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N.M. Dems try to save special ed funding

Copyright © 2013 Albuquerque Journal

New Mexico’s congressional delegation is hoping to ease the sting of recent news from the federal government, which could cost the state $34 million annually in special education funding.

The four Democrats in New Mexico’s delegation have introduced legislation to ensure New Mexico loses the money for only one year, rather than permanently.

The issue stems from a federal law that requires states to maintain or increase their special education funding every year in order to receive federal special education dollars. 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. If states fail to do so, they are penalized by losing some of their federal special education funding.

New Mexico stands to lose $34 million, out of about $90 million in annual federal money, because federal officials contend the state underspent by that amount in 2011. If the congressional delegation is unsuccessful, New Mexico could lose that money permanently.

Officials of all stripes have been quick to assure that special needs students will not see cuts to their services. Legally, districts cannot cut these services, even if they receive less state money earmarked for special education.

New Mexico officials got word last week that the state had received a waiver for underspending in fiscal year 2010, due to declining and unpredictable revenues that year. But the same letter denied New Mexico a waiver for fiscal 2011. It said the state also underspent in fiscal 2012 and may be on track to underspend in fiscal 2013.

State education chief Hanna Skandera said she plans to appeal the 2011 denial and thinks it may be based on incorrect information. She said she plans to submit a waiver request for fiscal 2012.

The denial prompted teachers’ unions to release a statement laying the issue at Skandera’s feet, calling it “incompetence” and “gross financial mismanagement.”

Rep. Ben Ray Luján, D-N.M., was more circumspect in casting blame, but in a written statement he said, “Anyone that has a child with special needs in their family or knows someone with special needs should be disappointed and frustrated with the state’s inability to meet these requirements over the past few years.”

The budgets for fiscal 2010 and fiscal 2011 were crafted during former Gov. Bill Richardson’s administration. However, the letter from the U.S. Department of Education is critical of the current administration’s handling of the waiver request, noting that inconsistent information was submitted at different times. The letter urges the state to promptly increase special education funding and not to anticipate future waivers.

Skandera said she stands by her administration’s handling of the situation.

“I think we’ve absolutely done what’s right by kids, that’s our first and foremost commitment,” Skandera said. “We’ve worked with the (federal education) department based on their advice and their approach.”

The high water mark for special education funding in New Mexico was in fiscal year 2009, when $461 million was spent, according to the letter from federal officials. The state has not returned to those education funding levels since, and has therefore failed to meet its obligation under federal law, the letter said.

Skandera questioned the $461 million figure, saying she wants federal officials to clarify how they calculated it. She also said the state is pursuing an option to reset its maintenance of effort levels, which might allow it to spend less on special education, as long as all students are receiving the services they need.

Education funding in New Mexico flows through a formula, intended to ensure all students receive the same levels of funding, regardless of whether they live in affluent or impoverished areas. Districts receive money from the state based on enrollment, with extra funding for students with special needs. The formula also takes other factors into account, like the number of students learning English and the experience level of teachers.

Rep. Luciano “Lucky” Varela, D-Santa Fe, said the Legislature has done its best to balance the state budget in tight financial times. Varela chairs the Legislative Finance Committee.

“Our role is to provide a balanced budget, not just for education but for all the other programs in state government,” Varela said. “And you know, there’s never been a year when people have said we were funded adequately for education.”

He said the Legislature has been proactive on the issue, by setting aside money in the fiscal 2014 budget to cover potential maintenance of effort issues.

Sen. John Arthur Smith, D-Deming, who co-chairs the LFC, said the Legislature may have tough choices to make during the next legislative session, but he hopes federal officials will relent on the 2011 denial.

“We’re still holding out hope. It’s a little premature to write a conclusion to this story,” Smith said, adding that officials are prepared for the possibility that the denial will hold. “We think we have the reserves to be able to handle that contingency.”

At this point, the issue has not affected special needs children. If anything has suffered, it’s regular education, said Albuquerque Public Schools Chief Financial Officer Don Moya.

That’s because school districts, while cutting their budgets in recent years, have held special education harmless to avoid running afoul of district-level maintenance of efforts provisions.

In an update to the APS board, Moya explained the situation this way: maintenance of effort requires states to give districts at least the same amount of special education funding year after year, and districts must spend at least the same amount from one year to the next.

“It’s really the regular ed students that have suffered over the short term,” Moya said. “Since education has been cut since 2008, we at APS, like many other districts, have cut programs around special education and have held special education sacrosanct. Again, that was a good thing to do, but it’s the regular education students, it’s the regular ed programs that have suffered.”