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

SPONSOR Nava

ORIGINAL DATE

LAST UPDATED

2/7/2007

3/16/2007 HB

SHORT TITLE Charter School Facilities Needs

SB 634/aSFC/aHJC/aHFl#1

ANALYST Aguilar

\ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY07

FY08

FY09 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total

$20,000.0

Non-

Recurring General

Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to Relates to HB 323, HB 328 and SB 395

SOURCES OF INFORMATION

LFC Files

Responses Received From

Public Education Department (PED)

Responses NOT Received From

Public School Facilities Authority (PSFA)

SUMMARY

Synopsis of House Floor Amendment #1

House Floor Amendment #1 to Senate Bill 634 changes language charging the PSCOC with

developing a program for assisting charter schools to be located in public buildings or in

buildings being acquired by charter schools pursuant to a lease purchase agreement.

The floor amendment removes additional uses for funds the council determines are not needed

for grants.

Synopsis of HJC Amendment

The House Judiciary Committee amendment to Senate Bill 634 as amended implements a

delayed repeal on July 1, 2012 and provides for the distribution of funds from the charter school

capital outlay fund upon repeal.

Senate Bill 634/aSFC/aHJC – Page

2

Synopsis of SFC Amendment

The Senate Finance Committee amendment to Senate Bill 634 removes all appropriations.

Synopsis of Original Bill

Senate Bill 634 appropriates $20 million from the general fund to the charter school capital

outlay fund for the purpose of funding the local share of a PSCOC project to charter schools.

Money available in the fund, in the following order, may be used for:

•

making grants to a state-chartered charter school for its share of a PSCOC project;

•

making grants to local or state charter schools;

•

providing grants to a local-chartered school for its share of a PSCOC project; and,

•

providing the state share of a project from the charter school capital outlay fund instead

of from the public school capital outlay fund.

FISCAL IMPLICATIONS

The appropriation of $20 million contained in this bill is a nonrecurring expense to the general

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

not revert to the general fund.

This bill creates a new fund and provides for continuing appropriations. The LFC has concerns

with including continuing appropriation language in the statutory provisions for newly created

funds, as earmarking reduces the ability of the legislature to establish spending priorities.

It is important to note that the underlying premise behind standards based funding has been the

need for a portion of all school funding projects is paid as the “local share" based on a formula

contained in the Public School Capital Outlay Act. Provisions contained in this bill result in the

state paying both the “state" share and the “local share" of projects. This may not be consistent

with the process approved by the judge overseeing the Zuni lawsuit. It is important that the

PSCOC ensure that all newly developed procedures are consistent with the judge’s orders.

SIGNIFICANT ISSUES

The bill provides that a state-chartered school will use the same percentage of participation

for a project as the school district in which the state charter is located. The current

percentages are derived from a formula which includes property valuation of a school

district.

The bill also provides that offsets from all direct legislative appropriations to charter

schools made after January 1, 2007 shall count against the school district until the charter

school becomes a state-chartered school. Once the charter school becomes a state-

chartered school the offset will follow the charter unless it has already been subtracted

from an award to a school district.

The bill provides that for PSCOC to make awards from the charter school capital outlay

fund when it determines a charter school does not have the resources to pay for its portion

of the project. The PSCOC is given the authority to establish by rule, procedures for the

Senate Bill 634/aSFC/aHJC – Page

3

amount needed and to be allocated to a charter school from the fund.

SB-634 provides for the Public School Facilities Authority to review and rank the

applications that are submitted. After a public hearing the PSCOC shall approve grants

from the fund based on the adopted methodology. Of note is that awards made pursuant to

this section will not be considered as an allocation when calculating the offsets.

TECHNICAL ISSUES

The public education department notes that the bill provides that once a charter school becomes a

state-chartered school an offset incurred from all appropriations made after January 1, 2007 will

follow the charter unless it has already been subtracted from an award to a school district.

However, the bill does not contain language providing a state-chartered school will have the

option to accept or reject an appropriation after it becomes a state-chartered school. Current

language gives the authority to the school district. The Legislature may wish to consider adding

language giving state-chartered schools this option once they are state chartered.

OTHER SUBSTANTIVE ISSUES

PED also notes that the Legislature may wish to consider as an alternative, legislation requiring

school districts to add charter schools to resolutions when they go to the voters for approval of

local general obligation bonds. An additional solution may be to increase the statewide GOB

limit to be used for statewide charter schools.

PA/mt