Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance
committees of the Legislature. LFC does not assume responsibility for the accuracy of these reports if they
are used for other purposes.
F I S C A L I M P A C T R E P O R T
SPONSOR
Mirabal
Moya/Dow/Lara/Vincent/Chatfield
LAST UPDATED
ORIGINAL DATE 2/11/2025
SHORT TITLE Millage for Certain School Districts
BILL
NUMBER House Bill 277
ANALYST Carswell
APPROPRIATION*
(dollars in thousands)
FY25 FY26
Recurring or
Nonrecurring
Fund
Affected
Up to $169,962.1 Recurring
Public School Capital
Outlay Fund
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
Relates to Senate Bill 82
Sources of Information
LFC Files
Agency Analysis Received From
Public School Facilities Authority Public Education Department
SUMMARY
Synopsis of House Bill 277
House Bill 277 amends the statutory criteria that determine school districts’ eligibility for
waivers of the local match for public school construction projects funded through the Public
School Capital Outlay Council. The bill would require districts to impose local property taxes of
only 8 mills rather than 10 mills to become eligible for a waiver, which is typically a partial
reduction of the local match.
This bill does not contain an effective date and, as a result, would go into effect 90 days after the
Legislature adjourns if enacted, or June 20, 2025.
FISCAL IMPLICATIONS
Criteria in statute determine whether a school district may ask PSCOC for a partial waiver of the
local match when it cannot afford the amount determined by the state-local match formula that
provides the foundation for New Mexico’s approach to equitable funding for public school
construction. Currently, districts can take three paths to become eligible for a waiver, illustrated
in the figure below. HB277 would change the 10 mill requirement under option A to 8 mills, House Bill 277 – Page 2
effectively lowering the amount of local property taxation that must be imposed before the state
will consider adjusting the local match.
Current Statutory Waiver Criteria in the Public School Capital Outlay Act
The Public School Facilities Authority identified 19 districts with mill levies between 8 and 10
that could become eligible for waivers if HB277 were enacted. Some of these districts have
projects on the Public School Capital Outlay Council’s award schedule over the next couple
fiscal years, and some already qualify for waivers under the current statutory criteria and have
indicated their intention to request waivers. HB277 would have no additional impact on those
districts. Other districts that would become eligible for waivers under HB277 with projects
before the council have indicated they can afford their local match without a waiver.
For the purposes of estimating the potential impact of HB277 on the public school capital outlay
fund, LFC worked with PSFA to identify the estimated local match for districts with projects
pending before the council that would become eligible for waivers under HB277, do not already
qualify for waivers, and have not indicated they will not need a waiver. This fiscal analysis
assumes those districts would request and receive full waivers of the local match for these
projects in FY26, which would require the state to cover the local portion of the project and
would reduce available dollars in the public school capital outlay fund for other projects. In
reality, the districts may only receive partial waivers and the impacts could be spread out over
multiple fiscal years. The bill could also impact districts that have not yet sought funding from
PSCOC, but its impact on those projects is difficult to quantify.
Districts that Could Become
Eligible for Waivers Under HB277
District
Total
Residential
Mills
Alamogordo 9.803
Central 9.249
Deming 8.255
Española 8.902 House Bill 277 – Page 3
Estancia 8.044
Farmington 9.764
Hondo 9.539
House 8.521
Las Cruces 9.357
Logan 9.201
Lordsburg 9.155
Portales 9.552
Ruidoso 8.242
Santa Fe 8.765
Socorro 8.683
Springer 8.256
Texico 9.612
Truth or Consequences 8.098
Tucumcari 9.413
Source: PSFA
PSFA notes districts that meet statutory waiver criteria can request the council grant a waiver to
fund only the portion of the local match the district cannot afford:
The statute requires the school district to make a “good faith effort” to use all its local
resources toward the potential award. This includes asking voters for authorization to use
general obligation bonds and/or levying SB9 and HB33 [public school property tax] mill
levies to (raise) funds to contribute to the awarded project. Districts are expected to fund
the maximum amount they can afford, which is often achieved with the passage of a
general obligation bond.
SIGNIFICANT ISSUES
In 2023, the Legislature passed and the governor signed Senate Bill 131, which provided across-
the-board, temporary reductions to the local match school districts must provide for capital
projects funded through PSCOC. SB131 provided a one-third match reduction for all districts
except those with fewer than 200 students, which got a one-half reduction. The temporary
reductions run through FY26.
Despite the local match reduction enacted in 2023, many school districts have requested PSCOC
grant partial waivers of their required match. Such requests increased in number and amount
starting in FY23 due to dramatic increases in construction costs, which rendered projects
unaffordable for many districts even with the lower local match. In FY22, PSCOC granted only
one waiver totaling about $370 thousand, according to PSFA. In FY23, it granted six totaling
$63.6 million. That amount nearly doubled in FY24. House Bill 277 – Page 4
In 2024, the Public School Capital Outlay Oversight Task Force studied waiver trends and the
need for adjustments to waiver criteria and the state-local match formula. Senate Bill 82,
currently under consideration by the Legislature, contains the recommendations of the task force
resulting from that work. SB82 would extend the across-the-board local match reductions and
make several revisions to the statutory waiver criteria aimed at further assisting small districts
with project costs when necessary. Notably, the task force did not endorse lowering the
requirements for local property taxation to support the local share of project costs under waiver
criteria A from the current 10 mill threshold.
Changes to Local Match Waiver Eligibility Criteria Proposed in Senate Bill 82
According to PSFA, many small districts with fewer than 800 students have difficulty meeting
the free and reduced lunch and local match criteria in waiver option B. The school districts are
unable to control either of these criteria and reaching the higher mill levy threshold of 10 to
qualify for option A is challenging for small districts, according to PSFA. Additionally, the
agency reports waiver criteria C is in practice duplicative of criteria A and is not used.
The increased need for waivers is an indication the state and local match formula that provides House Bill 277 – Page 5
the foundation for New Mexico’s approach to financing public school construction is not
working as intended. In 2024, the Public School Capital Outlay Oversight Task Force directed
staff from the Legislative Finance Committee, Legislative Education Study Committee, and
PSFA to study the formula and propose changes. Staff identified several formula factors that do
not reflect current realities, such as assumptions about the cost per square foot of new school
construction. However, the across-the-board local match reductions enacted by SB131 have a
similar effect on the amount districts are responsible for paying as adjusting these factors in the
formula.
Staff also found that adjusting these factors did not, in all cases, help the formula more
accurately reflect a district’s ability to pay; the reason for the outliers was not readily apparent.
The task force determined adjusting any factors would be premature and might represent an
overcorrection. The task force directed staff to continue to study the formula so that larger
changes could be pursued in the 2027 session, if warranted. SB82 was endorsed by the task force
to provide a stopgap solution to barriers to school replacement and continued financial relief to
school districts in the meantime.
The local match reductions were first pursued in 2023 to provide incentivize school districts to
seek funding from PSCOC. Applications had dropped off due to changes to the state-local match
formula that shifted the cost burden of projects more to districts.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
HB277 relates to SB82, which also makes revision to the statutory criteria for local match
waivers in the Public School Capital Outlay Act. SB82 was developed and endorsed by the
Public School Capital Outlay Oversight Task Force.
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