The New Mexico Public Education Department has requested $37.5 million in reserves from the state treasurer to reimburse some school districts for federal Impact Aid that essentially had been diverted to the statewide per-student funding formula.
The reimbursement request comes after the department failed to meet a deadline to submit an application to the U.S. Department of Education for approval to decrease the amount of state funds allocated to districts receiving Impact Aid — many of them serving students in remote tribal communities.
“I respectfully request that this amount be available by the end of May in order for PED to make state equalization guarantee distributions to local educational agencies in early June,” Public Education Department Secretary Ryan Stewart wrote in a letter May 12 to State Treasurer Tim Eichenberg.
The Gallup Sun first reported that federal officials informed the state in April — more than a year after the Public Education Department had submitted its application, including required school funding data — it had missed a May 3, 2020, deadline by three days.
The Impact Aid program was signed into law in 1950 to make up for property-tax losses at school districts with tax-exempt federal property, such as national forests and military bases, as well as tribal lands. Most states are prohibited from considering Impact Aid when distributing state education dollars to districts. New Mexico, unlike many states that heavily rely on property taxes for school funding, uses an enrollment-based formula and has received approval from the federal government to take credit for a portion of the aid sent to districts in the program.
The state’s practice of allocating fewer funds to poor, rural districts that receive money from the federal program has faced opposition for years.
The Gallup McKinley, Central Consolidated and Zuni districts requested a hearing on the issue in 2019. After a review, the Department of Education determined the state had failed a so-called disparity test required to take credit for the federal Impact Aid funding. The difference in overall per-student spending at the district with the highest rate and the district with the lowest rate was too high.
The state appealed but lost, and was ordered to send $60 million to the Impact Aid districts.
The Public Education Department maintains it had approval from previous Impact Aid Director Marilyn Hall, who left in May 2020, to take credit for program funding for the current year.
“This reversal a full year later is highly problematic and we remain in dispute of ED’s flip-flop on this,” department spokeswoman Judy Robinson wrote in an email Thursday evening.
The state reserves would cover the money owed to districts, she wrote.
Though, the state agency could appeal the U.S. Department of Education’s decision.
This fiscal year marks the final time the state would have taken credit for the Impact Aid funds.
In April, Gov. Michelle Lujan Grisham signed legislation into law that puts an end to Impact Aid credits. It allows school districts to receive their full allocation of federal funding without any decrease in state funds.