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HOUSE BILL 277
57TH LEGISLATURE - STATE OF NEW MEXICO - FIRST SESSION, 2025
INTRODUCED BY
Tanya Mirabal Moya and Rebecca Dow and Raymundo Lara
and Harlan Vincent and Jack Chatfield
AN ACT
RELATING TO PUBLIC SCHOOL CAPITAL OUTLAY; DECREASING THE
MILLAGE REQUIRED FOR SCHOOL DISTRICTS WITH INSUFFICIENT BONDING
CAPACITY.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 22-24-5 NMSA 1978 (being Laws 1975,
Chapter 235, Section 5, as amended) is amended to read:
"22-24-5. PUBLIC SCHOOL CAPITAL OUTLAY PROJECTS--
APPLICATION--GRANT ASSISTANCE.--
A. Applications for grant assistance, approval of
applications, prioritization of projects and grant awards shall
be conducted pursuant to the provisions of this section.
B. Except as provided in Sections 22-24-4.3,
22-24-5.4 and 22-24-5.6 NMSA 1978, the following provisions
govern grant assistance from the fund for a public school
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capital outlay project not wholly funded pursuant to Section
22-24-4.1 NMSA 1978:
(1) all school districts are eligible to apply
for funding from the fund, regardless of percentage of
indebtedness;
(2) priorities for funding shall be determined
by using the statewide adequacy standards developed pursuant to
Subsection C of this section; provided that:
(a) the council shall apply the
standards to charter schools to the same extent that they are
applied to other public schools;
(b) the council may award grants
annually to school districts for the purpose of repairing,
renovating or replacing public school building systems in
existing buildings as identified in Section 22-24-4.6
NMSA 1978;
(c) the council shall adopt and apply
adequacy standards appropriate to the unique needs of the
constitutional special schools; and
(d) in an emergency in which the health
or safety of students or school personnel is at immediate risk
or in which there is a threat of significant property damage,
the council may award grant assistance for a project using
criteria other than the statewide adequacy standards;
(3) the council shall establish criteria to be
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used in public school capital outlay projects that receive
grant assistance pursuant to the Public School Capital
Outlay Act. In establishing the criteria, the council shall
consider:
(a) the feasibility of using design,
build and finance arrangements for public school capital outlay
projects;
(b) the potential use of more durable
construction materials that may reduce long-term operating
costs;
(c) concepts that promote efficient but
flexible utilization of space; and
(d) any other financing or construction
concept that may maximize the dollar effect of the state grant
assistance;
(4) no more than ten percent of the combined
total of grants in a funding cycle shall be used for
retrofitting existing facilities for technology infrastructure;
(5) no later than May 1 of each calendar year,
the phase two formula value shall be calculated for each school
district in accordance with the following procedure:
(a) the sum of the final prior five
years net taxable value for a school district multiplied by
nine ten-thousandths for that school district is calculated for
each school district;
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(b) the maximum allowable gross square
foot per student multiplied by the replacement cost per square
foot divided by forty-five is calculated for each school
district;
(c) the value calculated pursuant to
Subparagraph (a) of this paragraph divided by the value
calculated pursuant to Subparagraph (b) of this paragraph is
calculated for each school district;
(d) in those instances in which the
calculation pursuant to Subparagraph (c) of this paragraph
yields a value equal to or greater than one, the phase two
formula value shall be zero for the subject school district;
(e) in those instances in which the
calculation pursuant to Subparagraph (c) of this paragraph
yields a value of ninety-hundredths or more but less than one,
the phase two formula value shall be one minus the value
calculated in Subparagraph (c) of this paragraph; and
(f) in those instances in which the
calculation pursuant to Subparagraph (c) of this paragraph
yields a value less than ninety-hundredths, the phase two
formula value shall be one minus the value calculated in
Subparagraph (c) of this paragraph plus the school district
population density factor;
(6) the state share of a project approved by
the council shall be funded within available resources pursuant
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to the provisions of this paragraph. Except as provided in
Section 22-24-5.7 NMSA 1978 and except as adjusted pursuant to
Paragraph (8), (9) or (10) of this subsection, the amount to be
distributed from the fund for an approved project shall equal
the total project cost multiplied by the following percentage,
except that in no case shall the state share be less than six
percent:
(a) for fiscal year 2024 through fiscal
year 2026, the percentage shall be the phase two formula value
plus a percentage equal to one-third of the difference between
one and the phase two formula value; provided that, for school
districts with fewer than 200 MEM, the percentage shall be the
phase two formula value plus a percentage equal to one-half of
the difference between one and the phase two formula; and
(b) for fiscal year 2027 and thereafter,
the percentage shall be the phase two formula value;
