for a charter school that is initially approved on or

after July 1, 2005 or whose charter is renewed on or after

July 1, 2005 shall serve on the governing body of another

charter school.

C. A charter school shall be responsible for:

(1) its own operation, including preparation

of a budget, subject to audits pursuant to the Audit Act; and

(2) contracting for services and personnel

matters.

D. A charter school may contract with a school

district, a university or college, the state, another

political subdivision of the state, the federal government or

one of its agencies, a tribal government or any other third

party for the use of a facility, its operation and maintenance

and the provision of any service or activity that the charter

school is required to perform in order to carry out the

educational program described in its charter. Facilities used

by a charter school shall meet the standards required pursuant

to Section 22-8B-4.2 NMSA 1978.

E. A conversion school chartered before July 1,

pg_0054

SFC/SB 395

Page 54

2007 may choose to continue using the school district

facilities and equipment it had been using prior to

conversion, subject to the provisions of Subsection F of this

section.

F. The school district in which a charter school

is geographically located shall provide a charter school with

available facilities for the school's operations unless the

facilities are currently used for other educational purposes.

An agreement for the use of school district facilities by a

charter school may provide for reasonable lease payments;

provided that the payments do not exceed the sum of the lease

reimbursement rate provided in Subparagraph (b) of Paragraph

(1) of Subsection I of Section 22-24-4 NMSA 1978 plus any

reimbursement for actual direct costs incurred by the school

district in providing the facilities; and, provided further,

that any lease payments received by a school district may be

retained by the school district and shall not be considered to

be cash balances in any calculation pursuant to Section 22-8-

41 NMSA 1978. The available facilities provided by a school

district to a charter school shall meet all occupancy

standards as specified by the public school capital outlay

council. As used in this subsection, "other educational

purposes" includes health clinics, daycare centers, teacher

training centers, school district administration functions and

other ancillary services related to a school district's

pg_0055

SFC/SB 395

Page 55

functions and operations.

G. A locally chartered charter school may pay the

costs of operation and maintenance of its facilities or may

contract with the school district to provide facility

operation and maintenance services.

H. Locally chartered charter school facilities are

eligible for state and local capital outlay funds and shall be

included in the school district's five-year facilities plan.

I. A locally chartered charter school shall

negotiate with a school district to provide transportation to

students eligible for transportation under the provisions of

the Public School Code. The school district, in conjunction

with the charter school, may establish a limit for student

transportation to and from the charter school site not to

extend beyond the school district boundary.

J. A charter school shall be a nonsectarian,

nonreligious and non-home-based public school.

K. Except as otherwise provided in the Public

School Code, a charter school shall not charge tuition or have

admission requirements.

L. With the approval of the chartering authority,

a single charter school may maintain separate facilities at

two or more locations within the same school district; but,

for purposes of calculating program units pursuant to the

Public School Finance Act, the separate facilities shall be

pg_0056

SFC/SB 395

Page 56

treated together as one school.

M. A charter school shall be subject to the

provisions of Section 22-2-8 NMSA 1978 and the Assessment and

Accountability Act.

N. Within constitutional and statutory limits, a

charter school may acquire and dispose of property; provided

that, upon termination of the charter, all assets of the

locally chartered charter school shall revert to the local

school board and all assets of the state-chartered charter

school shall revert to the state, except that, if all or any

portion of a state-chartered charter school facility is

financed with the proceeds of general obligation bonds issued

by a local school board, the facility shall revert to the

local school board.

O. The governing body of a charter school may

accept or reject any charitable gift, grant, devise or

bequest; provided that no such gift, grant, devise or bequest

shall be accepted if subject to any condition contrary to law

or to the terms of the charter. The particular gift, grant,

devise or bequest shall be considered an asset of the charter

school to which it is given.

P. The governing body may contract and sue and be

sued. A local school board shall not be liable for any acts

or omissions of the charter school.

Q. A charter school shall comply with all state

pg_0057

SFC/SB 395

Page 57

and federal health and safety requirements applicable to

public schools, including those health and safety codes

relating to educational building occupancy.

R. A charter school is a public school that may

contract with a school district or other party for provision

of financial management, food services, transportation,

facilities, education-related services or other services. The

governing body shall not contract with a for-profit entity for

the management of the charter school.

S. To enable state-chartered charter schools to

submit required data to the department, an accountability data

system shall be maintained by the department.

T. A charter school shall comply with all

applicable state and federal laws and rules related to

providing special education services. Charter school students

with disabilities and their parents retain all rights under

the federal Individuals with Disabilities Education Act and

its implementing state and federal rules. Each charter school

is responsible for identifying, evaluating and offering a free

appropriate public education to all eligible children who are

accepted for enrollment in that charter school. The state-

chartered charter school, as a local educational agency, shall

assume responsibility for determining students' needs for

special education and related services. The division may

promulgate rules to implement the requirements of this

pg_0058

SFC/SB 395

Page 58

subsection."

