PSFA History Overview:

The New Mexico Public School Facilities Authority (PSFA) was established by the Legislature in 2002 as a result of the Zuni Lawsuit, in which three New Mexico school districts challenged the equity of state capital outlay distribution and won their case. Pursuant to 22-24-9 NMSA 1978, PSFA reports to, and operates as staff to the Public School Capital Outlay Council (PSCOC), manages a funding model that distributes state capital outlay to schools according to greatest needs first (needs that are determined by objective methods), and assists school districts with facilities development and management.

 The Public School Capital Outlay Council, pursuant to 22-24-6 NMSA 1978, manages the allocation of state funding to public school facilities in New Mexico’s 89 school districts. The PSCOC consists of nine council members from the Governor’s Office, the Department of Finance & Administration, the Public Education Commission, the Legislative Education Study Committee, the Public Education Department, the New Mexico School Boards Association, the Construction Industries Division, the Legislative Finance Committee, and the Legislative Council Service. The PSCOC reports to the Public School Capital Outlay Oversight Task Force, (PSCOOTF) which is made up of legislators, senior leaders from school districts and charters, and members of the public.

How PSFA Differs From Other State Agencies

Public school capital outlay is constrained by the court with respect to the Zuni Lawsuit. Sources of state funds for public school capital outlay are not from the General Fund, but from a dedicated funding stream from severance tax revenues related to oil and gas extraction. In reporting to a joint Executive/Legislative/Educational council and in having been established in response to a lawsuit, PSFA is neither an executive agency, nor a legislative agency. Its adjunct structure, and the manner in which it is directed by the PSCOC, are unusual within state government.

Major Outstanding Issues

Current, unfunded facilities needs in New Mexico public schools total about $2.91 billion. Public school facilities condition is only average at best. The key performance measure is the Facilities Condition Index (FCI). The FCI for New Mexico schools has improved by 53 percent since 2002, but with an average FCI of only 33.52 percent, much work remains to be done. (With FCI, lower is better. If a building costs $100,000 and has an FCI of 33 percent, that building needs $33,000 of repairs.)

To maintain the current FCI will require $338.8 million in funding per annum over the next five years. Under the local/state match formula, $130.2 million of the total will need to come from the State. At lower funding levels, degradation exceeds renovation/repair and school facilities decline.

Project development and construction cycle times in this process are rapid—85 percent of funds are under contract within 15 months. School construction is important to the New Mexico economy. Over the next 18 months the PSCOC has $469 million in funding commitments to projects in development and construction, representing 13,367 direct and indirect jobs in construction and related sectors (SOURCE: George Mason University. Each $1 million in new construction spending supports 28.5 full-time, year-round-equivalent jobs).

Process Effectiveness / Key Performance Measures

New Mexico’s standards-based school facilities funding model which ranks all school facilities according to greatest need and funds the worst needs first, is considered a national best practice and had been copied by other states. Since 2002, the condition of school facilities condition has improved by 53 percent, from an average FCI of 70.6 percent to an average FCI of 33.5 percent. Funding turnover cycle times have improved by over 400 percent.

In fiscal year 2012, PSFA will revert $12.08 million back to the state via audit of construction project closeout with school districts. In calendar year 2011, PSFA reverted $15.5 million back to the state via project closeout audits. These funds, which are more than twice PSFA’s total annual operating budget, would otherwise not have reverted. PSFA has had clean third-party annual audits since agency inception in 2002.

District surveys indicate that 80 percent of school administrators in New Mexico feel that PSFA has had a positive or very positive impact on improving public school facilities and facilities funding; and 64 percent of schools consider the funding process fair. These metrics compare favorably to benchmark data from national role model organizations.

Time Line Of Key Events Related To The Zuni Lawsuit

January 1998

Zuni lawsuit filed.

March 1998

Public Education Department (formerly State Department of Education) appoints a task force to study public school capital outlay issues.

1999 Regular &
Special Sessions

State reduces impact aid credit; increases funding for critical capital outlay program; creates supplemental severance tax bonds & limits their issuance to 62.5% of previous year severance tax revenues; and authorizes $100 million of bonds for public school capital improvements. (Chapter 275, Laws 1999 & Chapter 6, Laws 1999 Special Session)

October 1999

District court rules that current public school capital outlay funding system is

2000 Regular &
Special Sessions

State increases the limit for issuance of supplemental severance tax bonds to 87.5% of previous year severance tax revenues; authorizes an additional $475 million of bonds for public school capital improvements; and creates a new Public School Capital Outlay Task Force (PSCOTF).

March 2000

District court holds status conference.

2001 Session

State adopts new, statewide capital outlay system based on adequacy standards and a state-share formula to determine state grant amounts as the basis for a long-term funding system and appropriates funds for a statewide assessment of all school facilities to be used to rank schools against the adequacy standards. Establishes a short-term deficiency corrections program; appropriates $200 million to fund it; and creates a new state agency to administer it. Additional funding for maintenance is provided by increasing the state guarantee amount under SB 9 from $35 to $50 per unit and the existing critical capital outlay program without the need for annual legislative approval. (Chapter 338, Laws 2001)

May 2001

District court appoints a special master to review the state’s progress in developing a uniform system for funding public school capital improvements.

October 2001

Special master holds hearing.

