Lawmakers pressure budget officials as new Simon Sanchez High School lacks $16.3 million appropriation

Senator Duenas, chairman of the Committee on Finance, pressed budget staff on the absence of a $16,300,000 appropriation for Simon Sanchez High School during an August committee hearing, asking whether the administration and the legislature had funds in place for debt service and to mitigate rising construction costs.

"The way that the law is written, Senator, it it allows basically the administration to solicit, for financing, for the construction, furniture and fixture and equipment, and for the insurance maintenance of the construction at the Simon Sant'an High School. Yes. For the total amount of a $166,365,000," Director Guerrero said, describing the statutory authorization Congress and the local law provide for the project.

Why it matters: lawmakers and school stakeholders have expected the project to move to market after Public Law 37-22 established the authorization. Without a legislative appropriation for the specific $16.3 million identified for debt-service or related mitigation, senators warned the project could face higher financing costs as construction prices rise.

Budget office and administration responses

Director Guerrero told the committee that the project has statutory authorization but that the current Executive Budget Request did not include a specific appropriation of $16,300,000 for the school. "I don't believe the EBR contained any appropriation for the construction or for the payment of Simon Sanchez High School," Guerrero said.

Mr. Carlson, a governor's office budget official who spoke to the committee, said the administration can proceed to market under the statute's authorization and that the law includes a grant of transfer authority to the governor to make leaseback payments for the school. But he also told senators the governor's transfer authority "doesn't have a dollar amount. It just says transfer for Simon Sanchez. So I mean is it $1? Is it $2? Is it $16,300,000?" — language senators said leaves the scope unclear.

Officials described the practical effect: the project has an authorization for roughly $166.4 million, with a net construction figure that officials said amounts to about $132 million after subtracting FF&E (furniture, fixtures and equipment) and the statutory 1 percent arts contribution. The administration and the Department of Education remain in the procurement stage; officials said that without a new appropriation the project would proceed to market constrained to the earlier authorization levels.

Options and risks cited by senators

Senators repeatedly pressed whether the governor could use transfer authority or whether the legislature should appropriate the $16.3 million to mitigate capitalized interest and rising construction costs. "If the body so desires, to provide the funding to mitigate the rise in construction costs or to provide funding so that we don't have to pay the capitalized interest with bond money," Director Carlson said. The administration described capitalized interest as a two‑year item the project expects to borrow and repay as part of financing unless the legislature provides cash to reduce that borrowing.

Senator Barnett and others emphasized that the law was passed in 2024 and asked why no appropriation had followed. "The students, families, and stakeholders of Simon Sanchez High School are being shorted by this budget bill... There's no appropriation. There's no money for Simon Sanchez's debt service obligation," Barnett said during public remarks.

Timing and payments

Administration witnesses told senators the project could be taken to the bond market under the existing authorization and that closing and bond issuance could occur later in the calendar year, with leaseback payments and debt-service obligations beginning after the project incurs the obligation. An exchange in committee clarified that, as presently structured, leaseback payments would appear in budgets after obligations are incurred and could begin in FY 2027 under the projected procurement and construction schedule.

Clerical and budget context

Committee members also discussed the broader fiscal environment: the budget office said the government's surplus and unassigned fund balance made some flexibility possible, while senators and budget staff noted that audited balances, excess revenue calculations, and agency lapse patterns (money not spent during a fiscal year) affect whether transfers or supplemental appropriations are advisable.

What lawmakers asked next

Senators requested a written analysis showing how a legislative appropriation now would change the project's long‑term cost and how much capitalized interest could be mitigated by a $16.3 million cash infusion. The committee said it will call Department of Education procurement staff to confirm readiness to go to market and asked the administration to clarify the specific limits of the governor's transfer authority for the project.

Ending

With procurement reportedly prepared to move forward under the statutory authorization, committee members said they would weigh a legislative appropriation against using the governor's transfer authority and against other competing demands on the budget in coming deliberations. No formal appropriation or vote occurred during the hearing.