September 2, 2015

Audit: NM underfunded special ed students

New Mexico underfunded special education by $110 million over three years, according to a report released today from State Auditor Tim Keller.

Head in HandsIn a letter to the chairmen of the state Legislative Finance Committee and the Legislative Education Study Committee, Keller says that the consequences could jeopardize future money from the federal government to pay for special education.

Keller also said in a statement that the audit shows “serious shortcomings in our state’s ability to serve special education students, who are some of the most vulnerable participants in our education system and deserve better.”

His letter adds that the funding problems stem from “material weakness and significant deficiencies” within the state Public Education Department. Every year, the state is expected to fund special education at a certain level to qualify for federal money under the federal Individuals with Disabilities Act (IDEA).

That certain amount of money is typically called the “maintenance of effort,” or MOE. Each year, the MOE increases slightly.

“If the state fails to meet the [maintenance of effort] requirement in a specific year, the federal government may impose penalties that include fines and a decrease in future funding,” Keller’s letter says.

New Mexico Political Report reached out to a Public Education Department spokesman about the audit and will update this story if he responds.

The special audit covers fiscal years 2010-2012, and concludes that the state education department failed to meet its share of IDEA in each of those years.

In fiscal year 2010 the department underfunded special education by an estimated $46 million. The deficits totaled $35 million in fiscal year 2011 and $29 million in fiscal year 2012.

Fiscal years in New Mexico begin on July 1 of the previous year and end June 30 of the current year. Fiscal year 2010, for example, began July 1, 2009 and ended June 30, 2010.

That means that the special education funding problem began under former Gov. Bill Richardson and continued through—at least—the first few years of Gov. Susana Martinez.

Still, the state education department nevertheless “checked the box” that it had met the maintenance of effort during all three years, according to Keller. The audit says that these “positive assurances” from the education department were based on “uncertain calculation methodology” that “were not ultimately accurate.”

The audit, which was announced back in the summer 2013 by then-State Auditor Hector Balderas, essentially affirms issues first raised two-and-a-half years ago.

During the 2013 state legislative session, lawmakers became aware that the state education department sent a letter to the federal Department of Education in August 2012 asking for a waiver from IDEA. At the time, some lawmakers expressed frustration over the state education department’s inability to inform the Legislature about the issue.

From the Santa Fe Reporter:

The issue, [then state Rep. Mimi] Stewart says, is that the PED didn’t tell any state legislators about the problem. Nor did it apparently tell staffers at the Legislative Education Study Committee or the Legislative Finance Committee, both of which recently found out on their own, according to Stewart and others.

“My first thought was dismay and shock,” Stewart, who chairs the House Education Committee, says. “This has been going on and no one knew about it.”

Keller’s audit reaffirms that the state education department kept the funding issue hidden from state lawmakers from 2010-2012.

When news first broke in 2013 about the problem, state Education Secretary Hanna Skandera agreed that there was a shortfall but disagreed with the feds over how much the state underfunded special education. While the U.S. Department of Education put the shortfall at $93.4 million for fiscal years 2010 and 2011, Skandera said the shortfall was less than half of that.

More from the Reporter:

Skandera says the discrepancy between PED’s and USDE’s numbers is a result of how PED reports its budgeting.

“We include in special education funding both our gifted kids and our students with disabilities,” Skandera says. “For the federal folks, we cannot include our gifted students. That’s not allowable by law.”

Yet some doubt that such a large discrepancy would come solely from gifted student programs.

“That doesn’t make any sense at all,” Stewart, pointing out that gifted students make up roughly 4 percent of all students statewide, tells SFR. “Gifted students are not half the budget.”

The state’s request for a waiver for the special education funding, which would stop the state from being penalized, is still pending. Last year, the federal government still penalized New Mexico by denying $34 million in special education funding for its inability to meet the MOE in 2011.

A lawsuit from the state education department against the U.S. Department of Education over how to calculate New Mexico’s special education funding is also ongoing.

The audit recommends that the state education department “modernize and systematize” its special education reporting.

Read the full special audit below:

924 – Public Education Department Examination Report Sept 1 2015 by New Mexico Political Report