January 2002

Special master issues a report finding that the state “is in good faith and with
substantial resources attempting to comply with the requirements” of the court. The report also finds that “because the use of direct appropriations necessarily removes substantial funds from the capital outlay process where merit and need on a priority basis dictate how funds are to be distributed, the state should take into account in its funding formula these appropriations as an element thereof.

May 2002

District court adopts the report of the special master and agrees to continue to review the state’s progress.

September 2002

Public School Capital Outlay Council (PSCOC) adopts newly developed adequacy standards.

2003 Session

State revises state-share formula and provides for an offset against state grant awards for direct appropriations for non-operating purposes. The offset amount is calculated based on the local share percentage of the district, so that wealthy districts have a greater offset percentage than poorer ones. Additional funding for maintenance is provided by adding a $5 per mill per unit minimum distribution to districts through the SB 9 program; up to $40 million in additional funds are appropriated for the deficiencies correction program; and a new, permanent Public School Facilities Authority is created to implement the standards-based process. (Chapter 147, Laws 2003 & Chapter 238, Laws 2003)

October 2003

PSCOC implements standards-based funding process for grant award requests.

2004 Session

State increases the limit for issuance of supplemental severance tax bonds from 87.5% to 95% and provides $67.0 million of additional funding for projects begun under the critical capital outlay program but not yet completed and for the deficiencies correction program. (Chapter 147, Laws 2004 & Chapter 126, Laws 2004)

October 2004

PSCOC provides $198.9 million in first year standards-based grant awards.

2005 Session

State provides for permanent Public School Capital Outlay Oversight Task Force (PSCOOTF) and provides $62 million of additional funds for roof repair and replacement as part of the deficiencies correction program and as part of the standards-based process. The SB9 guarantee is increased from $50 to $60 per mill per unit. The state-share formula is modified to allow the local share to be reduced or eliminated in certain circumstances (Chapter 274, Laws 2005)

October 2005

PSCOC provides $255.6 million in grant awards under the second year of the
standards-based program.

2006 Session

State creates a new “high-priority” program for projects meeting specified criteria in high-growth areas and provides an additional $90 million for these projects. The high-priority projects are subject to the same standards and procedures as other projects but are eligible for advanced funding of the local share amount with the requirement that this advanced funding be recouped by future grant offsets. (Laws 2006, Chapter 95)

March 2006

District court holds status conference. Parties agree to an evidentiary hearing to be held in October 2006.

October 2006

PSCOC provides $137.4 million third-year standards-based grant awards.

October 2006

Zuni plaintiffs present concerns to the Public School Capital Outlay Oversight Task Force, which sets up a work group to seek responses to those concerns.

2007 Session

Legislature passes legislation to allow a reduction of 50 percent of offsets from future project awards for direct legislative appropriations that are designated for school building projects that rank among the top 150 projects statewide; to exempt direct appropriations to state-chartered charter schools from offsets against the district in which the school is located; to increase lease reimbursement payments from $600 to $700 per MEM and allow administrative space to qualify for the reimbursement; to increase the state “SB 9" guarantee from $60 to $70 per mill per unit with yearly increases based upon the Consumer Price Index; to increase the period for which a
“HB 33" tax may be imposed from five to six years to track with biennial school district elections; to require that, upon termination of the charter of a state-chartered charter school, the facility must revert to the local school district rather than to the state if any
proceeds from local bond issues were used to finance the facility; and to add two members to the PSCOOTF (bringing the total number of members to 26) to include both a senator and a representative who represent Impact Aid school districts. (Laws 2007, Chapter 366)

August 2007

PSCOC provides $212.2 million in grant awards for the 2006-07 standards-based awards cycle.

2008 Session

Legislature passes legislation to amend the Public School Insurance Authority Act to allow for insurance for joint use of school buildings (Laws 2009, Chapter 198) Other legislation amended the Public School Capital Outlay Act to reduce the offset for direct appropriations from a PSCOC grant award made for joint use with another governmental entity; to authorize funding to continue the development and implementation of the Facility Information Management System (FIMS), a uniform, web-based system to manage maintenance for school district facilities; to provide an increased grant award to districts with a demonstrable exemplary record of preventive maintenance; and eliminates state investment officer as a member of PSCOOTF, bringing membership to 25. (Laws 2008, Chapter 90,.p.v.)

August 2008

PSCOC provides $93.4 million for the 2008-09 funding cycle. PSCOC changes from a one-time annual funding cycle to an ongoing examination of project readiness to make grant awards only when project is able to make expeditious of the funds. Albuquerque Public Schools reduces its advances and offsets by $75.6 million through applications in the standards-based process.

2009 Session

Legislature passes legislation to amend the Charter Schools Act to extend to 2015 the deadline for charter schools to be located in public buildings (Laws 2009, Chapter 198); amend the Public School Capital Outlay Act remove the limit on the amount of lease payment assistance funds that may be awarded (Laws 2009, Chapter 258 p.v.); and legislation to allow for funding to develop a geographic information system for use by the PSFA and other state governmental agencies (Laws 2009, Chapter 115).

2010 Session

Legislature passes legislation to amend the Qualified School Construction Bonds Act to clarify the methodology for allocation of bonding authority (Laws 2010, Chapter 56); to amend the Public School Capital Outlay Act to require the PSFA to administer procurement for certain emergency projects and to extend the time limit for roof repairs from 2012 to 2015. (Laws 2010, Chapter 104 p.v.)

January 2011

Scheduled: Award of roof project grants and short cycle standards-based grant awards.