NOTE: As provided in LFC policy, this report is intended for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used in any other situation.

The LFC is only preparing FIRs on bills referred to the Senate Finance Committee, the Senate Ways and Means Committee, the House Appropriations and Finance Committee and the House Taxation and Revenue Committee. The chief clerks are responsible for preparing and issuing all other bill analyses.

Only the most recent FIR version, excluding attachments, is available on the Intranet. Previously issued FIRs and attachments may be obtained from the LFC office in Room 416 of the State Capitol Building.

(Parenthesis ( ) Indicate Expenditure Decreases)

Conflicts with HB256

SOURCES OF INFORMATION

State Department of Public Education (SDE)

SUMMARY

Synopsis of Bill

House Bill 644 amends the Severance Tax Bonding Act to increase the percentage of severance tax revenues that may be used for severance tax bonds from a maximum of fifty percent to two-thirds of the annual deposits into the severance tax bonding fund and designates fifty percent of severance tax bond capacity to the Twenty-First Century Public School Capital Equity and Technology Fund. This bill also amends the Public School Capital Outlay Act for the following: changes the name to the Twenty-First Century Public School Capital Equity and Technology Act; includes the funding of necessary technology infrastructure for school districts statewide; removes the requirement that a school district must be indebted at not less than seventy-five percent of the total debt authorized by law; and adds two new members to the Twenty-First Century Public School Capital Equity and Technology Council.

Significant Issues

The purpose of the Public School Capital Outlay Act is to meet critical school district capital outlay needs which cannot be met by the school district after it has exhausted all available sources. Applications for assistance by local school districts to the Public School Capital Outlay Council are made in accordance with requirements of the council. Currently, seven requirements must be met in order to qualify for assistance, one of which is that a school district be indebted at not less than seventy-five percent of the total debt authorized by law. According to SDE, approximately thirty-five school districts qualify under current requirements. Removal of the this requirement will allow all eighty-nine school districts to participate and receive assistance pursuant to the Twenty-First Century Public School Capital Equity and Technology Act.

The Public School Capital Outlay Council consists of 9 members. This bill would increase membership to allow two people from the private sector, one appointed by the Speaker of the New Mexico House of Representatives and one appointed by the President Pro Tempore of the New Mexico Senate, both of which should be recognized for outstanding expertise and preeminence in the field of technology design, manufacture or use, especially for educational purposes and in educational settings.

FISCAL IMPLICATIONS

According to State Board of Finance, this bill will provide approximately $35 - 40 million per year from severance tax bonds for statewide public school capital outlay needs.

MGT of America, the independent contractor chosen to conduct the capital outlay study gathered data from 170 schools located in 35 districts and through an extrapolation process applied to the other districts, MGT of America estimated the total capital outlay needs for public schools to be $1,486 billion. The Public School Capital Outlay Task Force recommended a shared funding framework with the state funding approximately $830 million of the total identified need over a ten or fifteen year period and the local school districts providing $656 million over the same period.

The Public School Capital Outlay Equity Task Force identified several sources of revenue for a program similar to this in order to meet public school capital outlay needs. MGT of America recommended an amount between $55 million per year over a 15 year period or $83.0 million per year over a 10 year period.

ADMINISTRATIVE IMPLICATIONS

Included in the Public School Support request is $185.5 for additional staff, 2 at SDE and 1 at Department of Finance and Administration (DFA), to maintain and operate a capital outlay database. The LFC recommended the request for additional staff and funding is included in HB3/aHEC and SB3/aSEC in the respective SDE and DFA budgets.

CONFLICT/DUPLICATION/COMPANIONSHIP/RELATIONSHIP

This bill conflicts with HB256. HB 256 amends the Public School Capital Outlay Act to remove the requirement that a school district be indebted at not less than seventy-five percent of the total debt authorized by law and provides a funding formula to be used by the Public School Capital Outlay Council to determine the state's share for capital outlay projects approved and ranked by the council. These changes would be effective July 1, 2000.

CTF/prr