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

SPONSOR Ryan

ORIGINAL DATE

LAST UPDATED

2/3/08

HB

SHORT TITLE School District Instruction Expenditures

SB 523

ANALYST Wilson

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY08

FY09

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Attorney General’s Office (AGO)

Public Education Department

SUMMARY

Synopsis of Bill

Senate Bill 523

enacts a new section of the Public School Finance Act (NMSA Sections 22-8-1

et seq. 1978) to require a school districts with an enrollment of 35,000 or more students to

budget a minimum percentage of their total operating budget under function 1000, “instruction",

as specified in the PED's uniform chart of accounts manual of procedures, as follows:

A. 63% for fiscal year 2009,

B.64% for fiscal year 2010,

C. 65% for fiscal year 2011 and succeeding fiscal years.

FISCAL IMPLICATIONS

This bill

stipulates a minimum of operating expenditures that can go to direct instruction only

applies to school districts with a student enrollment of more than 35,000. Currently, this will

only apply to Albuquerque school district.

Senate Bill 523– Page

2

SIGNIFICANT ISSUES

This bill will affect the budgeting process for the Albuquerque Public Schools and will mandate

that a certain percentage of that district’s budget be allocated to “instruction". According to the

PED, that district was the only school district in New Mexico with an enrollment over 35,000 for

the 2006-2007 school year.

Function 1000 is a code used by the PED in its “Uniform Chart of Accounts" and generally

includes expenses related to “instruction", including teacher salaries, benefits, and equipment

used in instruction (computers etc.). Each school district must maintain a general ledger

comprised of individual funds and account groups using the PED’s Uniform Chart of Accounts.

The ledger and chart are used by each school district to report budget and financial information

to PED.

The Public School Finance Act sets procedures for preparing and submitting school district

budgets for approval by the Department... The Act generally allows school districts to set their

own budgets in accordance with its provisions, rules of the Department, and generally accepted

accounting principles (GAAP). See NMSA Section 22-8-10 (1978). This bill will remove some

discretion from the Albuquerque Public School District to set its budget in accordance with

existing procedures, and will require that a minimum amount of its budget for certain fiscal years

be used for “instruction", as opposed to other function code categories such as salaries and

benefits for support services, student transportation, and, legal services.

OTHER SUBSTANTIVE ISSUES

According to First Class Education, if school spending can be reallocated so that 65 cents of

every dollar goes directly to the classroom, spending on instruction can be increased with no

accompanying increase in taxes.

A study done by Standard and Poor’s in fall 2005 analyzed data in nine states that, at the time,

were considering implementing the 65 percent solution. The study found no significant positive

correlation between the percentage of funds that districts spend on instruction and the percentage

of students who score proficient or higher on state reading and math tests"

Since the movement began, only four states have instituted this concept as public policy.

DW/mt