PSFA briefs committee on capital outlay, recommends waiver cleanup and SB131 extension while formula is reviewed

The Public School Facilities Authority and Legislative staff presented a multi‑part review of capital outlay for public schools, urging short‑term fixes to help districts proceed with urgent projects while a comprehensive formula review takes place.

Mark Montoya (legislative staff) and Iris Romero (PSFA executive director) described the historical context: the Zuni litigation (1998) required the state to implement a more uniform capital funding system because some districts lacked local tax capacity. The presenters reviewed the main funding tools—standards‑based grants, systems‑based grants, SB9 (two‑mill levy), HB33 (ability to raise up to $10M via property taxes), general obligation bonds and federal impact aid—and described current PSFA programs including pre‑K, teacher housing and facilities master planning.

Key findings: the existing formula includes assumptions—use of SB9/HB33 by districts, adequacy square footage metrics and a replacement cost per square foot—that no longer reflect real costs or practice. Montoya said some districts do not maximize statutory options, and that rising construction costs have pushed the assumed cost per square foot well above the formula’s baseline.

Recommended near‑term action: staff recommended “Option 3a”—clean up waiver criteria so more districts qualify for local‑match reductions and extend the temporary local‑match reductions enacted by SB131 while the Legislature and staff perform a deeper review of the formula and waiver rules. That approach is intended to open access for districts in need and buy time for systemic reform.

Members questioned implementation and equity: representatives raised concerns about the long time from design to construction (often four to five years), projects that stall because districts lack bonding capacity, and the effect of inflated construction costs on rural and declining‑enrollment districts. PSFA staff described mentoring and outreach to low‑capacity districts and said they are updating adequacy standards and aim to present draft legislation in December to address waiver criteria and the SB131 sunset.

Budget and capacity: PSFA reported roughly $300 million in its financial plan available for projects and an estimated $325 million uncommitted for FY25; staff offered to provide detailed award and commitment timelines to lawmakers who requested them. Members urged attention to HVAC modernization and energy efficiency in retrofits, citing classroom air quality and climate concerns.

Next steps: PSFA and legislative staff will return to the committee in December with a draft bill, deeper analysis of formula adjustments, and specific language to clean waiver criteria and extend SB131 for a limited period while a comprehensive review proceeds.