Section 17. Section 22-8B-4.2 NMSA 1978 (being Laws

2005, Chapter 221, Section 3 and Laws 2005, Chapter 274,

Section 2) is amended to read:

"22-8B-4.2. CHARTER SCHOOL FACILITIES--STANDARDS.--

A. The facilities of a charter school that is

approved on or after July 1, 2005 and before July 1, 2010

shall meet educational occupancy standards required by

applicable New Mexico construction codes.

B. The facilities of a charter school that is in

existence, or has been approved, prior to July 1, 2005 shall

be evaluated, prioritized and eligible for grants pursuant to

the Public School Capital Outlay Act in the same manner as all

other public schools in the state; provided that for charter

school facilities in leased facilities, grants may be used as

additional lease payments for leasehold improvements.

C. On or after July 1, 2010, an application for a

charter shall not be approved and an existing charter shall

not be renewed unless the charter school:

(1) is housed in a public building that is:

(a) owned by the charter school, the

school district, the state, an institution of the state,

another political subdivision of the state, the federal

government or one of its agencies or a tribal government; and

(b) subject to evaluation and

pg_0059

SFC/SB 395

Page 59

prioritization and eligible for grants pursuant to the Public

School Capital Outlay Act in the same manner as all other

public schools in the state;

(2) is housed in a building that meets the

statewide adequacy standards developed pursuant to the Public

School Capital Outlay Act and that is being leased by the

charter school pursuant to a financing agreement that contains

an option to purchase for a price that is reduced according to

the lease payments made; or

(3) if it is not housed in a building

described in Paragraph (1) or (2) of this subsection,

demonstrates that:

(a) the facility in which the charter

school is housed meets the statewide adequacy standards

developed pursuant to the Public School Capital Outlay Act and

the owner of the facility is contractually obligated to

maintain those standards at no additional cost to the charter

school or the state; and

(b) either: 1) public buildings are

not available or adequate for the educational program of the

charter school; or 2) the owner of the facility is a nonprofit

entity specifically organized for the purpose of providing the

facility for the charter school.

D. The public school capital outlay council:

(1) shall determine whether facilities of a

pg_0060

SFC/SB 395

Page 60

charter school meet the educational occupancy standards

pursuant to the requirements of Subsection A of this section;

(2) shall determine whether facilities of a

charter school meet the requirements of Subsections B and C of

this section; and

(3) upon a determination that specific

requirements are not appropriate or reasonable for a charter

school, may grant a variance from those requirements for that

charter school."

Section 18. Section 22-26-1 NMSA 1978 (being Laws 1983,

Chapter 163, Section 1) is amended to read:

"22-26-1. SHORT TITLE.-- Chapter 22, Article 26 NMSA

1978 may be cited as the "Public School Buildings Act"."

Section 19. Section 22-26-2 NMSA 1978 (being Laws 1983,

Chapter 163, Section 2, as amended) is amended to read:

"22-26-2. DEFINITION.--As used in the Public School

Buildings Act, "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:

A. erecting, remodeling, making additions to,

providing equipment for or furnishing public school buildings;

B. payments made pursuant to a financing agreement

entered into by a school district or a charter school for the

leasing of a building or other real property with an option to

pg_0061

SFC/SB 395

Page 61

purchase for a price that is reduced according to payments

made;

C. purchasing or improving public school grounds;

D. administering the projects undertaken pursuant

to Subsections A and C of this section, including expenditures

for facility maintenance software, project management

software, project oversight and district personnel

specifically related to administration of projects funded by

the Public School Buildings Act; provided that expenditures

pursuant to this subsection shall not exceed five percent of

the total project costs."

Section 20. Section 22-26-3 NMSA 1978 (being Laws 1983,

Chapter 163, Section 3, as amended) is amended to read:

"22-26-3. AUTHORIZATION FOR LOCAL SCHOOL BOARD TO SUBMIT

QUESTION OF CAPITAL IMPROVEMENTS TAX IMPOSITION.--

A. A local school board may adopt a resolution to

submit to the qualified electors of the school district the

question of whether a property tax at a rate not to exceed the

rate specified in the resolution should be imposed upon the

net taxable value of property allocated to the school district

under the Property Tax Code for the purpose of capital

improvements to public schools in the school district. The

resolution shall:

(1) identify the capital improvements for

pg_0062

SFC/SB 395

Page 62

which the revenue proposed to be produced will be used;

(2) specify the rate of the proposed tax,

which shall not exceed ten dollars ($10.00) on each one

thousand dollars ($1,000) of net taxable value of property

allocated to the school district under the Property Tax Code;

(3) specify the date an election will be held

to submit the question of imposition of the tax to the

qualified electors of the district; and

(4) limit the imposition of the proposed tax

to no more than six property tax years.

