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

SPONSOR Wirth

ORIGINAL DATE

LAST UPDATED

3/1/2007

HB 874

SHORT TITLE NM School for the Arts

SB

ANALYST Aguilar

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

$750.0

Non-Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to SB 76 and HB 260

SOURCES OF INFORMATION

LFC Files

Responses Received From

Public Education Department (PED)

SUMMARY

Synopsis of Bill

House Bill 874 appropriates $750 thousand from the general fund to the Public Education

Department for the purpose of providing financial support for initial start-up costs, including

planning and outreach activities for the New Mexico School for the Arts.

FISCAL IMPLICATIONS

The appropriation of $750 thousand contained in this bill is a recurring expense to the general

fund. Any unexpended or unencumbered balance remaining at the end of fiscal year 2008 shall

revert to the general fund.

The LFC remains concerned with funding initiatives outside of the funding formula as it tends to

disequalize school funding and diverts funding away from core educational needs.

The bill provides for PED to use up to 3 percent for administrative costs.

House Bill 874 – Page

2

SIGNIFICANT ISSUES

PED notes that before funds can flow to the charter school, the school has to be approved by the

Public Education Commission (PEC), which cannot begin approving charter schools until July1,

2007. Until the school is approved by the PEC and is designated as a board of finance, it cannot

receive state funds. (see Section 22-8B-13(C).) Thus, there would be no entity to which the PED

can flow the appropriation until that occurs. Furthermore, there is the potential that the

application could be denied by the PEC, in which case no entity would ever exist to which the

money could be flowed.

PED also notes that given that the proposed school would not be a charter school until so-

approved by the PEC that cannot authorize schools until July 1, 2007, any action by a state

agency to pay public funds over to a private person or to a private non-profit foundation would

implicate the Anti-Donation Clause of the New Mexico Constitution. (Article IX, Section 14).

Also note, NM Const. Art. IV, sec. 31, (“No appropriation shall be made for charitable,

educational or other benevolent purposes to any person, corporation, association, institution or

community, not under the absolute control of the state…"). Although this is not a direct

appropriation to charter school organizers, the fact that the school could not become a charter

school until July 1

st

may give the appearance that an appropriation is being made contrary to the

restrictions in this article of the State constitution.

PA/csd