Lawmakers renew effort to alter practice of diverting federal aid to rural schools

New Mexico for years has taken a large share of federal education aid intended for rural schools that lie in areas with large parcels of public and tribal lands and has distributed it to other districts, including urban ones. Legislation that would have undone the long-standing practice quietly died last year. State lawmakers have renewed […]

Lawmakers renew effort to alter practice of diverting federal aid to rural schools

New Mexico for years has taken a large share of federal education aid intended for rural schools that lie in areas with large parcels of public and tribal lands and has distributed it to other districts, including urban ones.

Legislation that would have undone the long-standing practice quietly died last year.

State lawmakers have renewed the effort with more force in the current legislative session, introducing at least four bills designed to make up for tens of millions of dollars in federal Impact Aid diverted each year from rural districts, including many that serve Native American students.

“It’s an issue of fairness,” said House Speaker Brian Egolf, D-Santa Fe, who co-sponsored one of the bills.

While New Mexico funds public school districts through a formula based on student numbers using money from several sources — including oil and gas revenues — school districts in many states heavily rely on property taxes. Those in tax-poor communities, including areas with tribal lands, national forests, military bases and other federal lands, which are exempt from property taxes, often struggle to keep their doors open.

The U.S. Department of Education’s Impact Aid program began in the 1970s as a way to help offset those property tax losses.

New Mexico — which received $110.6 million in Impact Aid in fiscal year 2019 — sends more than half of the federal money into the state’s general fund, where it eventually is divvied to schools through the per-student formula.

In 2019, the state took $63.5 million out of about $84.6 million in operational Impact Aid. That left just over $21 million in operating funds and $26 million designated for Native American and special-education students, as well as construction projects, for the schools it was intended to aid.

The situation galls some education advocates and lawmakers. 

But their proposed solutions to the problem vary widely.

House Bill 4, introduced by Egolf and four other Democratic lawmakers, and Senate Bill 142, introduced by Democratic Sen. George Muñoz of Gallup, would set up a new state fund to make up for the losses districts have seen from diverted Impact Aid. 

The fund’s initial appropriation under HB 4 would be $18.9 million, an amount that would increase in phases over the next several years.

SB 142 ultimately would funnel 100 percent of the federal Impact Aid to the rural districts. The bill does not include an appropriation.

But Senate Bill 141, also introduced by Muñoz, would make a one-time appropriation of $86 million to replace federal revenue those districts lost.  

Senate Bill 135, introduced by Sen. Mimi Stewart, D-Albuquerque, would appropriate over $29 million to help nine Impact Aid districts that have seen at least $1 million a year in federal funds diverted. 

“I’m aware of the huge cry for more help from these districts,” Stewart said.

Egolf and Muñoz said their efforts are directly tied to the results of Yazzie/Martinez v. State of New Mexico, in which a district judge ruled the state is failing to provide sufficient resources for some of its most vulnerable children, including Native American students and English-language learners.

The judge ordered the state to remedy the problem.

The governor and Legislature appropriated $480 million in new education funding last year and have included more than $200 million in their spending plans for fiscal year 2021. Critics and advocates for the plaintiffs in that case continue to argue, however, that the efforts are not adequate.

Stan Rounds, executive director of the New Mexico Coalition for Educational Leaders, said Thursday his association hasn’t yet examined “all the implications” of the Impact Aid bills.

But, he said, “all appear to be moving toward equity” for districts that rely on the federal grants.

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