Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance

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

if they are used for other purposes.

Current FIRs (in HTML & Adobe PDF formats) are a vailable on the NM Legislative Website (legis.state.nm.us).

Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and

attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.

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

SPONSOR Miera

ORIGINALDATE

LAST UPDATED

8/16/08

8/18/08 HB 2/aHTC/aHAFC/aSFL#1

SHORT TITLE School Bus Transportation Funding

SB

ANALYST Aguilar

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY09

FY10

$3,200.0

Non Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Public Education Department (PED

SUMMARY

Synopsis of SFl Amendment #1

Senate Floor Amendment #1 to House Bill 2 as amended removes the HAFC and HTC

amendments.

This returns the bill to its original appropriation of $3.2 million for providing supplemental

funding to school districts for higher school bus fuel costs and removes all accountability

language contained in the HAFC amendment.

SIGNIFICANT ISSUE

It appears that removing accountability language would result in PED distributing these funds

through the transportation formula allowing districts to spend the money as they see fit and not

necessarily on fuel as the appropriation is intended. Some superintendents have testified they do

not need additional funds for FY09 but would receive money through the distribution

nonetheless.

House Bill 2/aHTC/aHAFC/aSFL#1 – Page

2

Synopsis of HAFC Amendment

The House Appropriations and Finance Committee amendment to House Bill 2 makes technical

changes to language and provides for PED to evaluate funding for fuel costs and adjust

distributions to school districts and bus contactors. The amendment also provides for the

department to take credit at the end of FY09 for any over payments of fuel costs to school

districts and bus contactors.

SIGNIFICANT ISSUES

The provision for PED to take credit for overpayments at the end of FY09 is contained in the

amendment to assure that these funds are used only for school bus fuel. Budget transfers out of

fuel budget line items will not be permitted with credit being taken by the department for all

funds remaining in these lines items at the end of FY09.

Synopsis of HTC Amendment

The House Transportation Committee amendment to House Bill 2 increased the appropriation

from $3.2 million to $5 million.

SIGNIFICANT ISSUES

The $5 million appropriation contained in the amendment is based on an average fuel price of

$3.81 per gallon and reflects the average of the LFC/DFA consensus estimate of $3.71 and a

PED quarterly estimate of $3.90. The amount reflects the full year need for bus fuel at

current estimates not a band-aid until the regular session.

Synopsis of Original Bill

House Bill 2 appropriates $3,200,000 from the general fund to the Public Education Department

for the purpose of providing supplemental funding to school districts for higher school bus fuel

costs.

FISCAL IMPLICATIONS

The appropriation of $3,200,000 contained in this bill is a nonrecurring 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

Fuel costs across the state are currently well above the amount appropriated for school bus

transportation for FY09. Data available during the 2008 session projected an average diesel fuel

cost for FY09 of $2.66 per gallon. This amount is what is budgeted by PED for distribution in

the current school year. Extraordinary increases in the cost of fuel in recent months have

resulted in a revision of the FY09 estimate by LFC and DFA to $3.71 per gallon, a difference of

$1.05 per gallon. This amount, while different from the current daily wholesale cost of fuel is

reflective of a projected yearlong average. This cost also reflects the wholesale cost of fuel and

not the price at the pump since all districts and school bus contractors are exempt from paying

House Bill 2/aHTC/aHAFC/aSFL#1 – Page

3

the state special fuels tax and federal taxes, including those contractors who choose to purchase

fuel at the pump.

The appropriation contained in the bill would fund fuel for FY09 at $3.39 per gallon,

considerably lower than the LFC/DFA estimate. The methodology used in determining this

amount is unclear.

The bill provides for the distribution of any additional funding to be based on miles traveled for

the to-and-from transportation costs on public school students only.

In order to determine if districts need the funding immediately or if this matter could wait until

the regular session, data on district transportation cash balances was requested from PED. The

department indicates that of the 152 total districts and charters, 92 or 61 percent are showing

increased budgeted cash balances from FY08 to FY09 and 60 or 39 percent are showing

decreased budgeted cash balances from FY08 to FY09. These are not audited cash balances, but

rather budgeted cash balances. This is an important distinction to note since it appears that up to

45 percent of districts and charter school have not yet submitted their final reports to PED for

FY08. It is clear that this delay by the districts and charter schools is causing problems in

determining the ability of districts to participate in addressing this problem in the short term.

PED notes that school bus mileage averages about eight miles per gallon. For FY08, school

buses in New Mexico traveled 34,682,392 miles transporting public school students to and from

school. Every one cent fluctuation in the price of fuel has a statewide impact of $43,750.

If all of these factors are combined, it would indicate the potential need for additional funding in

FY09. Using the LFC/DFA projection this amount could be as high as $4.6 million if funding

was provided for the entire year.

Given the volatility of fuel prices and the recent down turn in gas and oil prices it may not be

necessary to fund the entire amount at this time. Using the PED mileage and use methodology

and the LFC/DFA estimate, an appropriation of $2.3 million would fund the additional fuel need

at $3.71 per gallon for half the fiscal year allowing the Legislature and the executive to

reevaluate pricing, district participation and overall need at the regular session.

ADMINISTRATIVE IMPLICATIONS

The Public Education Department will be required to distribute the additional appropriation

based on a per mile calculation.

ALTERNATIVES

The Legislature may wish to consider minor changes to the bill to allow PED to determine the

need for additional funding on a per request basis to allow for the evaluation of the use of district

resources to participate in the total need. As written, the department would distribute funding to

schools without the benefit of evaluating the need for the distribution.

PA/mt:svb