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.

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(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates/Conflicts with/Companion to/Relates to Duplicates HB303

SOURCES OF INFORMATION

State Department of Public Education (SDE)

Office of Attorney General

LFC Files

SUMMARY

Synopsis of Bill

This bill enacts a new section of the Public School Code cited as the "Elementary and Secondary School Voucher Act". The purpose of the act is to establish a voucher program that provides New Mexico's students the opportunity to attend their choice of public or private schools in order to best suit their individual needs and interests.

Significant Issues

Students participating in the program must meet the following criteria: for the 1999-2000 school year, the student's family income in 1998 cannot exceed 100 percent of the 1998 federal poverty guidelines; for the 2000-2001 school year, the student's family income in 1999 cannot exceed 185 percent of the 1999 federal poverty guidelines; for the 2001-2002 school year, the student's family income in 2000 cannot exceed 235 percent of the 2000 federal poverty guidelines; for the 2002-2003 school year and subsequent years, all students shall be eligible to participate in the program.

To be eligible for participation in the program, the bill requires private schools to register with the superintendent of a local school district, to maintain or develop anti-discrimination policies, to develop policies that do not discriminate against students who are recipients of vouchers.

Private schools that accept students that are participants in the program are not required to comply with local or state rules and regulations that would otherwise apply to public schools.

The bill proposes to issue the voucher note to the student in care of the student's parent or legal guardian. A private school or school district shall redeem the value of the voucher note from SDE in four installments beginning in September and ending in May.

The voucher program will be administered by the State Department of Education and in cooperation with school districts, the department must initiate a public awareness campaign about the program.

FISCAL IMPLICATIONS

This bill does not contain an appropriation.

The value of the voucher note will be equal to the amount of money generated by the student through the public school funding formula if the student had attended public school in his school attendance zone, excluding any district or school size adjustment and training and experience adjustment. The value of the voucher shall also include a proportionate allocation for the local school district's at risk funding and a proportionate per student amount for transportation expenses. The voucher note redemption value shall not exceed the tuition and fees charged by a private school for students not participating in the program unless the cost of educating the student is greater than the tuition and fees charged.

SDE estimates that approximately 39,828 students are currently enrolled in nonpublic and home schools. Students that meet the eligibility criteria and are enrolled in nonpublic and home schools and not currently generating units through the funding formula would require additional state funding. During the 1999-2000 school year, the first year of implementation, assuming that approximately 6,200 students currently enrolled in nonpublic and home schools would meet the eligibility criteria, and using a voucher value of $3,000.0, the cost would be $18,600.0.

Students that meet the eligibility requirement during the first three years of implementation and are currently enrolled in the public schools, generate units and funding through the public school funding formula. These students that would qualify and elect to attend private schools, a shift in funding would occur between the public and private schools, with the dollars essentially following the students. In addition, the bill requires that a proportionate amount per student for transportation be included in the calculation of the value of the vouchers, thus it is possible that local school districts' transportation funding would also be reduced.

The most significant impact to the general fund would occur during the forth year of implementation, school year 2002-03 and subsequent years, when all students (private and home school) are eligible to participate in the program. Utilizing current enrollment figures for nonpublic and home schools of 39,828 students less a conservative estimate of 7,200 that would be covered during the first three years, and a estimated voucher value of $4,000 per student, the additional cost to the state to provide voucher notes would be approximately $130.5 million dollars. This cost estimate assumes that all students attending private schools and home schools in school year 2002-03 would participate and would be eligible to receive the full value.

According to SDE, the cost to process payments to private schools through Department of Finance and Administration for qualified students in the program would be approximately $75.00 per warrant issued.

ADMINISTRATIVE IMPLICATIONS

The State Department of Education will be required to administer and implement the program and indicates that there could be significant administrative impact. The department estimates that one additional FTE would be required to implement this program at a cost of $51.8.

CONFLICT/DUPLICATION/COMPANIONSHIP/RELATIONSHIP

This bill duplicates HB303.

TECHNICAL ISSUES

This bill does not require private schools to develop policies to prevent discrimination on the basis of

age, religion, sex, physical or mental handicap or serious medical condition.

This bill does not address accreditation issues for private schools participating in the program. An assumption must be made that private schools are not required to be accredited by the SBE or any another educational accrediting body.

SDE indicates that the bill should provide that payment is made at the close of the month for which the student has attended the private school so as not to offend the provisions of Section 30-23-2 NMSA 1978, which requires that services must be rendered prior to payment with public funds.

OTHER SUBSTANTIVE ISSUES

Attorney General Patricia A. Madrid recently issued an opinion regarding the use of public money to fund a school voucher program and it's permissibility under the New Mexico Constitution. The following is a summary of the information contained in the opinion issued January 29, 1999:

Conclusion:

"A school voucher program involving the use of public money to provide parents of private school children with tuition assistance raises serious and substantial state constitutional questions, most significantly under Article XII, Section 3, which proscribes the use of public money for the support of private schools, and the anti-donation clause of Article IX, Section 14.

Article XII, Section 3 provides that "no part of the proceeds arising from the sale or disposal of lands granted to the state by congress, or any other funds appropriated, levied or collected for educational purposes, shall be used for the support of any sectarian, denominational or private school, college or university." The Attorney General concluded "that a New Mexico court addressing the issue would likely conclude that tuition assistance under a voucher program constitutes the unconstitutional use of public money for the support of sectarian, denomination or private schools, whether the money is paid directly to the schools, the students or the parents".

The anti-donation clause of Article IX, Section 14 provides that "neither the state nor any county, school district or municipality, except as otherwise provided in this constitution, shall directly or indirectly lend or pledge its credit or make any donation to or in aid of any person, association or public or private institution....". According to the Attorney General, "the anti-donation clause appears to prohibit the state from providing tuition assistance in the form of vouchers to private school students. Whether the beneficiary of the assistance is the parents or the schools, the use of public money to subsidize the education of private school students, without more, is a donation to private persons or entities in violation of the state constitution. The educational purpose of private schools, an undeniably public purpose, is not sufficient to immunize the voucher program from constitutional challenge".

Article XII, Section 1 requires the state to maintain a uniform system of free public education. If a substantial proportion of the resources currently directed toward the support of the public schools is utilized in support of the voucher notes, the state's ability to maintain the mandated system of free public schools may be compromised.

Attached is an in-depth analysis of Constitutional issues provided by the State Department of Public Education.

CTF/gm

Attachment