The U.S. Department of Education told New Mexico’s top education official this week the state has failed a “disparity test” and must stop diverting millions of dollars in federal Impact Aid grants designated for specific school districts.
The decades-old program provides funding for districts nationwide to offset property tax losses from tribal lands, military bases, national forests and other tax-exempt federal lands within their boundaries. New Mexico essentially has redistributed much of that aid — over $63 million in 2019. The April 15 letter from Impact Aid Program Director Marilyn Hall to state Public Education Secretary Ryan Stewart said the decision was the result of sweeping changes to the state’s education funding formula in 2019.
While the Department of Education initially approved the state’s changes, three Impact Aid districts in northwestern New Mexico requested a hearing on the issue. The changes were reviewed again after the September hearing, Hall said, and the federal agency determined the state was not meeting an equity measurement required to redistribute federal aid.
Under federal law, the difference in per-student spending between the public district or charter school with the highest rate in the state and the one with the lowest must not exceed 25 percent.
According to Hall, fiscal year 2018 numbers show the Carlsbad Unified School District’s per-student spending was $7,438, while the Socorro Independent School District’s rate was $5,731 — a difference of 29.79 percent. Due to the disparity, Hall said, the state isn’t eligible to consider Impact Aid grants when determining state funding to districts.
The state Public Education Department did not respond to specific questions about the federal agency’s decision.
Department spokeswoman Nancy Martira said in an email Friday, “We are still in the beginning of understanding how this finding may affect all New Mexico school districts. When PED does have a plan to address this decision we will share it with school leaders, legislators and the media.”
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 districts, including those in tribal communities, have opposed the practice. Many pushed for legislative measures this year that would have allowed them to keep a larger share of the federal money.
Mike Hyatt, superintendent of Gallup-McKinley County Schools — one of the three districts that sought the September hearing — said his schools, which serve a high number of Navajo students, received $29 million in Impact Aid this year. That led to a reduction in state funding by about $22 million, he said.
“It’s extremely clear our school funding streams are inequitable in this state,” Hyatt said.
Districts need the federal Impact Aid money to build and maintain facilities because they can’t raise enough construction funds through property taxes, he said.
While there have been ongoing efforts to allow districts to retain the funding, Hyatt said, “there has never been a combined effort like this. This has been a real team effort, and following this ruling, I think any appeal from the state has very little chance for success.”