2020 New Mexico Statutes
Chapter 22 - Public Schools
Article 8 - Public School Finance
Section 22-8-25 - State equalization guarantee distribution; definitions; determination of amount.
A. The state equalization guarantee distribution is that amount of money distributed to each school district to ensure that its operating revenue, including its local and federal revenues as defined in this section, is at least equal to the school district's program cost. For state-chartered charter schools, the state equalization guarantee distribution is the difference between the state-chartered charter school's program cost and the two percent withheld by the department for administrative services.
B. "Local revenue", as used in this section, means seventy-five percent of receipts to the school district derived from that amount produced by a school district property tax applied at the rate of fifty cents ($.50) to each one thousand dollars ($1,000) of net taxable value of property allocated to the school district and to the assessed value of products severed and sold in the school district as determined under the Oil and Gas Ad Valorem Production Tax Act [Chapter 7, Article 32 NMSA 1978] and upon the assessed value of equipment in the school district as determined under the Oil and Gas Production Equipment Ad Valorem Tax Act [Chapter 7, Article 34 NMSA 1978].
C. "Federal revenue", as used in this section, means receipts to the school district or state-chartered charter school, excluding amounts that, if taken into account in the computation of the state equalization guarantee distribution, result, under federal law or regulations, in a reduction in or elimination of federal school funding otherwise receivable by the school district, derived from the following:
(1) seventy-five percent of the school district's share of forest reserve funds distributed in accordance with Section 22-8-33 NMSA 1978; and
(2) seventy-five percent of grants from the federal government as assistance to those areas affected by federal activity authorized in accordance with Title 20 of the United States Code, commonly known as "PL 874 funds" or "impact aid".
D. To determine the amount of the state equalization guarantee distribution, the department shall:
(1) calculate the number of program units to which each school district or charter school is entitled using an average of the MEM on the second and third reporting dates of the prior year; or
(2) calculate the number of program units to which a school district or charter school operating under an approved year-round school calendar is entitled using an average of the MEM on appropriate dates established by the department; or
(3) calculate the number of program units to which a school district or charter school with a MEM of two hundred or less is entitled by using an average of the MEM on the second and third reporting dates of the prior year or the fortieth day of the current year, whichever is greater; and
(4) using the results of the calculations in Paragraph (1), (2) or (3) of this subsection and the staffing cost multiplier from the October report of the prior school year, establish a total program cost of the school district or charter school;
(5) for school districts and state-chartered charter schools, calculate the local and federal revenues as defined in this section;
(6) deduct the sum of the calculations made in Paragraph (5) of this subsection from the program cost established in Paragraph (4) of this subsection;
(7) deduct the total amount of guaranteed energy savings contract payments that the department determines will be made to the school district from the public school utility conservation fund during the fiscal year for which the state equalization guarantee distribution is being computed; and
(8) deduct ninety percent of the amount certified for the school district by the department pursuant to the Energy Efficiency and Renewable Energy Bonding Act [Chapter 6, Article 21D NMSA 1978].
E. Reduction of a school district's state equalization guarantee distribution shall cease when the school district's cumulative reductions equal its proportional share of the cumulative debt service payments necessary to service the bonds issued pursuant to the Energy Efficiency and Renewable Energy Bonding Act.
F. The amount of the state equalization guarantee distribution to which a school district is entitled is the balance remaining after the deductions made in Paragraphs (6) through (8) of Subsection D of this section.
G. The state equalization guarantee distribution shall be distributed prior to June 30 of each fiscal year. The calculation shall be based on the local and federal revenues specified in this section received from June 1 of the previous fiscal year through May 31 of the fiscal year for which the state equalization guarantee distribution is being computed. In the event that a school district or charter school has received more state equalization guarantee funds than its entitlement, a refund shall be made by the school district or charter school to the state general fund.
History: 1953 Comp., § 77-6-19, enacted by Laws 1969, ch. 180, § 19; 1971, ch. 263, § 9; 1972, ch. 90, § 1; reenacted by Laws 1974, ch. 8, § 16; 1975, ch. 119, § 3; 1979, ch. 268, § 2; 1979, ch. 278, § 1; reenacted by Laws 1981, ch. 176, §§ 3, 4, 5; 1986, ch. 32, § 20; 1986, ch. 33, § 16; 1988, ch. 63, § 1; 1988, ch. 64, § 29; 1989, ch. 258, § 1; 1990, ch. 94, § 3; 1993, ch. 226, § 23; 1993, ch. 231, § 14; 1997, ch. 40, § 8; 1999, ch. 275, § 1; 2002, ch. 63, § 1; 2005, ch. 176, § 12; 2005, ch. 291, § 1; 2006, ch. 94, § 16; 2010, ch. 116, § 6; 2017, ch. 78, § 1; 2018, ch. 55, § 6.
ANNOTATIONSRepeals. — Laws 2006, ch. 94, § 60 repealed Laws 2005, ch. 176, § 12, effective July 1, 2007.
Cross references. — For state-support reserve fund, see 22-8-31 NMSA 1978.