(7) as used in this subsection:
(a) "governmental entity" includes an
Indian nation, tribe or pueblo;
(b) "phase two formula value" for a
state-chartered charter school means the phase two formula
value calculated pursuant to Paragraph (5) of this subsection
for the school district in which the state-chartered charter
school is physically located;
(c) "subject school district" means the
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school district that has submitted the application for funding
and in which the approved public school capital outlay project
will be located; and
(d) "total project cost" means the total
amount necessary to complete the public school capital outlay
project less any insurance reimbursement received by the school
district for the project;
(8) the amount calculated pursuant to
Paragraph (6) of this subsection may be increased by an
additional five percent if the council finds that the subject
school district has been exemplary in implementing and
maintaining a preventive maintenance program. The council
shall adopt such rules as are necessary to implement the
provisions of this paragraph;
(9) the council may adjust the amount of local
share otherwise required if it determines that a school
district has made a good-faith effort to use all of its local
resources. Before making any adjustment to the local share,
the council shall consider whether:
(a) the school district has insufficient
bonding capacity over the next four years to provide the local
match necessary to complete the project and, for all
educational purposes, has a residential property tax rate of at
least [ten dollars ($10.00) ] eight dollars ($8.00) on each one
thousand dollars ($1,000) of taxable value, as measured by the
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sum of all rates imposed by resolution of the local school
board plus rates set to pay interest and principal on
outstanding school district general obligation bonds;
(b) the school district: 1) has fewer
than an average of eight hundred full-time-equivalent students
on the second and third reporting dates of the prior school
year; 2) has at least seventy percent of its students eligible
for free or reduced-fee lunch; 3) has a phase two formula value
calculated pursuant to Paragraph (5) of this subsection that
would be greater than fifty percent; and 4) for all educational
purposes, has a residential property tax rate of at least seven
dollars ($7.00) on each one thousand dollars ($1,000) of
taxable value, as measured by the sum of all rates imposed by
resolution of the local school board plus rates set to pay
interest and principal on outstanding school district general
obligation bonds; or
(c) the school district: 1) has an
enrollment growth rate over the previous school year of at
least two and one-half percent; 2) pursuant to its five-year
facilities plan, will be building a new school within the next
two years; and 3) for all educational purposes, has a
residential property tax rate of at least ten dollars ($10.00)
on each one thousand dollars ($1,000) of taxable value, as
measured by the sum of all rates imposed by resolution of the
local school board plus rates set to pay interest and principal
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on outstanding school district general obligation bonds;
(10) the local match for the constitutional
special schools shall be set at fifty percent for projects that
qualify under the educational adequacy category and one hundred
percent for projects that qualify in the support spaces
category; provided that the council may adjust or waive the
amount of any direct appropriation offset to or local share
required for the constitutional special schools if an applicant
constitutional special school has insufficient or no local
resources available; and
(11) no application for grant assistance from
the fund shall be approved unless the council determines that:
(a) the public school capital outlay
project is needed and included in the school district's five-
year facilities plan among its top priorities;
(b) the school district has used its
capital resources in a prudent manner;
(c) the school district has provided
insurance for buildings of the school district in accordance
with the provisions of Section 13-5-3 NMSA 1978;
(d) the school district has submitted a
five-year facilities plan that includes: 1) enrollment
projections; 2) a current preventive maintenance plan that has
been approved by the council pursuant to Section 22-24-5.3 NMSA
1978 and that is followed by each public school in the
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district; 3) the capital needs of charter schools located in
the school district; and 4) projections for the facilities
needed in order to maintain a full-day kindergarten program;
(e) the school district is willing and
able to pay any portion of the total cost of the public school
capital outlay project that, according to Paragraph (6), (8) or
(9) of this subsection, is not funded with grant assistance
from the fund;
(f) the application includes the capital
needs of any charter school located in the school district or
the school district has shown that the facilities of the
charter school have a smaller deviation from the statewide
adequacy standards than other district facilities included in
the application; and
(g) the school district has agreed, in
writing, to comply with any reporting requirements or
conditions imposed by the council pursuant to Section 22-24-5.1
NMSA 1978.
