February 9, 2020

Voters may decide whether to use endowment fund for early ed programs

Matthew Reichbach

The New Mexico House of Representatives once again approved legislation that would let voters decide whether the state can withdraw additional money from a nearly $20 billion endowment to create a surge in funding for early childhood programs.

While the measure, proposed for the eighth year in a row, faced pushback from Republicans — some of whom said increasing state investments in both K-12 and prekindergarten education have not led to better education outcomes — the hourslong debate Saturday largely targeted a group that was absent from the chamber: the state Senate.

In years past, similar House resolutions have failed to even get a vote on the Senate floor, after facing opposition in Senate committees.

“It’s being stonewalled,” said Rep. Moe Maestas, D-Albuquerque, a sponsor of House Joint Resolution 1. The measure passed 44-25, along party lines.

Rep. Derrick Lente, D-Sandia Pueblo, also expressed frustration about the failed effort, year after year, to increase funding for early childhood education and care by using revenue from the century-old Land Grant Permanent Fund.

The recurring failure “sickens me,” said Lente, who called Maestas and Rep. Javier Martínez, a fellow Albuquerque Democrat who co-sponsored the measure, “champions for children.”

He noted Martínez’s own children in the chamber during the debate.

One of the biggest opponents of increasing withdrawals from the investment fund — which provided about $1 billion for public schools, hospitals and other institutions in the last fiscal year — is state Sen. John Arthur Smith, a fiscally conservative Democrat from Deming who leads the powerful Senate Finance Committee.

Smith has fiercely guarded the fund from further distributions, preventing proposals from moving to the full Senate.

This year, he has proposed an alternate funding source for programs administered under the newly created Early Childhood Education and Care Department — an early education trust fund. With an initial appropriation of $320 million in fiscal year 2021 and additional funding sources in the future, the trust is expected to provide around $30 million a year for services for the state’s youngest residents.

Smith’s bill is popular — with identical measures moving swiftly through both chambers.

But it would provide far fewer funds than HJR 1.

The proposal by Maestas and Martínez calls for a ballot question asking voters to approve an amendment to the state constitution that would allow the state to withdraw an additional 1 percent of the Land Grant Permanent Fund each year. It would generate nearly $200 million a year.

Efforts to draw more money from the endowment — largely funded with a combination of oil and gas production on state land and investment proceeds — to boost early childhood education date back more than a decade.

In 2010, when the fund stood at about $10 billion, lawmakers sought a 1.5 percent distribution for early childhood programs. But opponents argued the $100 million withdraw would erode the fund. Since then, however, the fund has grown by an average of about $1 billion a year.

Martínez pointed out Saturday that the fund continued to grow even during the recession of 2008 and the oil price crash years later.

He and Maestas both noted that while distributions from the fund are supposed to be 5 percent of the five-year average of the fund, the rate of revenues withdrawn has dipped to as low as 3.9 percent.

“I don’t think our friends in the Senate know about this,” Maestas said.

Rep. Jason Harper, R-Rio Rancho, argued that the fund’s balance has declined at times in the last few years.

Maestas agreed. Following some of Republican President Donald Trump’s more controversial tweets, it “lost $200 million in a day,” he said.