New Mexico has suffered another setback in its effort to avoid a loss of at least $34 million in special-education money from the federal government. In a letter earlier this month, the nation’s top education official affirmed a judge’s ruling against the district in its battle with the feds over how much money it earmarks for special-education programs.

At issue are at least two violations of funding mandates for programs aiding the state’s 46,000 special-education students. The U.S. government provides some funding for these programs, but it requires states to first allocate certain amounts of their own money. If it determines a state has contributed too little funding to the programs, it can withhold future federal funds. The New Mexico Public Education Department failed to meet those funding requirements in fiscal years 2010, 2011 and 2012, falling short by a total of more than $110 million over the three-year period.

The money goes toward Individualized Education Plans for special-education students, as well as support services such as tutoring, counseling, medical support, assisted technology, and physical and occupational therapy.

The state, citing a drop in its overall revenues, asked the U.S. Department of Education to grant some flexibility on the matter and allow it to reduce its base level of required financial support for special education for those years. But the federal agency approved the request only for fiscal year 2010.

And in the spring of 2014, Office of Hearing and Appeals Judge Richard O’Hair said he was not persuaded by the state’s argument that it had the right to reduce its own expenditures for special education for subsequent years.

In a letter dated Oct. 8, U.S. Education Secretary Arne Duncan affirmed O’Hair’s ruling. Duncan said he disagreed with New Mexico’s arguments on how it interprets the funding mandate, including its contention that a one-year flexibility provision allowed it to lower special-education support in following years.

“Even if a state reduces its expenditures in one year using the state flexibility provision, it must still allocate at least as much money as in the previous years,” Duncan wrote in his eight-page response.

He noted that some of the department’s other arguments were unconvincing as well. Referring to New Mexico’s claim that federal special education funding is provided to allow states to redirect some of their own money for other education uses, Duncan said, “I disagree. … States are strongly incentivized to continue their funding of special education.”

The state spends about $440 million on special education. Last month, State Auditor Tim Keller released a report that said state spending on special education in the 2010 fiscal year fell short by $47 million short. The shortfall was $30 million in 2012 and $35 million in 2011, according to the report. It said a decline in state revenues during the economic downtown of 2008-09 led to the funding drop.

Duncan’s decree on the issue will not necessarily end the legal wrangling that started years ago. He did not deny the state’s waiver requests for 2011 and 2012 in his letter, and a U.S. Department of Education spokesman said he expects those waiver request cases to “move forward.”

Robert McEntyre, a spokesman for New Mexico’s Public Education Department, said Tuesday, “Secretary Duncan’s letter is not a final determination in this matter and has no effect on federal funding for special education in New Mexico. The department is confident in the strength of the merits of its case.”

Katie Stone, the parent of two special-education children and the legislative chairwoman of the New Mexico Autism Society, said if Duncan’s decision does impact the state’s efforts to receive a waiver from the federal penalties for 2011 and 2012 spending violations, it presents a good news-bad news scenario for New Mexico.

“It’s good news for the students of New Mexico who have disabilities and their teachers and the districts that have been picking up the slack where PED has not been funding special ed,” she said. “It’s bad news for the PED in that they are basically being slapped down.”

She said she hopes Duncan’s decision “stops the cataclysmic defunding of special ed in this state.”

Critics of state Public Education Secretary Hanna Skandera acknowledged that the department’s initial failure to meet federal guidelines started under former Gov. Bill Richardson, but they still complained that Skandera did not notify lawmakers about the problem in 2011 and 2012.

Sen. Mimi Stewart, D-Albuquerque, said she sees Duncan’s letter as a defeat for the state’s Public Education Department.

“It means we will lose $34 million from 2011,” she said. “It means our funding for special education through IDEA [Individuals with Disabilities Education Act] will be severely restricted for at least one year.”

The state would essentially pay back the U.S. government with lower allocations in the future. The Public Education Department has maintained that no money would be lost for services, as the state general fund has adequate reserves to make up the difference.

Stewart said, “The case isn’t over, but their main argument has been rejected and that cannot be appealed.”

Contact Robert Nott at 986-3021 or

(3) comments

Denise Fort

One wonders how many of the kids who can't read at the end of third grade should have been given additional services from special education specialists. And what percentage of the state's dropouts have learning disabilities. These are the kids who require our greatest attention, and I'm grateful for some federal oversight. I hope the state legislature ensures that the lost federal funds are replaced with state funds during this period.

Scott Smart

Is anyone in charge? State also lost millions in Tobacco Settlement dollars due to our failure to comply with program requirements. Now this and the Medicaid issue.

Michael Olivas

it is true that Gov Bill Richardson started this, but Gov Martinez and her unqualified education chief Skandera have to own all that has happened since 20111. Shame on all of them for not complying with spending requirements for schoolchildren. This has now bitten the state in the backside, and has cost us untold millions.

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