0001|                           SENATE BILL 130
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0002|     43RD LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 1998
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0003|                            INTRODUCED BY
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0004|                          RICHARD M. ROMERO
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0005|     
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0006|                                   
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0007|     
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0008|                                   
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0009|     
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0010|                                AN ACT
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0011|     RELATING TO PUBLIC SCHOOLS; PROVIDING FOR A LOCAL OPTION
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0012|     PROPERTY TAX FOR SCHOOL DISTRICT OPERATIONAL PURPOSES;
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0013|     CREATING A FUND; PROVIDING FOR DISTRIBUTION; AMENDING AND
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0014|     ENACTING SECTIONS OF THE NMSA 1978; MAKING AN APPROPRIATION;
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0015|     DECLARING AN EMERGENCY.
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0016|     
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0017|     BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
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0018|          Section 1.  [<u>NEW MATERIAL</u>] SHORT TITLE.--Sections 1
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0019|     through 7 of this act may be cited as the "Local Operational
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0020|     School Levy Act".
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0021|          Section 2.  [<u>NEW MATERIAL</u>] DEFINITIONS.--As used in the
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0022|     Local Operational School Levy Act:
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0023|               A.  "average daily attendance program costs" means
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0024|     program costs, as defined in the Public School Finance Act,
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0025|     for any school district as calculated using membership, as
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<center>- 1 -</center>

0001|     defined in the Public School Finance Act, on the fortieth, one
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0002|     hundred twentieth and one hundred sixtieth day of the
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0003|     applicable school year in that school district;
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0004|               B.  "department" means the state department of
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0005|     public education;
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0006|               C.  "local school board" means the governing body
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0007|     of a school district;
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0008|               D.  "operational purposes" means those expenditure
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0009|     categories for the general operation of a school district that
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0010|     are defined in state board of education rules for uniform
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0011|     financial accounting and budgeting for New Mexico school
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0012|     districts;
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0013|               E.  "superintendent" means the superintendent of
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0014|     public instruction; and
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0015|               F.  "taxable value of property" means the sum of
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0016|     the following:
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0017|                    (1)  the "net taxable value", as that term is
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0018|     defined in the Property Tax Code, of property subject to
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0019|     taxation pursuant to the Property Tax Code;
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0020|                    (2)  the "assessed value" of "products" as
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0021|     those terms are defined in the Oil and Gas Ad Valorem
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0022|     Production Tax Act; 
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0023|                    (3)  the "assessed value" of "equipment" as
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0024|     those terms are defined in the Oil and Gas Production
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0025|     Equipment Ad Valorem Tax Act; and
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<center>- 2 -</center>

0001|                    (4)  the "taxable value" of "copper mineral
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0002|     property" as those terms are defined in the Copper Production
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0003|     Ad Valorem Tax Act.
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0004|          Section 3.  [<u>NEW MATERIAL</u>] LOCAL SCHOOL BOARD--
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0005|     AUTHORIZATION TO IMPOSE A TAX FOR SCHOOL DISTRICT OPERATIONAL
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0006|     PURPOSES--RESOLUTION--ELECTION REQUIRED.--
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0007|               A.  A local school board may adopt a resolution
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0008|     authorizing, for school district operational purposes, the
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0009|     imposition of a property tax upon the taxable value of
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0010|     property in the school district.  The total tax imposition
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0011|     that may be authorized under the Local Operational School Levy
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0012|     Act shall not exceed a rate of four dollars ($4.00) on each
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0013|     one thousand dollars ($1,000) of taxable value of property in
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0014|     the school district.
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0015|               B.  The tax authorized pursuant to Subsection A of
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0016|     this section shall not be imposed unless the question of
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0017|     authorizing the imposition of the tax is submitted to the
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0018|     voters of the district.  The local school board shall not
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0019|     submit to the voters at any one election a question
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0020|     authorizing the imposition of a tax under the Local
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0021|     Operational School Levy Act at a rate greater than two dollars
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0022|     ($2.00) on each one thousand dollars ($1,000) of taxable value
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0023|     of property in the school district or for a period of more
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0024|     than ten years.  However, if a tax is imposed pursuant to
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0025|     approval at a special school district election prior to the
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0001|     1999 regular school district election, the period for which
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0002|     the tax is imposed shall be for a period ending no later than
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0003|     December 31, 2007.
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0004|               C.  During the three years prior to the expiration
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0005|     of any period during which a tax has been authorized to be
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0006|     imposed pursuant to the Local Operational School Levy Act, the
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0007|     local school board may adopt a resolution pursuant to
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0008|     Subsection A of this section and submit to the voters of the
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0009|     district the question of authorizing the imposition of a tax
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0010|     pursuant to that act for an additional period not to exceed
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0011|     ten years with the tax to be certified and first imposed for
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0012|     the period immediately succeeding the last year of the period
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0013|     the tax was previously authorized to be imposed.
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0014|               D.  Any resolution adopted pursuant to Subsection A
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0015|     of this section shall specify:
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0016|                    (1)  the rate of the proposed tax;
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0017|                    (2)  the date a referendum will be held to
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0018|     submit the question of imposition of the tax to the voters of
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0019|     the school district;
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0020|                    (3)  the period of time the tax is authorized
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0021|     to be imposed; and
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0022|                    (4)  the proposed use of the revenues from the
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0023|     proposed tax.
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0024|               E.  The local school board shall mail the
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0025|     superintendent a copy of the resolution authorizing a tax
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0001|     pursuant to Subsection A of this section within two weeks
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0002|     following its adoption by the local school board.
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0003|               F.  Any amounts received by the school district
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0004|     pursuant to the provisions of the Local Operational School
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0005|     Levy Act shall be expended only for operational purposes of
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0006|     the school district.
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0007|          Section 4.  [<u>NEW MATERIAL</u>] CONDUCT OF ELECTION--
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0008|     BALLOT.--
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0009|               A.  The question of authorizing the imposition of a
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0010|     tax pursuant to the Local Operational School Levy Act shall be
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0011|     submitted to the voters at the first regular school district
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0012|     election following the adoption of a resolution pursuant to
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0013|     Section 3 of the Local Operational School Levy Act.  However,
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0014|     if a local school board deems it necessary, it may call a
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0015|     special school district election to submit to the voters the
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0016|     initial question of the authorization of a tax pursuant to the
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0017|     Local Operational School Levy Act.  Thereafter, the question
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0018|     of authorizing the imposition of any additional tax pursuant
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0019|     to that act shall be submitted to the voters only at regular
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0020|     school district elections.
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0021|               B.  The proclamation calling the election shall be
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0022|     filed and published as required pursuant to the School
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0023|     Election Law and shall specify:
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0024|                    (1)  the date on which the election will be
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0025|     held;
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<center>- 5 -</center>