B. After July 1, 2007, a resolution submitted to

the qualified electors pursuant to Subsection A of this

section shall include capital improvements funding for a

locally chartered or state-chartered charter school located

within the school district if:

(1) the charter school timely provides the

necessary information to the school district for inclusion on

the resolution that identifies the capital improvements of the

charter school for which the revenue proposed to be produced

will be used; and

(2) the capital improvements are included in

the five-year facilities plan:

(a) of the school district, if the

charter school is a locally chartered charter school; or

(b) of the charter school, if the

pg_0063

SFC/SB 395

Page 63

charter school is a state-chartered charter school."

Section 21. Section 22-26-5 NMSA 1978 (being Laws 1983,

Chapter 163, Section 5, as amended) is amended to read:

"22-26-5. CONDUCT OF ELECTION--NOTICE--BALLOT.--

A. An election on the question of imposing a tax

under the Public School Buildings Act may be held in

conjunction with a regular school district election or may be

conducted as or held in conjunction with a special school

district election, but the election shall be held prior to

July 1 of the property tax year in which the tax is proposed

to be imposed. Conduct of the election shall be as prescribed

in the School Election Law for regular and special school

district elections.

B. The resolution required to be published as

notice of the election under Section 1-22-4 or 1-22-5 NMSA

1978 shall include as the question to be submitted to the

voters whether a property tax at a rate not to exceed the rate

specified in the authorizing resolution should be imposed for

the specified number of property tax years not exceeding six

years upon the net taxable value of all property allocated to

the school district for capital improvements.

C. The ballot shall include the information

specified in Subsection B of this section and shall present

the voter the choice of voting "for the public school

buildings tax" or "against the public school buildings tax"."

pg_0064

SFC/SB 395

Page 64

Section 22. Section 22-26-8 NMSA 1978 (being Laws 1983,

Chapter 163, Section 8, as amended) is amended to read:

"22-26-8. TAX TO BE IMPOSED FOR A MAXIMUM OF SIX

YEARS.--A tax imposed in a school district as a result of an

election under the Public School Buildings Act shall be

imposed for one, two, three, four, five or six years

commencing with the property tax year in which the election

was held. The local school board may direct that such levy be

decreased or not made for any year if, in its judgment, the

total levy is not necessary for such year and shall direct

that the levy be decreased by the amount required if a

decrease is required by operation of the rate limitation

provisions of Section 7-37-7.1 NMSA 1978."

Section 23. A new section of the Public School Buildings

Act is enacted to read:

"CHARTER SCHOOLS--RECEIPT OF LOCAL PROPERTY TAX

REVENUE.--If, in an election held after July 1, 2007, the

qualified electors of a school district have voted in favor of

the imposition of a property tax as provided in Section

22-26-3 NMSA 1978, the amount of tax revenue to be distributed

to each charter school that was included in the resolution

shall be determined each year and shall be in the same

proportion as the average full-time-equivalent enrollment of

the charter school on the fortieth day of the prior school

year is to the total such enrollment in the district; provided

pg_0065

SFC/SB 395

Page 65

that, in the case of an approved charter school that had not

commenced classroom instruction in the prior school year, the

estimated full-time-equivalent enrollment in the first year of

instruction, as shown in the approved charter school

application, shall be used, subject to adjustment after the

fortieth day. Each year, the department shall certify to the

county treasurer of the county in which the eligible charter

schools in the school district are located the percentage of

the revenue to be distributed to each charter school. The

county treasurer shall distribute the charter school's share

of the property tax revenue directly to the charter school."

Section 24. TEMPORARY PROVISION--PUBLIC SCHOOL CAPITAL

OUTLAY OVERSIGHT TASK FORCE.--During the 2007 interim, the

public school capital outlay oversight task force shall

continue to work toward an equitable and fair system that

addresses the inequities between public school facilities

among various school districts in this state. Toward that

end, the task force shall assess the current statewide

adequacy standards, the need for changing those standards and

the effect upon school districts of any proposed change in the

standards.

Section 25. TEMPORARY PROVISION--RECOMPILATION

INSTRUCTIONS.--The compiler shall recompile Section 22-24-11

NMSA 1978 (being Laws 2006, Chapter 95, Section 3) as part of

the Public School Finance Act.

pg_0066

SFC/SB 395

Page 66

Section 26. DELAYED REPEAL--REVERSION OF FUND BALANCE.--

A. On July 1, 2013, Sections 22-24-5.8 and

22-24-12 NMSA 1978, as enacted by Sections 7 and 8 of this

act, and Section 10 of this act are repealed.

B. Upon the repeal of Section 22-24-12 NMSA 1978,

the proportion of the unencumbered balance of the public

school facility opportunity fund that is attributable to

proceeds of severance tax bonds shall revert to the severance

tax bonding fund and the remaining unencumbered balance shall

revert to the general fund.

Section 27. EFFECTIVE DATE.--The effective date of the

provisions of this act is July 1, 2007.