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Senate committee weighs House Bill 63 changes to school funding formula and SEG increases
Summary
Sonny Liu, LLC analyst for public schools, told the Senate Finance Committee that House Bill 63 would reorganize the school funding formula to add a standalone English-learner factor and raise secondary grade weights, but full implementation would require roughly $76.4 million beyond amounts in the current budget substitute.
Thank you, mister chair. My name is Sonny Liu. I'm the LLC analyst for public schools, and I'm joined here by deputy director John Courtney from LFC and then director John Cena from LAC top. Sonny Liu opened the presentation to the Senate Finance Committee summarizing changes the House made to the public school support high-level budget and to proposals in House Bill 63 to revise the funding formula.
The presentation described multiple pieces of House Bill 63: creation of a standalone English-learner factor, revisions to the at-risk calculation, and a proposal to raise the secondary factor (grades 6–12) to 1.3 units. Committee staff said full implementation of all proposals would cost about $132.9 million annually; HB2 as then drafted included roughly $56.5 million, leaving about $76.4 million unfunded.
Why it matters: senators said the changes would shift how money is delivered — either through the SEG (giving districts broader local control) or as targeted line items that require program delivery and reporting. Senator Campos asked whether adding money to the SEG would “provide some local flexibility” and help districts plan. Committee witnesses said money placed into the SEG is distributed monthly and can be used locally, but funds that are tied to a specific factor or program require districts to demonstrate service delivery to receive them.
Committee discussion focused on the secondary factor increase and career technical education (CTE). Staff explained the House substitute had increased sixth-grade weighting partway and left a larger increase for grades 7–12 unfulfilled. Senators pressed whether raising the secondary factor would let districts pay for extracurriculars, counselors and CTE programs or whether a separate CTE factor was needed. Witnesses said the secondary factor increase would provide flexible funding that districts could choose to use for CTE, but acknowledged a dedicated CTE weight would more directly target those programs and carries federal maintenance-of-effort implications (Carl Perkins requirements) and implementation complexity.
Committee members also discussed hold-harmless, transition, and nonrecurring grants for districts that piloted extended school-year programs, citing Rio Rancho, Las Cruces and Carlsbad as examples. Staff recommended targeted nonrecurring appropriations to “hold harmless” early adopters rather than broad formula changes to cover pilot transition shortfalls.
The presentation closed with staff offering to stand for questions and to return with additional modeling as senators requested.
Ending: The committee did not take a vote on the formula changes during the hearing. Senators signaled interest in targeted holds, more modeling on sixth-grade versus 6–12 weighting, and better fiscal detail on any dedicated CTE proposal before choosing recurring versus one-time funding.
