Summary:

 House Bill 71 (HB 71):  Section 9-29A-1 NMSA 1978 (being Laws 2020, Chapter 3, Section 1, as amended).  This act focuses on modifying the financial support structure for early childhood education in New Mexico by increasing the annual transfer amount from the Early Childhood Education and Care Fund to the Early Childhood Education and Care Program Fund.  

Legislation Overview:

 House Bill 71 (HB 71) The act refers to two key funds:  
•	Early Childhood Education and Care Fund: This is a state treasury fund composed of distributions, appropriations, gifts, grants, and donations, with income generated from investments.
•	Early Childhood Education and Care Program Fund: Receives distributions from the above fund to support early childhood education programs.
•	Investments are made following the Uniform Prudent Investor Act and are overseen by the state investment officer with the approval of the state investment council.
The Act proposes an annual distribution increase.  Originally, the annual distribution to the Program Fund was the greater of 5% of the average year-end market values of the Fund for the preceding three years or $250 million.  The act increases this annual distribution to the greater of 5% of the average year-end market values of the preceding three years or $500 million.
The primary use of the distributed funds is to support early childhood education and care programs.  Additional uses can be used in financial emergencies where general fund balances are insufficient, the legislature may appropriate necessary amounts from the Early Childhood Education and Care Fund to the general fund to avoid deficits, but only after exhausting other reserve fund options.
This act would require quarterly and annual Reports: The state investment officer must report investment activities quarterly to the Legislative Finance Committee and the State Investment Council, with an annual report due by October 1 each year.
This legislation aims to significantly boost financial support for early childhood programs in New Mexico, ensuring more robust funding and potentially enhancing the quality and reach of educational services for young children.

Effective Date for Implementation of this act will take effect on July 1, 2025.
 

Current Law:

 9-29A-1. Early childhood education and care fund. 
A. The "early childhood education and care fund" is created within the state treasury.  The fund shall consist of distributions, appropriations, gifts, grants and donations.  Income from investment of the fund shall be credited to the fund.  Money in the fund shall be expended only as provided in this section. 
B. The state investment officer, subject to the approval of the state investment council, shall invest money in the early childhood education and care fund: 
(1) in accordance with the prudent investor rule set forth in the Uniform Prudent Investor Act [45-7-601 to 45-7-612 NMSA 1978]; and 
(2) in consultation with the state treasurer. 
C. The state investment officer shall report quarterly to the legislative finance committee and the state investment council on the investments made pursuant to this section.  Annually, a report shall be submitted no later than October 1 each year to the legislative finance committee, the revenue stabilization and tax policy committee and any other appropriate interim committees. 
D. On July 1 of each year, a distribution shall be made from the early childhood education and care fund to the early childhood education and care program fund in an amount equal to the greater of five percent of the average of the year-end market values of the fund for the immediately preceding three calendar years or two hundred fifty million dollars ($250,000,000). 
E. In addition to the distribution pursuant to Subsection D of this section, money in the early childhood education and care fund may be expended in the event that general fund balances, including all authorized revenues and transfers to the general fund and balances in the general fund operating reserve, the appropriation contingency fund, the tobacco settlement permanent fund, the state-support reserve fund and the tax stabilization reserve, will not meet the level of appropriations authorized from the general fund for a fiscal year.  In that event, to avoid an unconstitutional deficit, the legislature may appropriate from the early childhood education and care fund to the general fund only in the amount necessary to meet general fund appropriations for that fiscal year and only if the legislature has authorized transfers from the appropriation contingency fund, the general fund operating reserve, the tax stabilization reserve and the tobacco settlement permanent fund that exhausts those fund balances.
 

Amendments:

 Floor Amendment March 12, 2025.

HFla/HB 71:  The following amendment has been proposed and recommended to Pass: 

 1.  On page 2, lines 19 and 20, strike "five hundred million
 dollars ($500,000,000)" and insert in lieu thereof "four hundred
 million dollars ($400,000,000)"