0001|                    (2)  the question of whether the imposition of
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0002|     a property tax for school district operational purposes shall
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0003|     be authorized pursuant to the Local Operational School Levy
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0004|     Act at a rate not to exceed the rate specified in the
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0005|     authorizing resolution and for the period specified in that
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0006|     resolution;
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0007|                    (3)  the precincts in each county in which the
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0008|     election is to be held and the location of each polling place;
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0009|                    (4)  the hours each polling place will be
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0010|     open; and 
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0011|                    (5)  the date and time of the closing of the
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0012|     registration books by the county clerk as required by law.
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0013|               C.  The ballot shall include the information
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0014|     specified in Paragraph (2) of Subsection B of this section and
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0015|     shall present the voter the choice of voting "for the local
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0016|     operational school levy" or "against the local operational
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0017|     school levy".
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0018|               D.  The election shall be held, conducted and
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0019|     canvassed pursuant to the School Election Law. 
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0020|               E.  The local school board shall notify the
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0021|     superintendent of the results of the election immediately upon
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0022|     completion of the canvass.
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0023|               F.  Any resolution authorizing a tax pursuant to
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0024|     the Local Operational School Levy Act shall be adopted by a
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0025|     date necessary to ensure that the results of the election on
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<center>- 6 -</center>

0001|     the question of imposing the tax shall be certified no later
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0002|     than June 15 of the property tax year for which the tax rates
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0003|     will first be certified.
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0004|          Section 5.  [<u>NEW MATERIAL</u>] IMPOSITION OF TAX--
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0005|     CERTIFICATION BY DEPARTMENT OF FINANCE AND ADMINISTRATION--
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0006|     DISCONTINUANCE OF TAX.--
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0007|               A.  If a majority of the voters voting on the
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0008|     question votes for a local operational school levy pursuant to
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0009|     a resolution adopted pursuant to the Local Operational School
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0010|     Levy Act, the tax shall be imposed for the earliest period for
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0011|     which the tax rate may be certified, except as otherwise
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0012|     provided in that act.  The tax rate shall be certified by the
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0013|     department of finance and administration and imposed,
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0014|     administered and collected in accordance with the provisions
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0015|     of the Oil and Gas Ad Valorem Production Tax Act, the Oil and
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0016|     Gas Production Equipment Ad Valorem Tax Act, the Copper
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0017|     Production Ad Valorem Tax Act and the Property Tax Code.
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0018|               B.  If a majority of the voters voting on the
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0019|     question votes against a local operational school levy, the
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0020|     tax shall not be imposed.  The local school board shall not
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0021|     again adopt a resolution authorizing the imposition of a tax
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0022|     pursuant to the Local Operational School Levy Act for at least
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0023|     two years after the date of the resolution that the voters
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0024|     rejected.
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0025|               C.  The department of finance and administration
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<center>- 7 -</center>

