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Auditor: NM underfunded special education by millions

SANTA FE – A report released Wednesday by state Auditor Tim Keller’s office concluded New Mexico underfunded special education statewide by more than $110 million over several years and needs to do a better job of tracking such spending.

However, the Public Education Department responded by saying the state is now fully funding special education students, while also pointing out state special education spending has actually increased every year since Gov. Susana Martinez took office in 2011.

The audit report comes as New Mexico is locked in an ongoing dispute with the federal government over special education spending. For more than a year, U.S. Education Secretary Arne Duncan has been weighing whether to reduce New Mexico’s share of federal funds by $34 million, after a federal judge ruled the state had erred in reducing its special education spending levels in 2011.

Keller, a Democrat who was elected auditor last year, said the state has shortchanged special education programs, while adding that the $110.8 million shortfall identified in the audit – which comes from the 2010 through 2012 budget years – puts the state’s ability to receive federal funding at risk.

“No matter which method you use to run the numbers, the state failed to maintain a steady level of funding for special education, and that puts our most vulnerable children at risk,” Keller said in announcing the Wednesday report.

However, a PED spokesman pointed out that Keller, while a member of the Legislature before being elected auditor, voted for a 2010 state budget bill that cut special education funding levels, among other budget cuts.

“We appreciate Tim Keller’s willingness to admit that the Richardson-era budgets he voted for left special education underfunded,” agency spokesman Robert McEntyre told the Journal . “Since Gov. Martinez has taken office, special education funding has increased every year.”

New Mexico funds special education programs through its public school funding formula, which distributes more than $2 billion annually to the state’s 89 school districts.

State special education funding was reduced from roughly $435.2 million in the 2009 fiscal year to about $388.9 million the following year, as state lawmakers grappled with a steep economic downturn that prompted cuts in many state programs, not just special education. It has since gradually increased to roughly $442 million for the budget year that began in July, according to PED.

The U.S. Education Department can withhold money from states that don’t maintain or increase their special education funding each year. The law, commonly known as “maintenance of effort,” is intended to ensure that states don’t merely supplant their own spending with federal dollars.

Although the state received an exception – or waiver – from the requirement for 2010, the federal government told PED it intended to deny the waiver for 2011, raising the possibility of a reduction in federal funding.

However, education experts say the state is not at risk of losing the entire $110.8 million identified in the state Auditor’s Office report.

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