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 Gonzales
LAST UPDATED
ORIGINAL DATE 2
/6/25
SHORT TITLE Public Ed. Reform Fund Uses
BILL
NUMBER Senate Bill 201
ANALYST Liu
ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT*
(dollars in thousands)
Agency/Program
FY25 FY26 FY27
3 Year
Total Cost
Recurring or
Nonrecurring
Fund
Affected
No fiscal
impact
No fiscal
impact
No fiscal
impact
$0 Recurring
Other state
funds
Total
No fiscal
impact
No fiscal
impact
No fiscal
impact
$0 Recurring
Other state
funds
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
Relates to a $150 million appropriation in the General Appropriation Act
Sources of Information
LFC Files
Legislative Education Study Committee (LESC) Files
Agency Analysis was Solicited but Not Received From
Public Education Department (PED) Department of Finance and Administration (DFA)
SUMMARY
Synopsis of the Bill
Senate Bill 201 requires the Public Education Department (PED) to develop accountability and
evaluation plans approved by the Department of Finance and Administration, in consultation
with LFC and the Legislative Education Study Committee (LESC), for programs funded by
appropriations from the public education reform fund. The bill also moves the submission
deadline for PED’s public schools budget request, along with requests for appropriations from
the reform fund, to an earlier date (September 1 rather than November 30).
This bill does not contain an effective date and, as a result, would go into effect 90 days after the
Legislature adjourns, or June 20, 2025, if enacted.
FISCAL IMPLICATIONS
The bill does not contain an appropriation and has no additional estimated fiscal impacts. Costs Senate Bill 201 – Page 2
for developing the accountability and evaluation plans are part of the normal operations of the
participating agencies.
Provisions of this bill may lead to more robust evaluations of PED programs, which could affect
program funding levels based on results. For FY25, PED has four programs with reform fund
appropriations totaling $54.5 million, including career and technical education (CTE) initiatives,
community schools, literacy training for secondary educators, and grants to low-income schools
(family income index pilot). The bill’s research plan requirements would not apply to these
programs but would be in place for any future programs with reform funding.
The largest revenue sources to the reform fund were unspent K-5 Plus extended school year and
extended learning time program appropriations between FY19 and FY23. For FY24, the
Legislature replaced both programs with a K-12 Plus formula factor, after schools had reverted
over half a billion dollars into the reform fund. The Legislature has used balances in the reform
fund for PED initiatives since reversions began occurring in FY20. As such, the reform fund no
longer has a recurring revenue stream and has become depleted. DFA and LFC staff estimate
remaining balances in the reform fund to be about $15 million for FY26 from reversions of prior
initiative funding.
The LFC and LESC budget recommendations include a $150 million transfer to the public
education reform fund, contingent on enactment of this bill. The committees propose using
reform fund appropriations to study new PED initiatives. Additional data collection and analysis
costs are included with the education reform appropriations.
SIGNIFICANT ISSUES
In 2018, the 1st Judicial District Court ruled in the Martinez-Yazzie lawsuit that New Mexico’s
education system was not constitutionally sufficient nor uniform for all students. The court found
evidence-based interventions—like prekindergarten, extended learning time programs, smaller
class sizes, research-based reading programs, and social support staff—could help students close
achievement gaps. However, the state had not provided sufficient funding to cover programming
for all students needing intervention, and administrative hurdles and timing of funds limited
participation.
As part of the legislative response to the lawsuit in FY19, the state established the public
education reform fund as a nonreverting fund for the purposes of implementing evidence-based
public education initiatives related to high-quality teaching and school leadership, extended
learning opportunities for students, educational interventions for at-risk students, effective and
efficient school administration or promoting public education accountability.
Initial deposits into the fund came from unspent K-5 Plus extended school year and extended
learning time programs, which totaled $567.5 million in reversions between FY20 and FY23.
Since FY20, the Legislature has leveraged the reform fund as other state revenue for PED
initiatives, most recently appropriating $54.5 million from the fund in FY25 for PED programs
related to CTE, community schools, secondary educator literacy training, and the family income
index pilot.
PED has spent appropriations from the public education reform fund on a wide variety of
purposes, from IT projects to conferences. Some reform funds have covered FTE salaries, Senate Bill 201 – Page 3
creating recurring costs through a nonrecurring revenue source. A 2024 joint LFC-LESC policy
brief recommended categorizing PED initiatives into four categories to help policymakers
prioritize resources effectively:
Interventions – evidence-based programs backed by research that should be funded
through operational sources and monitored by PED for fidelity of implementation;
Innovations – promising programs with emerging evidence that should be funded over a
specified set of years and evaluated by PED for effectiveness;
Base Operations – annual operational costs (e.g. salaries) that, if funded, should be
covered through recurring revenue sources; and
Nonrecurring – one-time expenses that, if funded, should be covered through
nonrecurring revenue sources.