0001|     shall not certify the tax rates for taxes authorized pursuant
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0002|     to the Local Operational School Levy Act in any year in which
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0003|     the superintendent certifies by July 1 of that year that money
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0004|     in the local operational school fund for the next school year
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0005|     is not sufficient to meet the demands on the fund.  The tax
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0006|     rates authorized but not certified shall be certified in the
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0007|     first succeeding year for which the necessary appropriation to
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0008|     the local operational school fund for the next school year has
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0009|     been made.  
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0010|               D.  The department of finance and administration
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0011|     shall not certify the tax rate for a tax authorized pursuant
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0012|     to the Local Operational School Levy Act for any school
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0013|     district in the state in any year in which the state
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0014|     department of public education notifies the department of
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0015|     finance and administration by August 1 that the imposition of
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0016|     the taxes or the use of revenues from the taxes would result
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0017|     in:
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0018|                    (1)  the failure to qualify for certification
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0019|     by the secretary of the United States department of education
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0020|     as having in effect for the tax year in which the tax would
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0021|     otherwise be imposed, administered and collected a program of
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0022|     state aid that equalizes expenditures for free public
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0023|     education among local educational agencies in the state; or
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0024|                    (2)  when computed according to 20 U.S.C.
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0025|     7709(d)(1), a proportion of less than eighty percent in any
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0001|     school district.  
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0002|               E.  The local school board may discontinue by
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0003|     resolution the imposition of any tax authorized pursuant to
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0004|     the Local Operational School Levy Act.  The discontinuance
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0005|     resolution shall be mailed to the department of finance and
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0006|     administration and the superintendent no later than June 15 of
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0007|     the year in which a tax rate pursuant to that act is not to be
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0008|     certified.
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0009|          Section 6.  [<u>NEW MATERIAL</u>] LOCAL OPERATIONAL SCHOOL
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0010|     FUND CREATED--APPROPRIATION.--There is created in the state
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0011|     treasury the "local operational school fund".  The fund shall
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0012|     be invested as other state funds are invested.  Earnings on
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0013|     balances in the local operational school fund shall be
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0014|     credited to the fund, and amounts in the fund are appropriated
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0015|     for the purposes of the Local Operational School Levy Act.
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0016|          Section 7.  [<u>NEW MATERIAL</u>] STATE GUARANTEE--STATE
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0017|     DISTRIBUTION--REMITTANCE OF EXCESS AMOUNTS.--
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0018|               A.  The state guarantee for a school district that
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0019|     has imposed a tax pursuant to the Local Operational School
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0020|     Levy Act shall be an amount equal to the product obtained by
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0021|     multiplying two and one-half percent by the tax rate certified
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0022|     pursuant to that act and multiplying that product by the
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0023|     average daily attendance program cost for the school year
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0024|     beginning in any year a tax rate pursuant to that act is
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0025|     certified for that district.
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0001|               B.  The state distribution for a district for a
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0002|     school year is an amount that shall not exceed the state
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0003|     guarantee for that district and that is equal to the amount by
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0004|     which the guarantee exceeds the revenue from the tax imposed
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0005|     in that district pursuant to the Local Operational School Levy
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0006|     Act received during the period beginning June 1 of the year
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0007|     during which a tax rate under that act is certified for the
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0008|     district and ending May 31 of the next year.  If a school
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0009|     district is entitled to a state distribution, the
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0010|     superintendent shall distribute the calculated amount from the
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0011|     local operational school fund to the school district not later
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0012|     than June 30 of the calendar year following the year during
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0013|     which the tax rate was certified.
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0014|               C.  If the revenue received during the period June
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0015|     1 to May 31 from the imposition of the tax authorized by the
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0016|     Local Operational School Levy Act exceeds the state guarantee
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0017|     for the school year during which the revenue was received, the
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0018|     local school board shall remit to the local operational school
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0019|     fund by June 30 of the school year an amount equal to the sum
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0020|     of the amounts derived from the following three calculations:
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0021|                    (1)  one-fourth of the amount of revenue that
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0022|     exceeds one hundred twenty-five percent of the state guarantee
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0023|     but is less than one hundred fifty percent of the state
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0024|     guarantee;
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0025|                    (2)  one-half of the amount of revenue that is
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<center>- 10 -</center>

0001|     one hundred fifty percent or more of the state guarantee but
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0002|     less than one hundred seventy-five percent of the state
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0003|     guarantee; and 
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0004|                    (3)  three-fourths of the amount of revenue
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0005|     that is one hundred seventy-five percent or more of the state
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0006|     guarantee.
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0007|               D.  If the balance in the local operational school
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0008|     fund in any fiscal year is insufficient to pay the sum of the
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0009|     distribution amounts determined to be due to all the school
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0010|     districts entitled to a distribution, the amount necessary to
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0011|     pay all distribution amounts in full shall be transferred from
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0012|     the state-support reserve fund to the local operational school
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0013|     fund for distribution to school districts as required pursuant
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0014|     to this section.  However, if there is not a sufficient
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0015|     balance in the state support reserve fund to pay both the full
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0016|     state equalization guarantee distribution and the state
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0017|     distributions pursuant to this section, the state equalization
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0018|     guarantee distribution shall be made in full and, based on the
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0019|     amount available in the local operational school fund, each
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0020|     state distribution amount due pursuant to this section shall
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0021|     be reduced proportionately.
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0022|               E.  Distributions to school districts made pursuant
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0023|     to the Local Operational School Levy Act shall be supplemental
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0024|     to state equalization guarantee distributions made pursuant to
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0025|     the Public School Finance Act.  In no fiscal year shall the
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0001|     amount of state funding pursuant to the Public School Finance
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0002|     Act be reduced because of the imposition in one or more school
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0003|     districts of a tax pursuant to the Local Operational School
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0004|     Levy Act.  The absence of a distribution to a school district
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0005|     pursuant to that act shall not affect the amount of any state
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0006|     equalization guarantee distributions to that district pursuant
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0007|     to the Public School Finance Act.
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0008|          Section 8.  Section 7-37-7.1 NMSA 1978 (being Laws 1979,
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0009|     Chapter 268, Section 1, as amended) is amended to read:
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0010|          "7-37-7.1.  ADDITIONAL LIMITATIONS ON PROPERTY TAX
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0011|     RATES.--
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0012|               A.  Except as provided in Subsections D and E of
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0013|     this section, in setting the general property tax rates for
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0014|     residential and nonresidential property authorized in
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0015|     Subsection B of Section 7-37-7 NMSA 1978, the other rates and
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0016|     impositions authorized in Paragraphs (2) and (3) of Subsection
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0017|     C of Section 7-37-7 NMSA 1978, except the portion of the rate
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0018|     authorized in Paragraph (1) of Subsection A of Section
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0019|     4-48B-12 NMSA 1978 used to meet the requirements of Section
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0020|     27-10-4 NMSA 1978 <u>and except rates authorized pursuant to the
</u>    |
<u></u>0021| <u>    local operational school levy act</u>, and benefit assessments
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0022|     authorized by law to be levied upon net taxable value of
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0023|     property, assessed value or a similar term, neither the
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0024|     department of finance and administration nor any other entity
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0025|     authorized to set or impose a rate or assessment shall set a
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<center>- 12 -</center>

