New Mexico learned last week that it had received a waiver from the
U.S. Department of Education for a 2010 violation of federal rules on spending
for special education.
But the department refused to grant a waiver for 2011, putting the state at risk of losing $34 million in federal funds.
The department is also questioning spending on special education for fiscal years 2012 and 2013, which ends June 30. The amount at risk for 2012 is about $26.4 million.
Federal "maintenance of effort" rules bar states from reducing the amount of money they spend on programs that receive federal funding. The rules are meant to ensure that states use federal grants to supplement funding on programs rather than as a replacement for existing state funding.
But in order to balance the budget in 2010 and 2011, New Mexico cut state aid to public schools.
In a 16-page letter the department said it was granting the waiver for 2010 because the state "experienced a precipitous and unforeseen decline in its financial resources" for that year.
But it found that New Mexico's recurring revenues actually increased by 1.66 percent in 2012, and denied the waiver.
Original estimates of the amount at risk in 2010 and 2011 combined ranged from $43.5 million to $93 million.
New Mexico Public Education Department Secretary-designate Hanna Skandera said the state became aware of the problem early in 2011, shortly after Gov. Susana Martinez took office. Last summer it submitted a request for a waiver, and followed that up with other appeals.
The letter from the U.S. Department of Education says that New Mexico sometimes submitted different and inconsistent data in support of its original waiver request and "did not certify the data it provided" in a response to the U.S. Department of Education submitted in May.
In a brief phone conversation Wednesday, Skandera said she sees the federal response as a partial victory and said the state will seek other avenues to appeal the decision. "We can take this to a hearing if need be," she said. "We're still pursuing all options."
Skandera noted that a new provision of the Individuals with Disabilities Education Act signed into law in March only allows the department to cut a state's federal allocation for one year for failure to meet maintenance-of-effort standards, with that money being redistributed to other states -- assuming the states being penalized address and correct the problem.
"It's not a forever-impact so it's mitigated," Skandera said Wednesday.
In addition, Gov. Martinez allocated $20 million in this coming year's budget to address potential maintenance-of-effort deficiencies, though it is unclear yet whether that money will be used to address the federal concerns about 2011, 2012, and 2013.
Rep. Mimi Stewart, D-Albuquerque and an outspoken critic of the governor and Skandera's education policies, said by phone Thursday that she feels the state should not continually appeal the U.S. Department of Education's decision and thus drag out the problem. She said Martinez and Skandera should immediately take funds, including the $20 million allocation and money from a special-education reserve fund, to ensure the state is maintaining its special-education support.
"To me the issue is still that the secretary-designate and the governor did not bring the Legislature into this issue when they first came into office," Stewart said. "They knew about this in January 2011. We found out about it two years later in January 2013. What were they thinking?"
The U.S. Department of Education and New Mexico's Public Education Department were discussing the problem beginning in 2011, documents show, but some state legislators, including Stewart, maintain that the state department did not notify them of the problem until early this year.
Joel Boyd, superintendent of Santa Fe Public Schools, said in an email this week that it is too early to tell whether the maintenance-of-effort issue will impact funding within the district. But on Thursday, the district's special-education director, Trisha Elmer, said that in her six years on the job the district has always compliant with maintenance-of-effort requirements, even if the state has not. "This district has been committed to special-education funding," she said.
The district has about 2,100 special-education students, she said.The state has about 46,000 special-education students in all.
Stewart said school districts are committed to maintaining special-education funding but to do so in the face of declining state support forces them to make cuts elsewhere or not give raises to teachers beyond the 1 percent raise for all state employees that the governor approved in this year's fiscal budget.
On Wednesday, members of the New Mexico congressional delegation introduced a bill to protect future special-education funding (the IDEA Adjustment Act) that would also limit any reduction in funding to any state to just one year.
Other states, including Kansas, New Jersey, and South Carolina, have recently found themselves in similar situations with maintenance-of-effort funding.
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