SCHOOL FINANCE CHANGES

SB0178

SENATE BILL 178

57th legislature - STATE OF NEW MEXICO - second session, 2026

INTRODUCED BY

George K. Muñoz

AN ACT

RELATING TO PUBLIC SCHOOL FINANCE; REQUIRING THAT SCHOOL
DISTRICTS ENROLLING MORE THAN TWO THOUSAND STUDENTS ALLOCATE AT
LEAST NINETY PERCENT OF THE MONEY A PUBLIC SCHOOL GENERATES
THROUGH THE STATE EQUALIZATION GUARANTEE DISTRIBUTION TO THAT
PUBLIC SCHOOL; LIMITING THE UNRESTRICTED CASH BALANCES OF
SCHOOL DISTRICTS THAT FAIL TO MEET THE ALLOCATION REQUIREMENT;
REQUIRING SCHOOL DISTRICTS AND CHARTER SCHOOLS TO USE
EVIDENCE-BASED SPENDING PLANS TO IMPROVE ACADEMIC OUTCOMES OF
AT-RISK STUDENTS; ALLOWING THE PUBLIC EDUCATION DEPARTMENT TO
INTERVENE IN PUBLIC SCHOOLS THAT FAIL TO MAKE PROGRESS ON
IMPROVING OUTCOMES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1
. A new section of the Public School Finance Act
is enacted to read:

"[
NEW MATERIAL
] BUDGETS--PERCENTAGE OF STATE EQUALIZATION
GUARANTEE DISTRIBUTION TO GENERATING SCHOOLS.--

A. For each school district that has a student
population of more than two thousand, the local school board
shall:

(1) calculate the number of program units that
are generated by each public school in the school district
through the state equalization guarantee distribution; and

(2) allocate to each public school within the
school district a minimum of ninety percent of the state
equalization guarantee distribution generated by that public
school's program units.

B. In any year in which a school district fails to
meet the allocation requirement required by the provisions of
this section, that school district shall be subject to the
following limits on that school district's unrestricted
operational cash balance at the end of the fiscal year:

(1) if the current year program cost is less
than seven million five hundred thousand dollars ($7,500,000),
eighteen percent of the budgeted expenditures;

(2) if the current year program cost is seven
million five hundred thousand dollars ($7,500,000) or more but
less than fifteen million dollars ($15,000,000), twelve percent
of the budgeted expenditures;

(3) if the current year program cost is
fifteen million dollars ($15,000,000) or more but less than
thirty-five million dollars ($35,000,000), ten percent of the
budgeted expenditures;

(4) if the current year program cost is
thirty-five million dollars ($35,000,000) or more but less than
three hundred million dollars ($300,000,000), eight percent of
the budgeted expenditures; and

(5) if the current year program cost is three
hundred million dollars ($300,000,000) or more, five percent of
the budgeted expenditures."

SECTION 2
. A new section of the Public School Finance Act
is enacted to read:

"[
NEW MATERIAL
] EVIDENCE-BASED SPENDING PLANS TO IMPROVE
ACADEMIC OUTCOMES FOR AT-RISK STUDENTS.--

A. Each school district and charter school shall
submit a three-year evidence-based spending plan that describes
how the funding the school district or charter school receives
from the state equalization guarantee distribution will be used
to provide culturally and linguistically relevant education
that improves academic outcomes for Native American students,
low-income students, English learner students and special
education students at each public school. The department shall
provide a tool to assist school districts and charter schools
in developing an evidence-based spending plan for each public
school that is aligned to culturally and linguistically
relevant goals and metrics.

B. The department shall require that school
districts and charter schools track and report academic
outcomes tied to program funding for Native American students,
low-income students, English learner students and special
education students at each public school. If adequate
progress, as determined by the department, for the target
students at each public school has not been made in a school
year, the school district shall implement training, reassess
curriculum and provide high-quality instructional materials as
deemed appropriate by the department for that public school.
If a public school has not made adequate progress for at least
one of the target student groups for three years in a row, as
determined by the department, the secretary shall contract with
a level 3A teacher or 3B school administrator, who may have
recently retired but had held such license, who has expertise
in the issues and needs of at-risk student populations and has
experience improving academic outcomes for at-risk student
populations to revamp programming provided to those students,
including curriculum, instructional material, class scheduling,
extended time offerings, professional development for evidence-
or research-based or innovative pedagogical methods and any
other changes to improve outcomes.

C. If a public school has met or exceeded adequate
progress as determined by the department, the school shall be
eligible to receive available discretionary funding for
enhanced or additional programming for Native American
students, low-income students, English learner students and
special education students at that public school."

SECTION 3.
Section 22-8-13.2 NMSA 1978 (being Laws 2011,
Chapter 12, Section 1) is amended to read:

"22-8-13.2. FINANCIAL REPORTING.--

A. Each local superintendent or person in charge of
the fiscal management of a charter school shall provide
quarterly reports on the financial position of the school
district or charter school, as applicable, to the local school
board [
of the school district
] or the governing body [
of the
charter school
] for use in reviewing the financial status of
the school district or charter school. The department shall
develop the forms to be used for the financial reporting
required under this section. The forms shall provide for at
least the following:

(1) a report on the budget status of the
[
local
] school district or charter school, including the
approved operating budget for revenues and expenses compared
with year-to-date actual revenue and expenses;

(2) a statement of any budget adjustment
requests;

(3) cash reports, including revenue, expenses,
temporary loans and cash balances for operational, state and
federal grants, capital outlay and debt service funds;

(4) voucher reports, including a list of
issued warrants or checks;

(5) reports listing procurement, travel [
or
]

and
gas card expenses; [
and
]

(6) investment reports;
and

(7) for school districts with student
populations of more than two thousand, a report on how the
school district is allocating the state equalization guarantee
distribution or other revenue at each public school to improve
the academic outcomes of Native American students, low-income
students, English learner students and special education
students at the public school
.

B. School districts and charter schools shall post
the reports required [
under
]
by
Subsection A of this section on
the school district's or charter school's [
web site
]
website
.

[
C. As used in this section:

(1) "charter school" means a school organized
as a charter school pursuant to the provisions of the Charter
Schools Act; and

(2) "governing body" means the governing
structure of a charter school as set forth in the school's
charter.
]"

SECTION 4.
APPLICABILITY.--The provisions of this act
apply to the 2026-2027 through 2030-2031 school years.

SECTION 5.
DELAYED REPEAL.--Sections 1 and 2 of this act
are repealed effective July 1, 2031.

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