0001|     rate or impose a tax or assessment that will produce revenue
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0002|     from either residential or nonresidential property in a
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0003|     particular governmental unit in excess of the sum of a dollar
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0004|     amount derived by multiplying the appropriate growth control
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0005|     factor by the revenue due from the imposition on residential
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0006|     or nonresidential property, as appropriate, for the prior
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0007|     property tax year in the governmental unit of the rate,
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0008|     imposition or assessment for the specified purpose plus, for
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0009|     the calculation for the rate authorized for county operating
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0010|     purposes by Subsection B of Section 7-37-7 NMSA 1978 with
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0011|     respect to residential property, any applicable tax rebate
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0012|     adjustment.  The calculation described in this subsection
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0013|     shall be separately made for residential and nonresidential
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0014|     property.  Except as provided in Subsections D and E of this
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0015|     section, no tax rate or benefit assessment that will produce
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0016|     revenue from either class of property in a particular
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0017|     governmental unit in excess of the dollar amount allowed by
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0018|     the calculation shall be set or imposed.  The rates imposed
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0019|     pursuant to Sections 7-32-4 and 7-34-4 NMSA 1978 shall be the
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0020|     rates for nonresidential property that would have been imposed
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0021|     but for the limitations in this section.  As used in this
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0022|     section, "growth control factor" is a percentage equal to the
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0023|     sum of "percent change I" plus V where:
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0024|                    (1)  V = <u>(base year value + net new value)</u>,  
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0025|                                     base year value
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<center>- 13 -</center>

0001|     expressed as a percentage, but if the percentage calculated is
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0002|     less than one hundred percent, then V shall be set and used as
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0003|     one hundred percent;
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0004|                    (2)  "base year value" means the value for
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0005|     property taxation purposes of all residential or
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0006|     nonresidential property, as appropriate, subject to valuation
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0007|     under the Property Tax Code in the governmental unit for the
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0008|     specified purpose in the prior property tax year;
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0009|                    (3)  "net new value" means the additional
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0010|     value of residential or nonresidential property, as
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0011|     appropriate, for property taxation purposes placed on the
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0012|     property tax schedule in the current year resulting from the
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0013|     elements in Subparagraphs (a) through (d) of this paragraph
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0014|     reduced by the value of residential or nonresidential
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0015|     property, as appropriate, removed from the property tax
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0016|     schedule in the current year and, if applicable, the
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0017|     reductions described in Subparagraph (e) of this paragraph:
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0018|                         (a)  residential or nonresidential
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0019|     property, as appropriate, valued in the current year that was
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0020|     not valued at all in the prior year;
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0021|                         (b)  improvements to existing
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0022|     residential or nonresidential property, as appropriate; 
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0023|                         (c)  additions to residential or
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0024|     nonresidential property, as appropriate, or values that were
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0025|     omitted from previous years' property tax schedules even if
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<center>- 14 -</center>

0001|     part or all of the property was included on the schedule, but
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0002|     no additions of values attributable to valuation maintenance
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0003|     programs or reappraisal programs shall be included;
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0004|                         (d)  additions to nonresidential
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0005|     property due to increases in annual net production values of
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0006|     mineral property valued in accordance with Section 7-36-23 or
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0007|     7-36-25 NMSA 1978 or due to increases in market value of
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0008|     mineral property valued in accordance with Section 7-36-24
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0009|     NMSA 1978; and
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0010|                         (e)  reductions to nonresidential
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0011|     property due to decreases in annual net production values of
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0012|     mineral property valued in accordance with Section 7-36-23 or
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0013|     7-36-25 NMSA 1978 or due to decreases in market value of
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0014|     mineral property valued in accordance with Section 7-36-24
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0015|     NMSA 1978; and
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0016|                    (4)  "percent change I" means a percent not in
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0017|     excess of five percent that is derived by dividing the annual
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0018|     implicit price deflator index for state and local government
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0019|     purchases of goods and services, as published in the United
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0020|     States department of commerce monthly publication entitled
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0021|     "survey of current business" or any successor publication, for
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0022|     the calendar year next preceding the prior calendar year into
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0023|     the difference between the prior year's comparable annual
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0024|     index and that next preceding year's annual index if that
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0025|     difference is an increase, and if the difference is a
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<center>- 15 -</center>

