Summary:

 House Bill 63 (HB 63) makes changes to the Public School Finance Act funding formula to increase the basic program unit for some grades. HB 63 defines the family income index rate. HB 63 changes the at-risk program unit and the calculation of the at risk index for charter schools. HB 63 creates an English Learner Program Unit. HB 63 provides a hold harmless provision for formula changes. HB 63 makes appropriations.
 

Legislation Overview:

 House Bill 63 (HB 63) amends multiple sections of the Public School Finance Act. HB 63 also makes appropriations.
SECTION 1 amends the Public School Finance Act Definitions as follows:
- amends Subsection B defining membership to delete reference to habitual truants to refer to students who are chronically or excessively absent.
- inserts Subsection G to provide the definition of family income index rate:
G. "family income index rate" means the percentage of MEM in a school district or charter school that is identified as either extremely low income or very low income by the family income index; 
The section is relettered.
- amend the relettered Subsection R to define the staffing cost multiplier as the teacher cost index.
SECTION 2 amends Charter School Operating Budgets in Subsection C to delete reference to the school  district in which the charter school is located.
SECTION 3 amends Program Cost Calculation in Subsection A to insert an additional program unit: (16) English learners.
SECTION 4 amends Basic Program Units to group grades 4 through 5 and grades 6 through 12. The Cost Differential Factor for grades 6-12 is increased from 1.25 to 1.30.
SECTION 5 amends At-Risk Program Units throughout to include charter schools along with school districts.
In Subsection A, the At-Risk Index calculation is increased from 0.33 to 0.40..
Subsection B is amended as follows:
B. To calculate the three-year average rate, the department shall compute a three-year average of the school district's or charter school's family income index rate.
Subsection D(2) is deleted.
SECTION 6 adds a new section of the Public School Finance Act, Section 22-8-23.15 NMSA 1978 to create English Learner Program Units.
Subsection A allows a school district or a charter school to receive additional program units if it establishes services to assist English learners. The number of additional units is computed:Three-Year Average Rate x MEM x 0.33 = Units. 
Subsection B provides the specifics for calculating the Three-Year Average Rate.
Subsection C directs that the department shall recalculate the three-year average rate for each school district and charter school every year.
Subsection D defines services as used in this section to mean research- or evidence-based social, emotional or academic interventions to improve student achievement and progress as specified in this subsection.
SECTION 7 provides temporary protection from program cost reductions.
A. Using money appropriated by the legislature for Fiscal Year 2026, the Public Education Department (PED) shall supplement a school district's or charter school's calculated program cost in that fiscal year: 
A. if, for Fiscal Year 2026, the school district's or charter school's calculated program units are less than its final program units in Fiscal Year 2025, due to the implementation of this act, an amount equal to 100 percent of the reduction; and (2) if, in fiscal year 2026, the appropriation is insufficient, then in an amount equal to the school district's or charter school's prorated share of the total appropriation.
B. On or before January 31, 2026, the PED shall submit a report to the Legislative Education Study Committee and the Legislative Finance Committee that states the need for a supplemental appropriation for Fiscal Year 2026 as specified in this subsection. 
SECTION 8 makes appropriations from the General Fund for expenditure in Fiscal Year 2026 as follows:
A. $132,725,000 to the state equalization guarantee distribution to cover the cost of funding formula changes. Any unexpended or unencumbered balance remaining at the end of Fiscal Year 2026 shall revert to the General Fund. 
B. $5,000,000 to the state support reserve fund to distribute supplemental funding pursuant to the hold harmless provisions of Section 7 of this act and in the manner provided for in Section 22-8-31 NMSA 1978. Any unexpended or unencumbered balance remaining at the end of Fiscal Year 2026 shall not revert to the General Fund. 
SECTION 9 makes the effective date of this act July 1, 2025.

 

Current Law:

 House Bill 63 amends the following sections to include or revise definitions, insert charter schools and change calculations for some measures:
Section 22-8-2 NMSA 1978 (being Laws 1978, Chapter 128, Section 3, as amended by Laws 2019, Chapter 206, Section 6 and by Laws 2019, Chapter 207, Section 6)
Section 22-8-6.1 NMSA 1978 (being Laws 1993, Chapter 227, Section 8, as amended by Laws 2019, Chapter 206, Section 9 and by Laws 2019, Chapter 207, Section 9)Section 22-8-18 NMSA 1978 (being Laws 1974, Chapter 8, Section 8, as amended)
Section 22-8-20 NMSA 1978 (being Laws 1991, Chapter 85, Section 3, as amended by Laws 1993, Chapter 2, Section 1 and by Laws 1993, Chapter 226, Sections 21 and 22 and also by Laws 1993, Chapter 228, Sections 2 and 3)
Section 22-8-23.3 NMSA 1978 (being Laws 1997, Chapter 40, Section 7, as amended) 

Amendments:

 House Bill 63 is amended by the House Education Committee as follows:
In Section 1 of Definitions, Subsection G, which is new text defining “family income index rate”, is amended to delete “MEM” and insert “students”.
In Section 2, Subsection C is amended to read:
C. For its first year of operation, a charter school's operating budget shall be based on the projected number of program units generated by the school and its students using the at-risk index the English learner three-year average rate and the staffing cost multiplier of the school district in which the charter school is located, and the charter school's operating budget shall be adjusted using the qualified MEM on the first reporting date of the current school year. For its second and third fiscal year of operation, a charter school's operating budget shall be based on the number of program units generated by the school and its students using the average of MEM on the second and third reporting dates of the prior year, the at-risk index and English learner three-year average rate of the school district in which the charter school is located and the charter school's staffing cost multiplier. 
For its fourth and subsequent fiscal years of operation, a charter school's operating budget shall be based on the number of program units generated by the charter school and its students using the average of the MEM on the second and third reporting dates of the prior year, the charter school's at-risk index, the charter school's English learner three-year average rate and the charter school’s staffing cost multiplier."
In Section 5, Subsection B is amended to read:
B. To calculate the three-year average rate, the department shall compute the preceding three-year average of the school district’s or charter school's family income index rate.
In Section 5, Subsection D(2) was deleted and now is amended to re-insert this text:
(2) culturally relevant professional and curriculum development, including those necessary to support language acquisition, bilingual and multicultural education;
Renumber the succeeding paragraphs accordingly. 
In Section 6, Subsection B is amended to read:
B. To calculate the three-year average rate, the department shall compute the preceding three-year average of the school district's or charter school's percentage of MEM that is classified as an English learner, using criteria established by the office for civil rights of the United States department of education. The three-year average rate shall include students who have been reclassified as fluent English proficient in the preceding two school years, as determined by the department on the department-approved English language proficiency assessment.