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(Parenthesis ( ) Indicate Revenue Decreases)

Duplicates/Conflicts with/Companion to/Relates to

SOURCES OF INFORMATION

Commission on Higher Education (CHE)

SUMMARY

Synopsis of HAFC Amendment

This amendment strikes House Education Committee Amendments 3, 4 and 5 which extended the appropriation usage from the fiscal year 2003 to 2004. The appropriation in its entirety is stricken.

Synopsis of HEC Amendment

This amendment strikes language dealing with participation and matching payments for individuals engaged in the New Mexico Works Act and extends the appropriation usage from the fiscal year 2003 to 2004.

Synopsis of Bill

This bill appropriates $608.7 to the CHE to implement and administer programs under the Education Trust Act. This bill amends existing law as follows: includes language that allows beneficiaries to use their funds at accredited private post-secondary institutions or accredited private and public post-secondary institutions outside of the state; incorporates language allowing the Board to set refund amounts for terminated contracts; incorporates language allowing New Mexico to match a portion of the contributions made by low-income families; incorporates language allowing the State Investment Officer or another investment firm to invest the funds, thereby allowing the state to maximize the return on the funds paid into the pre-paid tuition/college savings program; removes language that deems all beneficiaries as residents for tuition purposes; strengthens the language prohibiting the creation of an obligation to the state; provides for the Board to set details of what will be provided in an annual report to the investor; and provides for the Board to set the date for the submission of an annual report on the status of the program.

Significant Issues

According to the CHE, the appropriation made in this bill is meant to be a loan to be repaid through earnings of the Education Trust Fund (Fund).

FISCAL IMPLICATIONS

The appropriation of $608.7 contained in this bill is a non-recurring expense to the general fund for expenditure in fiscal years 2000 through 2004. Any unexpended or unencumbered balance remaining at the end of FY04 shall revert to the general fund. If at the end of a fiscal year beginning after July 1, 2004 the assets of the Fund are in excess of those required to meet the obligations of that fund, the excess shall be transferred to the general fund.

ADMINISTRATIVE IMPLICATIONS

According to the CHE, the Board anticipates out sourcing the administration of the program.

OTHER SUBSTANTIVE ISSUES

According to the CHE, the Board has studied the need for and feasibility of creating a statewide prepaid tuition program, determining that it is in the best interest of the state as it allows families to purchase future tuition credits at today's rates.

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