0001|     decrease, the "percent change I" is zero.  In the event that
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0002|     the annual implicit price deflator index for state and local
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0003|     government purchases of goods and services is no longer
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0004|     prepared or published by the United States department of
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0005|     commerce, the department shall adopt by regulation the use of
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0006|     any comparable index prepared by any agency of the United
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0007|     States.
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0008|               B.  If, as a result of the application of the
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0009|     limitation imposed under Subsection A of this section, a
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0010|     property tax rate for residential or nonresidential property,
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0011|     as appropriate, authorized in Subsection B of Section 7-37-7
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0012|     NMSA 1978 is reduced below the maximum rate authorized in that
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0013|     subsection, no governmental unit or entity authorized to
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0014|     impose a tax rate under Paragraph (2) of Subsection C of
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0015|     Section 7-37-7 NMSA 1978 shall impose any portion of the rate
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0016|     representing the difference between a maximum rate authorized
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0017|     under Subsection B of Section 7-37-7 NMSA 1978 and the reduced
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0018|     rate resulting from the application of the limitation imposed
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0019|     under Subsection A of this section.
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0020|               C.  If the net new values necessary to make the
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0021|     computation required under Subsection A of this section are
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0022|     not available for any governmental unit at the time the
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0023|     calculation must be made, the department of finance and
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0024|     administration shall use a zero amount for net new values when
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0025|     making the computation for the governmental unit.
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<center>- 16 -</center>

0001|               D.  Any part of the maximum tax rate authorized for
    |
0002|     each governmental unit for residential and nonresidential
    |
0003|     property by Subsection B of Section 7-37-7 NMSA 1978 that is
    |
0004|     not imposed for a governmental unit for any property tax year
    |
0005|     for reasons other than the limitation required under
    |
0006|     Subsection A of this section may be authorized by the
    |
0007|     department of finance and administration to be imposed for
    |
0008|     that governmental unit for residential and nonresidential
    |
0009|     property for the following tax year subject to the restriction
    |
0010|     of Subsection D of Section 7-38-33 NMSA 1978.
    |
0011|               E.  If the base year value necessary to make the
    |
0012|     computation required under Subsection A of this section is not
    |
0013|     available for any governmental unit at the time the
    |
0014|     calculation must be made, the department of finance and
    |
0015|     administration shall set a rate for residential and
    |
0016|     nonresidential property that will produce in that governmental
    |
0017|     unit a dollar amount that is not in excess of the property tax
    |
0018|     revenue due for all property for the prior property tax year
    |
0019|     for the specified purpose of that rate in that governmental
    |
0020|     unit.
    |
0021|               F.  For the purposes of this section:
    |
0022|                    (1)  "nonresidential property" does not
    |
0023|     include any property upon which taxes are imposed pursuant to
    |
0024|     the Oil and Gas Ad Valorem Production Tax Act, the Oil and Gas
    |
0025|     Production Equipment Ad Valorem Tax Act or the Copper
    |
<center>- 17 -</center>

0001|     Production Ad Valorem Tax Act; and
    |
0002|                    (2)  "tax rebate adjustment" means, for those
    |
0003|     counties that have an ordinance in effect providing the
    |
0004|     property tax rebate pursuant to the Income Tax Act for the
    |
0005|     property tax year and that have not imposed for the property
    |
0006|     tax year either a property tax, the revenue from which is
    |
0007|     pledged for payment of the income tax revenue reduction
    |
0008|     resulting from the provision of the property tax rebate, or a
    |
0009|     property transfer tax, the estimated amount of the property
    |
0010|     tax rebate to be allowed with respect to the property tax
    |
0011|     year, and for any other governmental unit or purpose, zero;
    |
0012|     provided that any estimate of property tax rebate to be
    |
0013|     allowed is subject to review for appropriateness and approval
    |
0014|     by the department of finance and administration."
    |
0015|          Section 9.  Section 22-8-25 NMSA 1978 (being Laws 1981,
    |
0016|     Chapter 176, Section 5, as amended) is amended to read:
    |
0017|          "22-8-25.  STATE EQUALIZATION GUARANTEE DISTRIBUTION--
    |
0018|     DEFINITIONS--DETERMINATION OF AMOUNT.--
    |
0019|               A.  The state equalization guarantee distribution
    |
0020|     is that amount of money distributed to each school district to
    |
0021|     ensure that the school district's operating revenue, including
    |
0022|     its local and federal revenues as defined in this section, is
    |
0023|     at least equal to the school district's program cost.
    |
0024|               B.  "Local revenue", as used in this section, means
    |
0025|     ninety-five percent of receipts to the school district derived
    |
<center>- 18 -</center>

