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committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

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

SPONSOR Miera

ORIGINAL DATE

LAST UPDATED

1/18/2008

HB 3

SHORT TITLE Education Appropriation Act

SB

ANALYST Aguilar

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY08

FY09

$2,608,806.5

Recurring

General Fund

$750.0

Recurring Driver’s License Fund

$11.346.6

Recurring

Other State Funds

$5,000.0

Recurring

Other State

Funds/TANF

$488,735.2

Recurring

Federal Funds

$11,364.1 Nonrecurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to Appropriation in the General Appropriation Act

SOURCES OF INFORMATION

LFC Files

SUMMARY

Synopsis of Bill

House Bill 3 reflects the Legislative finance Committee (LFC) recommendation and appropriates

$2.397 billion from the general fund, $750 thousand from the driver’s license fund, and

recognizes $438.4 million in federal flow through for the purpose of funding the 89 public school

districts and charter schools. The appropriation recommendation includes $ 25 million for

funding the first year implementation of the new funding formula and $4 million for increases in

the employer contribution to retiree healthcare. Both of these appropriations are contingent on

the enactment of related legislation. Additionally, $162.7 million is provided in categorical

support for a total general fund recommendation for public school support of $2.559 billion. The

appropriation to the Public Education Department provides $17.5 million from the general fund,

$1.3 million in other state funds and $29.5 million in federal funds. An additional $31.4 million

House Bill 3 – Page 2

from the general fund and $5 million in TANF funding is appropriated for related, recurring

appropriations and $11.4 million for related, nonrecurring funding (see attached summary).

House Bill 3 further appropriates $10.1 million in other state funds and $20.8 million in federal

funds to the nine regional educational cooperatives.

FISCAL IMPLICATIONS

The appropriation of $2,608,806,300 contained in this bill is a recurring expense to the general

fund. Any unexpended or unencumbered balance remaining at the end of fiscal year 2009 shall

revert to the general fund.

SIGNIFICANT ISSUES

The state equalization guarantee, also known as the “funding formula" is used to distribute funds

to public schools and charter schools. House Bill 3 funds a general fund increase of $124.7

million or 5.5 percent over FY08 appropriations. Notable items contributing to this increase

include $10.5 million for enrollment growth, $3.8 million for fixed costs, $19.3 million for

insurance, and $14.7 million for the increased employer contribution to the Educational

Retirement Board. The bill includes $39.2 million for a 2 percent salary increase for all

educational employees. The appropriation also includes $8 million above the line to fund the

second year of elementary physical education.

Appropriations in the bill estimate projected credits of $55.6 million from the 0.5 percent local

mill levy, federal forest funds and the operational portion of federal impact aid and $750

thousand from the drivers’ license fund.

Transportation funding is increased by $5.1 million; including recurring funding for school bus

replacements. Categorical appropriations also include $2 million in emergency supplemental

funding, $6 million for the educational technology fund, $2.5 million for Indian education and

$2.5 million in recurring funding for the school improvement framework, part of a total

categorical appropriation increase of $4.6 million.

Language earmarking $1 million from the Indian Education Fund for a rural literacy

program contingent on a $500 thousand match from other than state sources was inserted

into HB-3 and does not reflect the recommendation of the LFC.

In related appropriations-recurring, the bill includes $31.4 million to the public education

department (see attached summary). These appropriations include $10.2 million for

kindergarten-three-plus, $9 million for pre-kindergarten, $2 million for Advanced Placement, $3

million for expanding beginning teacher mentorship, $1.5 million for the Family and Youth

resource Act, $2.5 million for elementary breakfasts, and $1 million for GRADS. Additional

related and recurring appropriations include $6 million for the pre-kindergarten program, an

additional $3 million for the school improvement framework, and $3 million for summer

reading, math and science institutes for teacher professional development.

House Bill 3 – Page 3

ADMINISTRATIVE IMPLICATIONS

The bill contains language which directs the secretary to set an initial unit value to be used by the

districts in developing school year 2008-2009 operating budgets and to set a final unit value no

later than January 31, 2009.

Additional language contained in the bill provides that teachers be evaluated under the three-

tiered licensure evaluation system to be eligible for minimum salaries.

TECHNICAL ISSUES

Language earmarking $1 million from the Indian Education Fund for a rural literacy program

contingent on a $500 thousand match from other than state sources was inserted into HB-3 and

does not reflect the recommendation of the LFC.

OTHER SUBSTANTIVE ISSUES

Language contained in the bill provides that the appropriations for the pre-kindergarten program

shall only be used for direct instruction, transportation and approved administrative costs.

PA/bb

House Bill 3 – Page 4

House Bill 3 – Page 5

House Bill 3 – Page 6