SENATE MEMORIAL 135

52nd legislature - STATE OF NEW MEXICO - first session, 2015

INTRODUCED BY

John Pinto

A MEMORIAL

REQUESTING THAT THE LEGISLATIVE FINANCE COMMITTEE AND THE LEGISLATIVE EDUCATION STUDY COMMITTEE, TOGETHER WITH THE PUBLIC EDUCATION DEPARTMENT, THE DEPARTMENT OF FINANCE AND ADMINISTRATION, THE PUBLIC SCHOOL CAPITAL OUTLAY COUNCIL AND REPRESENTATIVES OF STAKEHOLDER GROUPS, STUDY THE PROVISIONS OF THE PUBLIC SCHOOL CODE RELATING TO FEDERAL IMPACT AID AND OTHER FEDERAL PAYMENT-IN-LIEU-OF-TAXES PROVISIONS; THE PUBLIC SCHOOL FUNDING FORMULA SIZE ADJUSTMENT FACTOR RELATING TO POPULATION CENTERS AND RURAL, ISOLATED SCHOOLS IN THE SAME SCHOOL DISTRICT; THE EFFECT OF FEDERAL "SEQUESTRATION" OF FUNDS; AND RELEVANT CHANGES IN FEDERAL AND STATE LAW SINCE IMPLEMENTATION OF THE PUBLIC SCHOOL CAPITAL OUTLAY STANDARDS-BASED PROCESS.

     WHEREAS, many local school districts across the United States include within their boundaries parcels of land that are owned by the federal government or that have been removed from the local tax rolls by the federal government, including Indian lands; and

     WHEREAS, these school districts face special challenges in providing a quality education to children living on Indian lands and federal lands, such as military bases and other federal installations; and

     WHEREAS, until the mid-1970s, almost all school districts in the United States relied primarily on property tax receipts for both their operational and capital outlay expenditures; and

     WHEREAS, in 1950, President Harry S. Truman signed federal legislation that provides impact aid funds for general operational purposes to school districts burdened by an inability to raise substantial property taxes; and

     WHEREAS, a total of twenty-nine New Mexico school districts have a portion of tax-exempt lands, such as military bases, Indian lands, low-rent housing properties or other federal properties, and, to a lesser extent, concentrations of children who have parents in the uniformed services or who are employed on eligible federal properties but do not live on federal property; and

     WHEREAS, in 1974, the New Mexico legislature passed and the governor signed into law an equalized public school operational funding formula that relies on the tax resources of the entire state rather than the property tax wealth of individual school districts; and

     WHEREAS, during the same time, New Mexico experienced what could be described as solid and reliable revenue growth; and

     WHEREAS, using a combination of other tax resources and property taxes, New Mexico was able to fund its public school districts through a state equalization guarantee provision in the operational funding formula; and

     WHEREAS, in 1981, the legislature enacted and the governor signed tax relief bills that became known as the "Big Mac", named after one of the bills' sponsors, Representative Colin McMillan of Roswell; and

     WHEREAS, provisions of the Big Mac reduced the property tax rate for school districts from eight dollars ninety-two and one-half cents ($8.925) per one thousand dollars ($1,000) in taxable valuation to fifty cents ($.50), making property tax no longer a source of public school funding and requiring public school operations to be funded almost entirely by the state's general fund; and

     WHEREAS, as a result, New Mexico has avoided the litigation that many states using local funding for public schools have faced; and

     WHEREAS, since school districts no longer relied on property taxes to fund public schools, state law was amended to allow the state to take credit for ninety-five percent of all impact aid basic support payments while taking no credit for special education students and students residing on Indian lands; and

     WHEREAS, New Mexico school districts continued to rely primarily on locally generated property taxes to fund their capital outlay needs; and

     WHEREAS, in 2000, a state district court found that New Mexico's method for funding public school capital outlay violated the state constitution's requirement for establishment and maintenance of a "uniform" and "sufficient" free public school system; and

     WHEREAS, from 2003 to the present time, public school capital outlay funding has been based on a needs-based sliding scale, with districts that have a greater need and that have made a local match commitment receiving priority in funding requests;

     NOW, THEREFORE, BE IT RESOLVED BY THE SENATE OF THE STATE OF NEW MEXICO that the legislative finance committee and the legislative education study committee, together with the public education department, the department of finance and administration, the public school capital outlay council and representatives of the public school facilities authority, the New Mexico association of school business officials and the New Mexico coalition of educational leaders to study the provisions of federal and state laws related to federal impact aid and payment in lieu of taxes, the effect of federal "sequestration" of funds and the so-called "sparsity factor" in the public school funding formula in light of changes in federal and state law since the 2003 implementation of the standards-based capital outlay funding formula; and

     BE IT FURTHER RESOLVED that the results of this study be reported to the legislative finance committee, the legislative education study committee and the governor before the 2016 legislative session; and

     BE IT FURTHER RESOLVED that copies of this memorial be transmitted to the respective directors of the legislative finance committee and the legislative education study committee, the respective secretaries of public education and finance and administration, the director of the public school facilities authority and the respective executive directors of the New Mexico association of school business officials and the New Mexico coalition of educational leaders.

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