0001|     from that amount produced by a school district property tax
    |
0002|     applied at the rate of fifty cents ($.50) to each one thousand
    |
0003|     dollars ($1,000) of net taxable value of property allocated to
    |
0004|     the school district and to the assessed value of products
    |
0005|     severed and sold in the school district as determined under
    |
0006|     the Oil and Gas Ad Valorem Production Tax Act and upon the
    |
0007|     assessed value of equipment in the school district as
    |
0008|     determined under the Oil and Gas Production Equipment Ad
    |
0009|     Valorem Tax Act.
    |
0010|               C.  "Federal revenue", as used in this section,
    |
0011|     <u>excludes amounts that if taken into consideration in the
</u>    |
<u></u>0012| <u>    computation of the state equalization guarantee distribution
</u>    |
<u></u>0013| <u>    will result, under federal law or regulations, in the
</u>    |
<u></u>0014| <u>    reduction or elimination of federal school funding otherwise
</u>    |
<u></u>0015| <u>    receivable by the district, and</u> means: 
    |
0016|                    <u>(1)</u>  ninety-five percent of receipts to the
    |
0017|     school district <s>[excluding amounts which, if taken into
</s>    |
<s></s>0018| <s>    account in the computation of the state equalization guarantee
</s>    |
<s></s>0019| <s>    distribution, result, under federal law or regulations, in a
</s>    |
<s></s>0020| <s>    reduction in or elimination of federal school funding
</s>    |
<s></s>0021| <s>    otherwise receivable by the school district]</s> derived from the
    |
0022|     following:
    |
0023|                    <s>[(1)]</s> <u>(a)</u>  the school district's share of
    |
0024|     forest reserve funds distributed in accordance with Section
    |
0025|     22-8-33 NMSA 1978; and
    |
<center>- 19 -</center>

0001|                    <s>[(2)]</s> <u>(b)</u>  grants from the federal
    |
0002|     government as assistance to those areas affected by federal
    |
0003|     activity authorized in accordance with Sections <s>[236 through
</s>    |
<s></s>0004| <s>    240]</s> <u>7701 through 7714</u> of Title 20 of the United States
    |
0005|     Code (commonly known as "PL 874 funds") or an amount equal to
    |
0006|     the revenue the district was entitled to receive if no
    |
0007|     application was made for such funds but <s>[deducting from those
</s>    |
<s></s>0008| <s>    grants the additional amounts to which school districts would
</s>    |
<s></s>0009| <s>    be entitled because of the provisions of Subparagraph (D) of
</s>    |
<s></s>0010| <s>    Paragraph (2) of Subsection (d) of Section 238 of Title 20 of
</s>    |
<s></s>0011| <s>    the United States Code]</s> <u>excluding from those grants amounts

</u>    |
<u></u>0012| <u>    that the state is prohibited by federal law or regulations
</u>    |
<u></u>0013| <u>    from taking into consideration in the computation of the state
</u>    |
<u></u>0014| <u>    equalization guarantee distribution; or</u>
    |
0015|                    <u>(2)  with respect to a school district that
</u>    |
<u></u>0016| <u>    receives PL 874 funds and for which a proportion of less than
</u>    |
<u></u>0017| <u>    ninety-five percent is calculated for the purpose of taking
</u>    |
<u></u>0018| <u>    PL 874 funds into consideration in determining the state
</u>    |
<u></u>0019| <u>    equalization guarantee distribution, that lesser proportion of
</u>    |
<u></u>0020| <u>    receipts to the school district derived from grants from the
</u>    |
<u></u>0021| <u>    federal government as assistance to those areas affected by
</u>    |
<u></u>0022| <u>    federal activity authorized in accordance with Sections 7701
</u>    |
<u></u>0023| <u>    through 7714 of Title 20 of the United States Code (commonly
</u>    |
<u></u>0024| <u>    known as "PL 874 funds") or an amount equal to the revenue the
</u>    |
<u></u>0025| <u>    district was entitled to receive if no application was made
</u>    |
<center>- 20 -</center>

<u></u>0001| <u>    for such funds but excluding from those grants amounts that
</u>    |
<u></u>0002| <u>    the state is prohibited by federal law or regulations from
</u>    |
<u></u>0003| <u>    taking into consideration in the computation of the state
</u>    |
<u></u>0004| <u>    equalization guarantee distribution</u>.
    |
0005|               D.  To determine the amount of the state
    |
0006|     equalization guarantee distribution, the state superintendent
    |
0007|     shall:
    |
0008|                    (1)  calculate the number of program units to
    |
0009|     which each school district is entitled using the basic program
    |
0010|     membership of the fortieth day for all programs; provided that
    |
0011|     special education program units shall be calculated using the
    |
0012|     membership in special education programs on December 1; or
    |
0013|                    (2)  calculate the number of program units to
    |
0014|     which a school district operating under an approved year-round
    |
0015|     school calendar is entitled using the basic program membership
    |
0016|     on an appropriate date established by the state board; or
    |
0017|                    (3)  calculate the number of program units to
    |
0018|     which a school district with a basic program MEM of <s>[200]</s>
    |
0019|     <u>two hundred</u> or less is entitled by using the basic program
    |
0020|     membership on the fortieth day of either the prior or the
    |
0021|     current year, whichever is greater; provided that special
    |
0022|     education program units shall be calculated using the
    |
0023|     membership in special education programs on December 1 of
    |
0024|     either the prior or the current year; and
    |
0025|                    (4)  using the results of the calculations in
    |
<center>- 21 -</center>

