A. A school district shall not expend money from its operational fund for the acquisition of a building site or for the construction of a new structure, unless the school district has bonded itself to practical capacity or the secretary determines and certifies to the legislative finance committee that the expending of money from the operational fund for this purpose is necessary for an adequate public educational program and will not unduly hamper the school district's current operations.

B. A school district or charter school may budget out of cash balances carried forward from the previous fiscal year an amount not to exceed five percent of its proposed operational fund expenditures for the ensuing fiscal year as an emergency account. Money in the emergency account shall be used only for unforeseen expenditures incurred after the annual budget was approved and shall not be expended without the prior written approval of the secretary.

C. In addition to the emergency account, school districts or charter schools may also budget operational fund cash balances carried forward from the previous fiscal year for operational expenditures, exclusive of salaries and payroll, upon specific prior approval of the secretary. The secretary shall notify the legislative finance committee in writing of the secretary's approval of such proposed expenditures.

D. Notwithstanding any provision of this section to the contrary, the secretary shall reduce school districts' and charter schools' fiscal year 2017 state equalization guarantee distributions as credit for excess fiscal year 2016 operational fund cash balances in accordance with Section 2 of this 2017 act, and a school district or charter school whose distribution is accordingly reduced shall apply in the amount of that credit its audited fiscal year 2016 operational fund cash balance toward the school district's or charter school's fiscal year 2017 operations.

History: 1953 Comp., § 77-6-45, enacted by Laws 1967, ch. 16, § 99; 1983, ch. 56, § 1; 1985 (1st S.S.), ch. 15, § 19; 1988, ch. 64, § 37; 2003, ch. 155, § 1; 2004, ch. 60, § 1; 2006, ch. 95, § 2; 2007, ch. 122, § 1; 2011, ch. 39, § 1; 2017, ch. 3, § 1.

Cross references. — For the secretary of public education, see 9-24-5 NMSA 1978.

For public school emergency capital outlays, see 22-24-1 NMSA 1978 et seq.

For public school capital improvements, see 22-25-1 NMSA 1978 et seq.

For the legislative finance committee, see 2-5-1 NMSA 1978.

The 2017 amendment, effective January 31, 2017, limited certain school districts' and charter schools' fiscal year 2016 cash balances by taking credits against those schools' fiscal year 2017 state equalization guarantee distributions; in Subsection C, deleted "For fiscal years 2004 and 2005, with the approval of the secretary, a school district or charter school may budget so much of its operational cash balance as is needed for nonrecurring expenditures, including capital outlay."; and added a new Subsection D.

Temporary provisions. — Laws 2017, ch. 3, § 2, provided that the secretary of public education shall:

A. apply as a credit against the fiscal year 2017 state equalization guarantee distribution of each school district and charter school that does not receive an emergency supplemental distribution in fiscal year 2017 and whose audited fiscal year 2016 operational fund cash balance is greater than three percent of its fiscal year 2016 program cost an amount equal to the result of the following calculation or, if, using that result, the applied credit would leave the school district's or charter school's audited fiscal year 2016 operational fund cash balance below three percent of its fiscal year 2016 program cost, then equal to the portion of that result that will leave the school district's or charter school's audited fiscal year 2016 operational fund cash balance at three percent of its fiscal year 2016 program cost:

(1) fifty million dollars ($50,000,000) divided by the fiscal year 2016 program costs for all school districts and charter schools; and

(2) that quotient multiplied by the school district's or charter school's fiscal year 2016 program cost;

B. promptly after January 31, 2017, notify each school district and charter school of the amount of its credit; and

C. for each school district and charter school that does not receive an emergency supplemental distribution in fiscal year 2017 and whose audited fiscal year 2016 operational fund cash balance is greater than three percent of its fiscal year 2016 program cost, reduce by the amount of its credit the school district's or charter school's state equalization guarantee distributions evenly over the period remaining in fiscal year 2017.

The 2011 amendment, effective April 4, 2011, permitted school districts to keep their cash balances for emergency or operational expenditures by eliminating the former limitation on allowable operational cash balances, the reduction of the state equalization guarantee distribution, and the prohibition against budgeting cash balances.

Applicability. — Laws 2011, ch. 39, § 2 provided that Laws 2011, ch. 39, § 1 applies to cash balances realized from the appropriations in fiscal year 2011 and subsequent fiscal years.

The 2007 amendment, effective June 15, 2007, made cash balance credits proportional to the amount of the excess cash balance.

The 2006 amendment, effective March 6, 2006, in Subsection D, deleted the provision at the beginning of the sentence, which provided that notwithstanding the provisions of Subsection G and changed "2006" to "2007"; in Paragraph (1) of Subsection E, changed "nine" to "fifteen"; in Paragraph (2) of Subsection E, changed "seven and one-half" to "twelve"; in Paragraph (3) of Subsection E, added "or more" after ten million dollars; in Paragraph (4) of Subsection E, added "or more" after twenty-five million dollars and changed "four and one-half" to "seven"; in Paragraph (5) of Subsection E, deleted the former provision that provided for fiscal year 2005, two and one-half percent of the budgeted expenditures and for subsequent fiscal years three percent and added five percent; in Paragraphs (1) and (2) of Subsection F, deleted "unrestricted, unreserved operational cash balance and the emergency reserve" and inserted "limit"; and added Subsection I to provide for waiver of the reduction required by Subsection F.

The 2004 amendment, effective May 19, 2004, amended Subsections A, B, C, D, E, F, G and H to change "state superintendent" to "secretary" and amended Subsection F to delete in Paragraph (1) "limit calculated pursuant to Subsection E of this section" and insert in its place: "unrestricted, unreserved operational cash balance and the emergency reserve" and to insert "unrestricted, unreserved operational cash balance and the emergency reserve" in two places in Paragraphs (1) and (2).

The 2003 amendment, effective April 4, 2003, substituted "A school" for "No school" at the beginning of Subsection A; inserted "or charter school" in the first sentence of Subsections B and C; added the last sentence in Subsection C; and added Subsections D to K.

The 1988 amendment, effective May 18, 1988, substituted "state superintendent" for "director" throughout the section.