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NM fights for $34M in special education funding

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Copyright © 2014 Albuquerque Journal

The state launches its latest effort to preserve federal special education money during an initial hearing Tuesday in Washington, D.C. – a high-stakes battle that could lead to a loss of $34 million in funding.

At issue is whether the U.S. Department of Education should penalize New Mexico for reducing the money the state made available for special education in 2011.

If the agency cuts federal funding, “we would have some definite reductions in our special education programs,” said Anne Tafoya, executive director of special education for Albuquerque Public Schools.

The federal department withholds money from states that don’t maintain or increase their own special education funding each year. The intent of the law, called “maintenance of effort,” is to ensure states are using federal money to enhance services, not to supplant state funding. States don’t necessarily have to spend the money, but they do have to set it aside so it’s available for local districts.

The federal department agreed to give the state a waiver for 2010, noting that the recession pummeled the state’s revenues that year. But it told the PED it intends to deny a waiver for 2011. It has not said whether New Mexico met maintenance of effort in 2012 or 2013.

The purpose of Tuesday’s hearing before an administrative judge is to clear up preliminary matters in the case. The judge, in a later hearing, will hear the PED’s arguments for the 2011 waiver and render an opinion. The final decision will be up to U.S. Education Secretary Arne Duncan.,

If Duncan denies the waiver, New Mexico could petition for review by the U.S. Court of Appeals.

In its waiver request, the PED argued the recession forced the state’s hand in reducing special education funding and that the maintenance of effort law is too rigid given the way New Mexico funds education. Because the state distributes special education dollars through its per-pupil funding formula, the allocation can dip if there is a drop in the number of special education students.

The PED has argued the state missed its maintenance of effort by $15 million, not the $34.1 million federal officials have claimed. It’s one of several instances in which the state and federal governments disagree on the financial figures pertaining to maintenance of effort.

State Auditor Hector Balderas’ department is reviewing how the PED has handled the issue. Balderas, Democratic state lawmakers and special education advocates have criticized the PED for not doing more to ring the alarm bell about the possible federal funding cut.

It was the previous governor, Bill Richardson, who crafted New Mexico’s 2010 and 2011 state budgets, and the Legislature is charged with making sure the state keeps up with special education spending.

The PED learned of the possible federal funding loss in February 2011, but lawmakers didn’t become aware of it until the 2013 legislative session, Balderas said in a July letter to the PED outlining the department’s annual audit.

“As State Auditor, I am troubled by the substantial risks created by the state’s (maintenance of effort) failures, the department’s untimely waiver requests, and the apparent lack of transparency regarding the potential funding loss,” Balderas wrote.

Lawmakers, however, should have been aware of the issue, said Paul Aguilar, PED deputy secretary of finance and operations. He said the PED under the previous administration told lawmakers the 2010 and 2011 budgets might fail to meet the state’s funding requirement.

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