The ruling was a setback for the state on a side issue in a broader, ongoing dispute over whether New Mexico should be docked as much as $34 million by the federal government for not funding special education at the required level that year.
In the ongoing appeal, New Mexico claims it’s entitled to a waiver from the U.S. Department of Education for 2011, and therefore should not be penalized.
The state also is challenging the way the federal government calculates how much money New Mexico makes available for special education.
The state says that because it distributes special education money through a per-pupil funding formula, rather than allocating a specific amount for special education, the federal agency’s rules for determining what the state is allocating are too rigid.
“Secretary Duncan’s letter is not a final determination in this matter, and has no effect on federal funding for special education in New Mexico,” said Robert McEntyre, a spokesman for the state Public Education Department.
He said the PED “is confident in the strength of the merits of its case.”
The U.S. Department of Education can withhold money from states that don’t maintain or increase their own special education funding each year – dubbed a “maintenance of effort.”
That’s aimed at ensuring that federal funds are used to enhance services, not replace state funding.
The federal department gave New Mexico a waiver from that requirement for 2010 because of the impact of the recession on the state’s revenues that year.
But an administrative law judge with the federal agency said that for the 2011 budget year, the state wrongly interpreted a federal provision giving states some spending flexibility in years when they’re getting extra federal money.
The state didn’t have a right to continue with the reduced special education funding, he said. Duncan agreed in an Oct. 8 letter to PED.
It hasn’t been determined by federal officials whether New Mexico met its “maintenance of effort” in the years since 2011.
State Auditor Tim Keller’s office concluded in a report released last month that New Mexico has underfunded special education by more than $110 million over several years.
The PED responded that the state is now fully funding special education students.
Special education funding was cut from $435 million in the 2009 budget year to about $389 million the following year. It’s up to about $442 million for the budget year that began in July, according to the PED.