Provisions of this bill would convert the public education reform fund into a fund for innovations
and establish requirements for evaluation of these programs. PED would submit accountability
and evaluation plans for approval by DFA, in consultation with LFC and LESC, for any
education reforms and initiatives affecting performance measures pursuant to the Accountability
in Government Act. Additionally, the bill would require PED to submit appropriation requests
for programs receiving any reform funds and its budget request for public schools on September
1, the same date for all other agency budget requests. Separately, the bill authorizes PED to
request any appropriation adjustments for enrollment growth units in the school funding formula
by November 30.
PERFORMANCE IMPLICATIONS
Since the Martinez-Yazzie ruling, the state has increased recurring appropriations for public
schools and PED programs by $1.6 billion, or 58 percent. Alongside growth in operational
dollars, PED initiatives have expanded from 20 programs at $92 million to 48 programs at $347
million. To date, PED has not shown evidence that changes in student outcomes are attributable
to department initiatives in a statistically significant way.
Provisions of this bill would require PED to submit accountability and evaluation plans for
public education reforms and initiatives affecting performance measures. Evaluations of reforms
and initiatives may increase transparency on how state investments are affecting performance,
0
20
40
60
80
$0
$100
$200
$300
$400
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
FY24
FY25
Davis Garcia Skandera/Ruszkowski TrujilloStewart Steinhaus Romero
PED "Below-the-Line" Special Program Appropriations
(in m illions)
Section 4 Recurring General Fund Section 5 Nonrecurring General Fund
Section 5 Nonrecurring Other State Funds House Bill 2 Junior
Section 9 GRO 3-Year Number of Appropriations
Source: LFCFiles Senate Bill 201 – Page 4
which may result in the prioritization of funds toward programs that improve outcomes
significantly.
ADMINISTRATIVE IMPLICATIONS
Provisions of this bill would change reporting deadlines for PED, requiring submission of their
public school support budget request and special program (colloquially referred to as “below-the-
line”) appropriation request on September 1 each year. Historically, PED submits its agency
operating budget on September 1 to LFC and DFA but submits the public school support and
PED special program appropriation requests later on November 30. The public school support
(i.e., school funding formula and transportation distribution) request has previously been allotted
more time in statute to accommodate data collection timelines and student enrollment changes
that affect formula distributions.
PED special appropriations, however, are often competitive grants that are reimbursement-based,
awarded by agency choice, and noy usually governed by any statute or authority other than the
General Appropriation Act. In 2024, NMAG opined that PED must submit its annual special
program appropriations request to LFC and DFA on or before September 1. Provisions of the bill
enforce this requirement and set PED’s deadline to submit other public school support requests
on September 1 as well. Additionally, PED must submit accountability and evaluation plans on
or before June 15 to DFA, LFC, and LESC for programs receiving reform funds.
The accountability and evaluation plans for each program must (1) identify program goals and
outcomes, (2) describe how program activities would achieve expected outcomes, (3) summarize
evidence or research on program effectiveness, (4) include a plan for monitoring performance,
(5) include an evaluation plan to assess casual impacts of the program, and (6) describe methods
for statistical analysis and timelines for reporting results. By September 1 of the first year of the
appropriation, DFA must approve the accountability and evaluation plans, after consultation with
LFC and LESC. These plans are currently developed with existing staff at these agencies.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
This bill is a companion to a $150 million appropriation recommendation for the General
Appropriation Act to the public education reform fund.
OTHER SUBSTANT IVE ISSUES
Provisions of this bill require evaluations of reform fund programs to assess causal impacts on
expected outcomes and planned statistical analyses. Causal impact evaluations help researchers
determine the effect of a program or policy and are used to show if changes in outcomes are due
to a program and not other factors (i.e. confounding variables like poverty). However, the higher
standard of requiring counterfactual data for comparison may limit the topics of study due to
ethical or cost-prohibitive reasons. Randomized controlled trials (RCT), often hailed as the gold
standard by researchers, involve randomly assigning subjects to either a treatment group or
control group, allowing researchers to observe differences caused by the treatment or
intervention. Ethical concerns relating to RCTs in education typically center on equity issues, as
studies could potentially deprive some students of beneficial interventions while others receive
them. Senate Bill 201 – Page 5
SL/hj/hg