C. After consulting with the public school capital
outlay oversight task force and other experts, the council
shall regularly review and update statewide adequacy standards
applicable to all school districts. The standards shall
establish the acceptable level for the physical condition and
capacity of buildings, the educational suitability of
facilities, the need for career-technical education facilities
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or classrooms and the need for education technology
infrastructure. Except as otherwise provided in the Public
School Capital Outlay Act, the amount of outstanding deviation
from the standards shall be used by the council in evaluating
and prioritizing public school capital outlay projects.
D. The acquisition of a facility by a school
district or charter school pursuant to a financing agreement
that provides for lease payments with an option to purchase for
a price that is reduced according to lease payments made may be
considered a public school capital outlay project and eligible
for grant assistance under this section pursuant to the
following criteria:
(1) no grant shall be awarded unless the
council determines that, at the time of exercising the option
to purchase the facility by the school district or charter
school, the facility will equal or exceed the statewide
adequacy standards and the building standards for public school
facilities;
(2) no grant shall be awarded unless the
school district and the need for the facility meet all of the
requirements for grant assistance pursuant to the Public School
Capital Outlay Act;
(3) the total project cost shall equal the
total payments that would be due under the agreement if the
school district or charter school would eventually acquire
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title to the facility;
(4) the portion of the total project cost to
be paid from the fund may be awarded as one grant, but
disbursements from the fund shall be made from time to time as
lease payments become due;
(5) the portion of the total project cost to
be paid by the school district or charter school may be paid
from time to time as lease payments become due; and
(6) neither a grant award nor any provision of
the Public School Capital Outlay Act creates a legal obligation
for the school district or charter school to continue the lease
from year to year or to purchase the facility.
E. In order to encourage private capital investment
in the construction of public school facilities, the purchase
of a privately owned school facility that is, at the time of
application, in use by a school district may be considered a
public school capital outlay project and eligible for grant
assistance pursuant to this section if the council finds that:
(1) at the time of the initial use by the
school district, the facility to be purchased equaled or
exceeded the statewide adequacy standards and the building
standards for public school facilities;
(2) at the time of application, attendance at
the facility to be purchased is at seventy-five percent or
greater of design capacity and the attendance at other schools
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in the school district that the students at the facility would
otherwise attend is at eighty-five percent or greater of design
capacity; and
(3) the school district and the capital outlay
project meet all of the requirements for grant assistance
pursuant to the Public School Capital Outlay Act; provided
that, when determining the deviation from the statewide
adequacy standards for the purposes of evaluating and
prioritizing the project, the students using the facility shall
be deemed to be attending other schools in the school district.
F. It is the intent of the legislature that grant
assistance made pursuant to this section allows every school
district to meet the standards developed pursuant to Subsection
C of this section; provided, however, that nothing in the
Public School Capital Outlay Act or the development of
standards pursuant to that act prohibits a school district from
using other funds available to the district to exceed the
statewide adequacy standards.
G. Upon request, the council shall work with, and
provide assistance and information to, the public school
capital outlay oversight task force.
H. The council may establish committees or task
forces, not necessarily consisting of council members, and may
use the committees or task forces, as well as existing agencies
or organizations, to conduct studies, conduct surveys, submit
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recommendations or otherwise contribute expertise from the
public schools, programs, interest groups and segments of
society most concerned with a particular aspect of the
council's work.
I. Upon the recommendation of the authority, the
council shall develop building standards for public school
facilities and shall promulgate other such rules as are
necessary to carry out the provisions of the Public School
Capital Outlay Act.
J. No later than December 15 of each year, the
council shall prepare a report summarizing its activities
during the previous fiscal year. The report shall describe in
detail all projects funded, the progress of projects previously
funded but not completed, the criteria used to prioritize and
fund projects and all other council actions. The report shall
be submitted to the public education commission, the governor,
the legislative finance committee, the legislative education
study committee and the legislature.
K. For any school district that received a
standards- or systems-based award from the council in fiscal
year 2023, the state share for any future phase of the project
for which funding has not yet been awarded shall be the amount
calculated pursuant to Subsection B of this section for fiscal
year 2024, regardless of the state share at the time of the
initial award.
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L. As used in this section:
(1) "MEM" means membership; and
(2) "membership" means the total enrollment of
qualified students on the current roll of a class or school on
a specified day. The current roll is established by the
addition of original entries and reentries minus withdrawals.
Withdrawals of students, in addition to students formally
withdrawn from the public school, include students absent from
the public school for as many as ten consecutive school days;
provided that withdrawals do not include students in need of
early intervention and habitual truants the school district is
required to intervene with and keep in an educational setting."
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