For PL 874 funds, see 20 USCS § 7701 et seq.
The 2018 amendment, effective July 1, 2018, revised the formula for determining the amount of the state equalization guarantee distribution; and in Paragraph D(4), after "this subsection and the", deleted "instructional staff training and experience index" and added "staffing cost multiplier".
Temporary provisions. — Laws 2018, ch. 55, § 7 provided that:
A. Using funds appropriated by the legislature for fiscal years 2020 through 2022, the public education department shall supplement a school district's or charter school's calculated program cost in each of those fiscal years:
(1) if, for the fiscal year, the school district's or charter school's calculated program cost is less than its final program cost in the previous fiscal year, not considering any supplement the school district or charter school receives under this subsection; and
(2) as follows:
(a) for fiscal year 2020, in an amount equal to one hundred percent of the reduction attributable to the implementation of this act or the difference between the calculated program cost and the final program cost in the previous fiscal year, whichever is less;
(b) for fiscal year 2021, in an amount equal to seventy-five percent of the reduction attributable to the implementation of this act or the difference between the calculated program cost and the final program cost in the previous fiscal year, whichever is less; and
(c) for fiscal year 2022, in an amount equal to fifty percent of the reduction attributable to the implementation of this act or the difference between the calculated program cost and the final program cost in the previous fiscal year, whichever is less; but
(3) if, in a fiscal year, the appropriation for the purpose of implementing this subsection is insufficient to supplement school districts and charter schools in accordance with Paragraphs (1) and (2) of this subsection, then in an amount equal to the school district's or charter school's prorated share of the total appropriation.
B. On or before February 1 of 2020 through 2022, the public education department shall submit a report to the legislative education study committee and the legislative finance committee that states, regarding the current fiscal year:
(1) the sum needed to supplement school districts and charter schools in accordance with this section;
(2) a list of the school districts and charter schools eligible to receive a supplement in accordance with this section; and
(3) the supplement amount of each of those school districts and charter schools.
The 2017 amendment, effective June 16, 2017, required the public education department to take credit for certain state-chartered charter schools' impact aid receipts; in Subsection C, in the introductory clause, after the first occurrence of "school district", added "or state-chartered charter school"; and in Subsection D, Paragraph D(5), after "school districts", added "and state-chartered charter schools".
The 2010 amendment, effective May 19, 2010, in Subsection D(1), after "average of the MEM on the", deleted "eightieth and one-hundred twentieth days" and added "second and third reporting dates"; and in Subsection D(3), after "average of the MEM on the", deleted "eightieth and one-hundred twentieth days" and added "second and third reporting dates".
Temporary provisions. — Laws 2010, ch. 116, § 9 provided that references in the Public School Code pertaining to the fortieth-day or forty-day report of public school membership or enrollment shall be deemed to be references to the first reporting date, which is the second Wednesday in October; references pertaining to the eightieth-day or eighty-day report of public school membership or enrollment shall be deemed to be references to the second reporting date, which is the second Wednesday in December; and references pertaining to the one-hundred twentieth-day or one-hundred twenty-day report of public school membership or enrollment shall be deemed to be references to the third reporting date, which is the second Wednesday in February.
As the public schools transition from former reporting dates to new reporting dates, the public education department may use any combination of former and new reporting dates as necessary to develop membership and cost projections and budgets for the 2010-2011 school year.
The 2006 amendment, effective July 1, 2007, provided for the state equalization guarantee distribution for state-chartered charter schools in Subsection A; added charter schools in Paragraphs (1) through (5) of Subsection D and in Subsection G and deleted condition that required the enactment of House Bill 32 or similar legislation of the first session of the forty-seventh legislature in Paragraph (8) of Subsection D and in Subsection E.
The 2005 amendments, effective July 1, 2005, deleted the former provision of Subsection B which provided that the school district shall budget and expend twenty percent of the total revenue receipts for capital outlay; deleted the former provision of Subsection C(1) which provided that the school district shall budget and expend twenty percent of the total forest reserve receipts for capital outlay; deleted the former provision of Subsection C(2) that the school district shall budget and expend twenty percent of the grant receipts for capital outlay; deleted the former provision in Subsection D(3) that the number of program units be calculated using the average MEM on the fortieth day of the prior year; added Subsection D(8) to provide that to determine the amount of the state equalization guarantee distribution, the department shall deduct ninety percent of the amount certified for the school district by the department pursuant to the Energy Efficiency and Renewal Energy Bonding Act, if the act becomes law pursuant to House Bill 32 of similar legislation of the first session of the forty-seventh legislature; and added Subsection E to provide that reduction of a district's state equalization guarantee distribution shall cease when the district's cumulative reductions equal its proportional share of cumulative debt service payments to service the bonds issued pursuant to the Efficiency and Renewal Energy Bonding Act, if the act became law pursuant to House Bill 32 or similar legislation of the first session of the forty-seventh legislature; and changed "state superintendent" and "state board" to "department".
