Copyright © 2021 Albuquerque Journal
SANTA FE – The decade-long campaign to pull more money out of New Mexico’s largest permanent fund is on track to move from the Roundhouse to the ballot box.
The state Senate on Thursday adopted legislation that would ask voters to support boosting the annual withdrawal from the Land Grant Permanent Fund to 6.25%, an increase from 5%.
It would generate an extra $127 million a year to expand early childhood education programs and about $85 million a year for K-12 schools. An additional $34 million would go to other beneficiaries of the permanent fund, such as universities and hospitals.
The K-12 funding was added as an amendment by the Senate to the House-approved version of the proposal. It would be dedicated to extending the school year, compensating teachers and enhanced instruction for at-risk students.
“In order for a child to succeed, they must be invested in and cared for at every step of their development,” Democratic Sen. Jacob Candelaria of Albuquerque said.
The vote marked a significant political breakthrough. The House had approved similar legislation for five years in a row, only to see it die in the Senate each time.
The Senate adopted the measure, House Joint Resolution 1, on a 26-16 vote, mostly along party lines with Democrats in favor and Republicans opposing. Sen. Bill Tallman of Albuquerque was the lone Democrat to vote against the bill, questioning whether the money would be spent effectively.
It passed the House last month but will have to go back to that chamber for agreement on the Senate changes.
The House sponsors say they support the new version, much of which was crafted by Candelaria.
Opponents said the proposal would damage the long-term health of the permanent fund. Pulling too much out of the fund now, they said, would shortchange a future generation of children.
A higher distribution rate would slow the growth of the fund. Eventually, the fund will deliver less money for schools and other beneficiaries under the 6.25% rate than if it had been left at 5%, according to analysts for the Legislative Finance Committee.
Their report estimates the flip would come in 2042.
“The more we withdraw, the less the power of compound interest helps us,” Republican Sen. William Sharer of Farmington said.
Sen. Steven Neville, R-Aztec, said the fund is already a critical source of revenue for public schools, injecting about $986 million into this year’s budget.
Withdrawing more “hurts the future,” Neville said. “That’s my biggest objection.”
Early brain development
Supporters contend the increase would be worthwhile. Analysts working for the LFC have found long-lasting academic gains by New Mexico children who participate in prekindergarten, and the effect seems to be amplified by certain programs that extend the school year, if they are carried out in a high-quality way, the analysts say.
Sen. Michael Padilla, D-Albuquerque, said the state is in good position to make sure the extra money is spent effectively, following the 2019 creation of a standalone Early Childhood Education and Care Department to oversee services.
“This really moves New Mexico in the right direction,” Padilla said of the proposed amendment. “It’s turning the ship around in a really big way.”
Sen. Siah Correa Hemphill, a Silver City Democrat and school psychologist, said early education services have a powerful effect on children’s health.
“There’s a tremendous amount of brain development that occurs in those first three years of life,” she said.
Opponents didn’t dispute the importance of early childhood education, but they said the state is already ramping up spending without relying more on the permanent fund.
Sen. Gay Kernan, R-Hobbs, said state documents show New Mexico is now spending about $450 million a year on early childhood education, a three-fold increase in a 10-year period.
“We are serving a significant number of children in the early childhood programs,” she said.
The Senate rejected a series of GOP-sponsored amendments to reduce the proposed distribution or add a sunset clause.
Rep. Antonio “Moe” Maestas, an Albuquerque Democrat and long-term supporter of the measure, sat on the Senate floor next to Candelaria as senators debated the resolution.
The other co-sponsors are Democratic Reps. Javier Martinez, Elizabeth Thomson and Georgene Louis, all of Albuquerque, and Sen. Pete Campos, D-Las Vegas.
The version passed by the House called for a 1 percentage point increase in the annual distribution, dedicated largely to prekindergarten, home visiting programs for new parents and other early childhood programs. But Candelaria’s changes boosted the distribution to 1.25 percentage points, with some of the money earmarked for K-12 education.
Candelaria pointed out that the state faces a landmark 2018 court decision that found New Mexico is violating the rights of at-risk students by failing to provide a sufficient education.
The debate over the permanent fund amendment stretches back about 10 years altogether.
After the 2020 elections reshaped the Senate, the vote Thursday puts the measure on track to pass the Legislature in the final days of this year’s session. Senators debated the legislation for about three years.
“This is the end of our chapter of the discussion,” Candelaria said.
Voter, congressional approval
The proposed constitutional amendment, if adopted by lawmakers, would have to go before voters in a statewide election for approval.
The legislation doesn’t specify an election date. It could go before voters in the next general election or in a special election.
Approval by the U.S. Congress to dedicate some of the permanent fund money for early childhood education would also be required.
If the amendment succeeds, the extra distribution would still be subject to suspension, if the balance of the permanent fund falls below $17 billion. It now stands at roughly $22 billion.