LFC Requester:
Gudgel
AGENCY BILL ANALYSIS
2011 REGULAR SESSION
WITHIN 24 HOURS OF BILL POSTING, EMAIL ANALYSIS TO:
LFC@NMLEGIS.GOV
And
DFA@STATE.NM.US
{Include the bill no. in the email subject line, e.g., HB2, and only attach one bill analysis and related documentation per email message}
SECTION I: GENERAL INFORMATION
{Indicate if analysis is on an original bill, amendment, substitute or a correction of a previous bill}
Check all that apply:
X Amendment
Original
Correction
Substitute
Date Prepared: January 28, 2011
Bill No: HB120
Sponsor: Stewart
Moratorium on New
Short
Schools & Buildings
Title:
Reviewing Agency:
Public School Facilities
Authority
Person Writing Analysis: Tim A. Berry
Phone: 505-988-5989
Email: tberry@nmpsfa.org
SECTION II: FISCAL IMPACT
APPROPRIATION (dollars in thousands)
Appropriation
FY11
Recurring
or Non-Rec
FY12
Fund
Affected
(Parenthesis ( ) Indicate Expenditure Decreases)
Duplicates/Conflicts with/Companion to/Relates to:
Duplicates/Relates to Appropriation in the General Appropriation Act
REVENUE (dollars in thousands)
Estimated Revenue
FY11
FY12
FY13
(Parenthesis ( ) Indicate Expenditure Decreases)
Duplicates, Relates to, Conflicts with, Companion to
Recurring
or Non-Rec
Fund
Affected
ESTIMATED ADDITIONAL BUDGET IMPACT (dollars in thousands)
FY11
Total
FY12
0
(285.9)
FY13
(567.3)
3 Year
Total Cost
(853.2)
Recurring
or Non-Rec
Recurring
until FY18
Fund
Affected
PSCOF
(Parenthesis ( ) Indicate Expenditure Decreases)
SECTION III: NARRATIVE
BILL SUMMARY
Synopsis:
House Bill 120 creates a new section in the Public School Code which bans the creation of
any new charter schools that have not already entered their planning year until 2017. In
addition, the bill would also restrict all school districts from constructing new schools until
2017, unless already approved and funded or the Public School Facilities Authority (PSFA)
certifies that the school must be replaced due to health and safety or adequacy standard
concerns and receives approval from the Public School Capital Outlay Council (PSCOC).
The bill exempts renovations or repairs to existing buildings.
This bill has been endorsed by the Legislative Education Study Committee
FISCAL IMPLICATIONS
A moratorium on new charter schools would reduce the requests for lease assistance funds for
charters in their first year of operations through the Public School Capital Outlay Council.
FY 09 – Six start-ups for total awards (after 80th day) of $722.8 thousand
FY 10 – Six start-ups for total awards (after 80th day) of $457.6 thousand
FY 11 – Nine start ups (80th day adjustment pending) of $802.8 thousand
FY09 – FY11 Average:
$661.0 thousand
There are three new charters approved for their planning year in FY11. It is unknown at this
time what the facility needs of these three schools will be for FY12, but are estimated at $95.3
thousand each (3 year average lease reimbursement for new charters).
SIGNIFICANT ISSUES
Section 22-8B-11 NMSA 1978 limits the number of start-up charters that can be approved by the
Public Education Commission to no more than 15 per year or up to seventy five in any five year
period.
The distribution of Lease Assistance funding to charter schools and school districts has increased
from $300/MEM in FY05 ($2 million) to $724/MEM in FY11 ($9.8 million). The cap of $7.5
million annually was removed in 2009, which may impact the ability of the PSCOC to fund
projects under the standards-based capital process which is funded by the same revenue source.
Charter School Lease Assistance
(millions)
$12
$10
$8
$6
$4
$2
$0
FY05
FY06
FY07
FY08
FY09
FY10
FY11
It is uncertain what the growth rate of the program will be going forward due to the increase in
number of charter schools and the use of lease assistance reimbursement as a funding stream for
lease-purchase arrangements. Lease purchase is viewed as the primary vehicle that will be used
by charter schools to meet the provisions in Section 22-8B-4.2, which condition approval of any
