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Schools upset over ‘CARES Act Swap’

Copyright © 2020 Albuquerque Journal

A section of a budget solvency bill aimed at absorbing a revenue drop caused by the coronavirus pandemic and plummeting oil prices would reduce the appropriation to the school funding formula by about $45 million to reflect federal stimulus dollars received by school districts.

And some school leaders are calling foul.

A Legislative Education Study Committee analysis describes this aspect of the bill, which was sent to the governor for final approval, as a “CARES Act Swap,” saying the $44.7 million takes into account funding provided by the federal Coronavirus Aid, Relief and Economic Security Act.

“School districts and state-chartered charter schools will receive at least $97.1 million, which can be used for any educational purpose allowed under other federal grant programs, and PED will receive up to $10.9 million to distribute to schools for statewide priorities in response to the COVID-19 pandemic,” according to the LESC analysis.

Sen. Bill Soules, D-Las Cruces, said, “That money was designated for schools because they have had increased costs and expenses as a result of the (coronavirus pandemic). And what we’ve done is we’ve taken credit for it to fix the hole in the state budget.”

Overall, state equalization guarantee funding for Fiscal Year 2021 will be about $23 million higher than the previous year.

Still, districts are arguing the money they got from the CARES Act is already earmarked for costs related to the pandemic, not typical operational expenses.

Rep. Patricia Lundstrom, D-Gallup, the chairwoman of the House Appropriations and Finance Committee, defended the Legislature’s handling of public school spending, which makes up about 46% of the state’s overall budget.

“What we’re really trying to do with the education budget is let local school districts decide how to use the funding,” Lundstrom said during a news conference Tuesday.

Officials from the state’s largest school district, Albuquerque Public Schools, wrote a letter to lawmakers ahead of the session, saying the federal money helps pay for virus responses such as safety measures and the extra costs of teaching during a pandemic.

“These federal dollars should not go to fill shortfalls in operational costs, as proposed by the Legislative Finance Committee. Instead, (state equalization guarantee) funding should be preserved for school operations,” the letter said.

Chief Financial Officer Tami Coleman is projecting the CARES Act Swap could result in up to a $10 million reduction in APS’ budget. The district’s portion of the CARES Act money was about $26 million.

This week the Public Education Department released guidance on back-to-school for the coming year, which will kick off with a mix of in-person and online learning. Adhering to the plan and opening schools during a pandemic comes with “skyrocketing” costs, according to chief operations officer and soon to be acting superintendent of Albuquerque Public Schools Scott Elder.

“It’s more expensive to operate in this environment than it is in a normal environment,” Elder said during a press conference Wednesday.

While he didn’t have a total price tag on costs yet, he said it will be a “combination of funds” to cover all expenses, adding that more information is forthcoming as the district has until Aug. 1 to submit its detailed plan to the state.

Veronica Garcia, superintendent of Santa Fe Public Schools, said the bill could result in the district dipping into reserves.

“To me, this is somewhat of a cash sweep in sheep’s clothing because it’s going to force districts to dip into their reserves to be able to cover some of these nonrecurring expenses,” Garcia said.

Santa Fe received about $2.5 million from the CARES Act, which is slated to cover unexpected costs like safety equipment, cleaning, scheduling logistics and hot spots.

“That $44 million credit against the state equalization guarantee from the CARES Act will directly impact how I am going to keep my kids safe,” Garcia said.

Garcia said SFPS expects about a $1 million decrease to its budget with the adjusted state equalization guarantee.

In Gallup, superintendent Mike Hyatt had a similar sentiment, asserting that taking credit for this money in the state equalization guarantee is contrary to the federal intent.

Hyatt said Gallup McKinley County Schools received a little over $6.8 million from the CARES Act, which is already earmarked.

“All the money we have received and budgeted is for technology and PPE – directly to help starting back-to-school in the fall,” he said.

Some other state agencies would also see reductions based on their federal allocations.

Journal Capitol Bureau Chief Dan Boyd contributed to this story.


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