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

SPONSOR Beffort

ORIGINAL DATE

LAST UPDATED

1/30/2007

HB

SHORT TITLE School Closure Moratorium

SB 169

ANALYST Aguilar

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

$5,500.0

Nonrecurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to appropriations in the General Appropriation Act

SOURCES OF INFORMATION

LFC Files

Responses Received From

Attorney General’s Office (AGO)

Public Education Department (PED)

SUMMARY

Synopsis of Bill

Senate Bill 169 appropriates $5.5 million from the general fund to the public education depart-

ment for the purpose of providing funding for school districts to which the closure moratorium

applies.

The bill requires that a moratorium be placed on the closing of public schools until July 1, 2008,

and that schools contemplated for closing prior to the moratorium be reconsidered once the

moratorium is lifted in light of actions taken by the Legislature in response to findings and rec-

ommendations made by the funding formula study taskforce. The bill further provides for dis-

tricts having contemplated closing schools prior to the moratorium to apply for funding to con-

tinue operating the school and that these funds will be above and beyond funding received from

the state equalization guarantee, emergency supplemental funding or other distributions and

funding.

Senate Bill 169 – Page

2

Senate Bill 169 declares an emergency.

FISCAL IMPLICATIONS

The appropriation of $5.5 million contained in this bill is a nonrecurring 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 Attorney General Office notes that by providing additional funding to local school districts

to continue to operate schools designated for closure, the bill circumvents calculations resulting

in the state equalization guarantee distribution for school district operating revenue as set forth in

NMSA Section 22-8-25. The additional funding could result in certain school districts receiving

more funding than others in order to maintain and operate unnecessary public school facilities, as

determined by the local school board.

SIGNIFICANT ISSUES

Testimony throughout the summer regarding funding formula impacts on districts indicates that

student enrollment declines are having a devastating impact on medium size districts with a low

Training and Experience Index (T&E). Many school districts have worked to cut budgets, staff

and other operational expenses and are still falling significantly short in operating budgets.

Further testimony indicated that although the Legislature appropriates sufficient funding to meet

school district needs, when it flows through the formula, a number of districts receive less fund-

ing than is needed to meet operating expenses while other districts receive more than needed.

The funding formula study task force is working on changes to the funding formula and is ex-

pected to make recommendations to the Legislature in early fall o7 2008 and will make recom-

mendations to the Legislature in time for the 2008 session.

PA/sb