new or renewal of existing charters after July 1, 2015 on being in public buildings or meeting
one of the other exceptions, which includes a facility under a lease purchase agreement that will
meet adequacy standards.
(See Attachment A. for detailed history and program summary statistics.)
PERFORMANCE IMPLICATIONS
None noted.
ADMINISTRATIVE IMPLICATIONS
The PSFA is statutorily responsible for approving all public school construction projects
pursuant to Section 22-20-1 and will need to require proof from districts that the project was
approved and funding available prior to January 1, 2011.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
Senate Bill 2 (Nava) could be in conflict with this bill as it would give districts the option and
incentive to construct additional “small” schools to replace large schools.
TECHNICAL ISSUES
The effective date of this legislation, since it does not contain an emergency clause is June 17,
2011. It is unclear how this bill would affect projects approved and funded between January 1,
2011 and the effective date.
Schools are primarily funded through issuance of local general obligation bonds which are
approved by voters and subsequently issued over multiple years. It is unclear how this bill may
affect specific school projects that have received voter approval prior to the effective date of this
legislation.
OTHER SUBSTANTIVE ISSUES
The Adequacy Standards measure and highly weight “adequacy of space” of existing school
facilities, and may warrant the construction of an addition or in some cases of high growth areas,
an entire additional school. The provisions of this bill may limit the ability of the PSCOC to
address these situations, which would undermine the integrity of the standards-based capital
outlay process.
ALTERNATIVES
None recommended.
WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL
Chartering authorities would continue to accept and approve applications for start-up charter
schools and local school districts would be able to continue to construct and open new facilities.
AMENDMENTS
Need to define entity that will have approval authority for construction or opening of new
schools.
Attachment “A”
PSCOC Lease Payment Assistance Program
History
Year
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
1
2
3
4
5
6
7
Rate
$300/MEM
$477/MEM2
$600/MEM
$700/MEM
$719.60/MEM4
$724.71/MEM5
$721.81/MEM6
Max Award
$4 million
$4 million
$7.5 million
$7.5 million
$7.5 million
$ No Limit
$ No Limit
Awards
$2,041,261
$3,973,258
$5,046,095
$6,375,293
$7,302,193
$8,221,670
$9,883,5797
Number of Awards
40 total awards/34 charter1
51 total awards/46 charter
63 total awards/56 charter
68 total awards/61 charter3
75 total awards/64 charter
77 total awards/69 charter
86 total awards/80 charter
Includes $284,400 for retroactive amounts to charters in first year of operation.
$600/MEM reduced to stay within $4M cap.
First year to allow lease of facilities from District.
$700/MEM increased by CPI of 2.8%.
$700/MEM increased by CPI of 3.53%.
$700/MEM decreased by CPI correction for FY 09 = 1.9%, FY 10 = 1.6%, FY 11 =0.4%.
Tentative Awards pending approval July 29th PSCOC meeting.
2010-2011 Awards
Total Requests:
$9,883,579 (86)
Total Requests for Charters: $9,749,850 (80)

32 State Charters

9 Charters in first year of operation

22 in public building/ East Mountain High School partially in public building/ (Lindrith in
public bldg. -no lease cost, 3 charters leasing from counties, 12 from districts, 2 from the
Federal Gov., 1 from city, 2 from Tribal, 3 from colleges or Universities and 10 nonprofit)

2 schools in lease purchase agreements

48 charters limited by MEM

38 charters limited by actual lease cost

% of Actual –vs.- Reimbursement:
65.8%
Charter Schools Only:
Total Square Feet:
SF Per MEM:
Actual Lease Cost (annual):
Cost Per SF:
Low
3,387
11
14,460
3.22
High
59,899
342
1,053,455
33.99
Total
1,332,080
7,641
14,869,846
Average
16,862
97
185,873
11.02