0001|     Paragraph (1), (2) or (3) of this subsection and the
    |
0002|     instructional staff training and experience index from the
    |
0003|     October report of the prior school year, establish a total
    |
0004|     program cost of the school district;
    |
0005|                    (5)  calculate the local and federal revenues
    |
0006|     as defined in this section;
    |
0007|                    (6)  deduct the sum of the calculations made
    |
0008|     in Paragraph (5) of this subsection from the program cost
    |
0009|     established in Paragraph (4) of this subsection; and
    |
0010|                    (7)  deduct the total amount of guaranteed
    |
0011|     energy savings contract payments that the state superintendent
    |
0012|     determines will be made to the school district from the
    |
0013|     <s>[public school energy efficiency fund]</s> <u>public school
</u>    |
<u></u>0014| <u>    utility conservation fund</u> during the fiscal year for which
    |
0015|     the state equalization guarantee distribution is being
    |
0016|     computed.
    |
0017|               E.  The amount of the state equalization guarantee
    |
0018|     distribution to which a school district is entitled is the
    |
0019|     balance remaining after the deductions made in Paragraphs (6)
    |
0020|     and (7) of Subsection D of this section.
    |
0021|               F.  The state equalization guarantee distribution
    |
0022|     shall be distributed prior to June 30 of each fiscal year. 
    |
0023|     The calculation shall be based on the local and federal
    |
0024|     revenues specified in this section received from June 1 of the
    |
0025|     previous fiscal year through May 31 of the fiscal year for
    |
<center>- 22 -</center>

0001|     which the state equalization guarantee distribution is being
    |
0002|     computed.  In the event that a district has received more
    |
0003|     state equalization guarantee funds than its entitlement, a
    |
0004|     refund shall be made by the district to the state general
    |
0005|     fund.
    |
0006|               G.  Notwithstanding the methods of calculating the
    |
0007|     state equalization guarantee distribution in this section and
    |
0008|     Laws 1974, Chapter 8, Section 22, if a school district
    |
0009|     received funds under Section 2391 of Title 42 USCA and if the
    |
0010|     federal government takes into consideration grants authorized
    |
0011|     by Sections <s>[236 through 240]</s> <u>7701 through 7714</u> of Title
    |
0012|     20 of the United States Code and all other revenues available
    |
0013|     to the school district in determining the level of federal
    |
0014|     support for the school district for the sixty-fourth and
    |
0015|     succeeding fiscal years, the state equalization guarantee
    |
0016|     distribution for school districts receiving funds under this
    |
0017|     subsection shall be computed as follows:
    |
0018|          fiscal year program cost           prior fiscal year
    |
0019|          excluding special education        state equalization
    |
0020|          for the year for which the    x    guarantee distribution
    |
0021|                                             state equalization guarantee       excluding special
    |
0022|          <u>distribution is being computed</u>        education
    |
0023|          <u></u>prior fiscal year program cost
    |
0024|          excluding special education
    |
0025|     plus special education funding in accordance with Paragraphs
    |
<center>- 23 -</center>

0001|     (1), (2) or (3) and (4) of Subsection D of this section and
    |
0002|     Section 22-8-21 NMSA 1978 plus an amount that would be
    |
0003|     produced by applying a rate of eight dollars forty-two and
    |
0004|     one-half cents ($8.425) to each one thousand dollars ($1,000)
    |
0005|     of net taxable value of property as defined in the Property
    |
0006|     Tax Code for property taxation purposes in the school district
    |
0007|     and to each one thousand dollars ($1,000) of the assessed
    |
0008|     value of products severed and sold in the school district as
    |
0009|     determined under the Oil and Gas Ad Valorem Production Tax Act
    |
0010|     <u>and the Copper Production Ad Valorem Tax Act</u> and upon the
    |
0011|     assessed value of equipment in the school district as
    |
0012|     determined under the Oil and Gas Production Equipment Ad
    |
0013|     Valorem Tax Act and then reduced by the total amount of
    |
0014|     guaranteed energy savings contract payments, if any, that the
    |
0015|     state superintendent determines will be made to the school
    |
0016|     district from the <s>[public school energy efficiency fund]</s>
    |
0017|     <u>public school utility conservation fund</u> during the fiscal
    |
0018|     year for which the state equalization guarantee distribution
    |
0019|     is being computed, equals the fiscal year state equalization
    |
0020|     guarantee distribution for the year for which the state
    |
0021|     equalization guarantee distribution is being computed.
    |
0022|          If at any time grants from the federal government as
    |
0023|     assistance to those areas affected by federal activity
    |
0024|     authorized in accordance with Sections <s>[236 through 240]</s>
    |
0025|     <u>7701 through 7714</u> of Title 20 of the United States Code
    |
<center>- 24 -</center>

