The U.S. Department of Education has reaffirmed its decision calling for New Mexico to return federal aid to some public school districts it essentially was diverted from in 2019-20, a move that could cost the state nearly $60 million.
Angela Miranda, an administrative law judge for the Department of Education, on Jan. 15 upheld an agency official’s initial finding that the state had failed a “disparity test” for public schools and therefore could not redistribute funding for districts from the federal Impact Aid Program, which was intended to offset property tax losses from tax-exempt federal and tribal lands within the districts’ boundaries.
Judy Gibbs Robinson, a spokeswoman for the New Mexico Public Education Department, said Cabinet Secretary Ryan Stewart and the department’s general counsel are reviewing the decision and “are not at a point to announce next steps.”
The amount that would be owed to districts is $59,992,240, she said.
In May 2019, the Department of Education approved New Mexico’s plan to deduct a portion of state funding for school districts receiving Impact Aid, according to the ruling, but three northwestern districts — the Central Consolidated School District, Zuni Public Schools and Gallup McKinley Schools — requested a hearing on the matter. Following a September 2019 hearing and review, the federal agency determined the state did not meet an equity measurement required to redistribute the aid.
Under federal law, the difference in per-student spending between the public school district or charter school in the state with the highest rate and the one with the lowest must not exceed 25 percent for the state to reduce the amount it parcels out to districts receiving Impact Aid grants. Impact Aid Program Director Marilyn Hall found New Mexico did not meet that requirement because data from 2017-18 showed the Carlsbad district’s per-student spending was $7,438, while the Socorro district’s rate was $5,731 — a difference of 29.79 percent.
A letter from Hall to Stewart in April 2020 said the decision was the result of sweeping changes to the state’s education funding formula in 2019.
The Public Education Department requested an administrative hearing in June and then altered its funding plan in July, the ruling stated. But the districts argued the change was made only because Hall informed state officials it would allow the state to pass the disparity test.
When the districts asked to intervene in the case in August, the state filed a motion to withdraw its appeal.
Daniel Benavidez, superintendent of the Central Consolidated School District, said he felt the Jan. 15 ruling confirmed what he saw as collusion between the federal and state departments.
The Impact Aid Program has long created controversy in New Mexico.
While education funding in many states is heavily dependent on local property taxes, New Mexico divvies its funds through a complex enrollment-based formula. It has for years reduced the amount of state funding it sends to districts that receive the Impact Aid grants.
But Benavidez said that practice hurts students in poor, rural districts like his, which lost $15 million in state funding in 2019-20 due to Impact Aid deductions. The funding loss means some facilities do not receive needed improvements, educational programs are inadequately funded and the district’s ability to hire good teachers is hindered, he said.
“We’re going in the right direction,” Benavidez said. “[The ruling] is a big deal because it reaffirms we are doing the right thing.”
Mike Hyatt, the superintendent of Gallup McKinley County Schools, said his district saw the state redistribute $24 million in Impact Aid. The district’s inability to raise money through property taxes to pay for capital projects affects the quality and the size of facilities it can build, he added.
“Our students have been marginalized in the funding in New Mexico, whether it’s in the classroom or the capital funding that we need to support the education in our communities,” Hyatt said. “You see it across the state in terms of the level of construction and the size of the buildings and the amenities of those school buildings.”