The 2002 amendment, effective July 1, 2002, deleted "as defined in the manual of accounting and budgeting provided in Section 22-8-5 NMSA 1978" at the end of Subsections B, C(1), and C(2); in Subsection D, deleted provisions for calculating program units effective between July 1, 1999 and July 1, 2000 in Paragraph (1), substituted "an average of the MEM on appropriate dates" for "the basic program membership on an appropriate date" in Paragraph (2); and, in Paragraph (3), substituted "an average of the MEM on the fortieth, eightieth and one hundred twentieth days of the prior year or the fortieth day of the current year" for "the basic program membership on the fortieth day of either the prior or the current year", and deleted a proviso relating to special education program units.
The 1999 amendment, effective June 18, 1999, rewrote the section, changing the percentage of local revenue credit calculated in the state equalization guarantee distribution from ninety-five percent to seventy-five percent, and requiring the use of prior year average enrollment counts on certain days for the calculation of program units for distribution of the state equalization funds.
The 1997 amendment, effective July 1, 1997, in Subsection D, substituted "basic program membership of the fortieth day for all programs; provided that special education program units shall be calculated using the membership in special education programs on December 1" for "membership of the fortieth day of the school year, except for school districts with a MEM of 200 or less where the number of program units shall be calculated on the fortieth day membership of either the prior year or the current year, whichever is greater, for all programs except special education, which shall be calculated by using the membership on December 1 of the school year" in Paragraph (1); inserted "basic program" in Paragraph (2); added Paragraph (3) and redesignated the remaining paragraphs accordingly; inserted "distribution is being computed" in Subsection G; and made stylistic changes throughout the section.
The 1993 amendment, effective June 18, 1993, added Paragraph (6) in Subsection D; substituted "deductions made in Paragraphs (5) and (6)" for "deduction made in Paragraph (5)" in Subsection E; and inserted the language beginning ", and then reduced by the total" and ending "distribution is being computed," following "Oil and Gas Production Equipment Ad Valorem Tax Act" in Subsection G.
The 1990 amendment, effective May 16, 1990, substituted "on December 1 of the school year" for "the fortieth or eightieth day of the school year whichever is greater" at the end of Paragraph (1) of Subsection D.
The 1989 amendment, effective June 16, 1989, inserted "upon the assessed value of equipment in the school district as determined under" near the end of Subsection B; substituted "a MEM" for "an ADM" near the middle of Subsection D(1); added present Subsection D(2); redesignated former Subsections D(2) through D(4) as present Subsections D(3) through D(5); in present Subsection D(3) inserted "or (2)"; in present Subsection D(5) substituted "Paragraph (4)" for "Paragraph (3)" and "Paragraph (3)" for "Paragraph (2)"; and in Subsection G substituted "Paragraphs (1) or (2) and (3)" for "Paragraphs (1) and (2)" near the middle of the first paragraph and inserted "upon the assessed value of equipment in the school district as determined under" near the end of that paragraph.
The 1988 amendment, effective July 1, 1988, amended Subsections C(1),and C(2); deleted Subsection C(3) regarding grants from the federal government to public secondary schools; and substituted "state superintendent" for "director of the office of education" in Subsection D.
Federal impact aid deductions. — Where the New Mexico public education department (department) reduced state equalization guarantee (SEG) distribution payments to the Zuni public school district based on anticipated federal impact aid payments prior to certification from the secretary of the United States department of education (DOE), the district court erred in finding that the deductions were authorized under state law, because, under state and federal law, the state may not take into consideration impact aid payments, whether anticipated or actually received, prior to obtaining certification from the DOE secretary, and the department may not reduce SEG distribution payments to an impacted district prior to certification, but once the state has received its certification from the DOE secretary, the certification shall apply retroactively to any impact aid payments received by the district during the entire fiscal year. N.M. Pub. Educ. Dep't v. Zuni Pub. Sch. Dist. #89, 2018-NMSC-029.
Deductions of federal impact aid funds from state equalization guarantee distribution. — Where the Zuni public school district (Zuni) petitioned the district court for a writ of mandamus, declaratory relief, and injunctive relief, claiming that the New Mexico department of education (department) violated the Public School Finance Act (the act) by deducting federal impact aid funds it anticipated that Zuni was gong to receive from funds it was otherwise entitled to under the act's share of school funding prior to the federal department of education (DOE) secretary certifying New Mexico's school funding system, the district court erred in granting the department's motion for summary judgment because under federal law, the department was prohibited from taking into account Zuni's federal impact aid payments before the DOE secretary issued its certification. Zuni Pub. Sch. Dist. #89 v. N.M. Pub. Educ. Dep't, 2017-NMCA-003, cert. granted.
Law reviews. — For note, "Indirect Funding of Sectarian Schools: A Discussion of the Constitutionality of State School Voucher Programs Under Federal and New Mexico Law After Zelman v. Simmons-Harris," see 34 N.M.L. Rev. 194 (2004).
For article, "No Cake For Zuni: The Constitutionality of New Mexico's Public School Capital Finance System," see 37 N.M.L. Rev. 307 (2007).
