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/Relates to Senate Bill 18.

SOURCES OF INFORMATION

State Department Of Public Education (SDE)

SUMMARY

Synopsis of Bill

Senate Bill 22 amends sections of the Public School Finance Act to change the current budget approval process and amends current school district reporting requirements.

Significant Issues

Senate Bill 22 would no longer require the State Department of Public Education to approve school district operating budgets, giving greater control to local school boards over the budget process. This bill would require SDE to provide technical assistance during the budget preparation phase.

This bill would also no longer require local school districts to file financial reports with SDE but rather upon request, must file reports with the Legislative Finance Committee and the Legislative Education Study Committee.

FISCAL IMPLICATIONS

The analysis provided by SDE indicates that since school districts receive more than ninety percent of their operational funds from the state, SDE has a responsibility to determine if school district's fiscal resources are being utilized in accordance with law.

The State Department of Public Education is the grantee for approximately $200.0 million dollars in federal flow-through funds and as such, must provide specific financial information and assurance to the federal government regarding the financial operations of school districts. Removal of the department's budgetary authority would compromise New Mexico's ability to make certain assurances and could jeopardize federal funding.

Senate Bill 22 also requires school districts, upon request, to provide financial reports to the Legislative Finance Committee and the Legislative Education Study Committee. If the Legislative Finance Committee were to receive a significant number of requests for financial information, additional staff would be required.

ADMINISTRATIVE IMPLICATIONS

This bill requires SDE to provide technical assistance to local school boards during budget preparation.

According to SDE this bill would affect the department's ability to conduct program/budget reviews to address programmatic needs and compliance issues of school districts.

CONFLICT/DUPLICATION/COMPANIONSHIP/RELATIONSHIP

Senate Bill 22 relates to and conflicts with Senate Bill 18 which also proposes to amend the Public School Finance Act.

OTHER SUBSTANTIVE ISSUES

SDE indicates that this bill may be vulnerable to Constitutional challenge on the ground that it effectively removes the authority of the State Board of Education relative to financial direction, distribution of school funds and financial accounting.

CTF/sb