0001|     (commonly known as "PL 874 funds") are reduced or are no
    |
0002|     longer available, the state equalization guarantee
    |
0003|     distribution shall be computed by the formula contained in
    |
0004|     this subsection plus an increase by fifty percent of the
    |
0005|     amount the prior year's
    |
0006|     PL 874 funds exceed PL 874 funds for the year for which the
    |
0007|     state equalization guarantee distribution is being computed."
    |
0008|          Section 10.  Section 22-8-31 NMSA 1978 (being Laws 1967,
    |
0009|     Chapter 16, Section 84, as amended) is amended to read:
    |
0010|          "22-8-31.  STATE-SUPPORT RESERVE FUND.--
    |
0011|               A.  The "state-support reserve fund" is created.
    |
0012|               B.  The state-support reserve fund shall be used
    |
0013|     only to augment the appropriations for the state equalization
    |
0014|     guarantee distribution <u>and the distributions pursuant to the
</u>    |
<u></u>0015| <u>    local Operational School Levy Act</u> in order to <s>[insure]</s>
    |
0016|     <u>ensure</u>, to the extent of the amount undistributed in the
    |
0017|     fund, that the maximum figures for such <s>[distribution]</s>
    |
0018|     <u>distributions</u> established by law shall not be reduced.
    |
0019|               C.  The undistributed money in the state-support
    |
0020|     reserve fund shall be invested by the state treasurer in
    |
0021|     interest-bearing securities of the United States government or
    |
0022|     in certificates of deposit in qualified banks and in savings
    |
0023|     and <s>[loans]</s> <u>loan</u> associations whose deposits are insured
    |
0024|     with an agency of the United States.  The state treasurer may
    |
0025|     deposit money from the state-support reserve fund or any other
    |
<center>- 25 -</center>

0001|     fund in one or more accounts with any such bank or federally
    |
0002|     insured savings and loan association, but the state treasurer,
    |
0003|     in any official capacity, shall not deposit money from
    |
0004|     <s>[said]</s> <u>that</u> fund or any other fund in any one <s>[such]</s>
    |
0005|     federally insured savings and loan association the aggregate
    |
0006|     of which would exceed the amount of federal savings and loan
    |
0007|     insurance corporation insurance for a single public account. 
    |
0008|     Income from these investments shall be periodically credited
    |
0009|     to the general fund.
    |
0010|               D.  At least forty-five days before the money is
    |
0011|     needed, the <s>[chief]</s> <u>state superintendent</u> shall notify the
    |
0012|     state treasurer in writing of the amount that will be needed
    |
0013|     for <u>the state equalization guarantee</u> distribution.  <u>At
</u>    |
<u></u>0014| <u>    least twenty-five days before the money is needed, the state
</u>    |
<u></u>0015| <u>    superintendent shall notify the state treasurer in writing of
</u>    |
<u></u>0016| <u>    the amount that will be needed for transfer to the local
</u>    |
<u></u>0017| <u>    operational school fund for distribution pursuant to the Local
</u>    |
<u></u>0018| <u>    Operational School Levy Act.  The state treasurer shall
</u>    |
<u></u>0019| <u>    transfer to the local operational school fund the amount
</u>    |
<u></u>0020| <u>    requested or the remaining unencumbered balance in the state-
</u>    |
<u></u>0021| <u>    support reserve fund after the state equalization guarantee
</u>    |
<u></u>0022| <u>    distribution amount has been subtracted, whichever is less.</u>
    |
0023|               E.  In the event that local or federal revenues as
    |
0024|     defined in Section <s>[77-6-19 NMSA 1953]</s> <u>22-8-25 NMSA 1978</u>
    |
0025|     are received after May 31 of the fiscal year for which the
    |
<center>- 26 -</center>

0001|     state equalization guarantee distribution is being computed
    |
0002|     and it is therefore necessary to use money from the state-
    |
0003|     support reserve fund to augment the appropriation for the
    |
0004|     state equalization guarantee distribution, the <s>[chief]</s>
    |
0005|     <u>state superintendent</u>, upon receipt by the school district of
    |
0006|     the delayed local or federal revenues, shall deduct the
    |
0007|     appropriate amount from the current state equalization
    |
0008|     guarantee distribution to that school district and reimburse
    |
0009|     the state-support reserve fund in the amount of the deduction.
    |
0010|               F.  It is the intent of the legislature that the
    |
0011|     <u>state-support reserve</u> fund be reimbursed in the amount of
    |
0012|     the yearly <s>[distribution]</s> <u>distributions</u> by appropriation
    |
0013|     in the year following the distribution so that the fund at the
    |
0014|     beginning of each fiscal year shall have a credit balance of
    |
0015|     at least ten million dollars ($10,000,000).
    |
0016|               G.  Distribution from <s>[this]</s> <u>the state-support
</u>    |
<u></u>0017| <u>    reserve</u> fund shall be made in the same manner and on the same
    |
0018|     basis as the state equalization guarantee distribution."
    |
0019|          Section 11.  EMERGENCY.--It is necessary for the public
    |
0020|     peace, health and safety that this act take effect
    |
0021|     immediately.
    |
0022|                              
    |