Bill Sponsor Rep. Joy Garratt, D-Bernalillo
By ANDRÉ SALKIN
The Santa Fe New Mexican
Supporters of virtual education, many wearing shirts reading “Save Our Virtual Schools,” packed into a room at the state Capitol on Friday to push back against a bill that would overhaul New Mexico’s online learning regulations for the first time in nearly two decades.
The changes include a slash in funding for schools that serve distance learning students to fix a crisis: a $35 million hole in the roughly $4.5 billion pool of per-student funding.
The provision also would prevent nearly $40 million in state funds from flowing to private cyber school corporation Stride K12.
House Bill 253 would affect at least 8,977 full-time distance learning students enrolled across 67 school districts and charter schools, said state Rep. Joy Garratt, an Albuquerque Democrat who sponsored the bill.
Or at least “as far as we know,” she told the House Education Committee during Friday’s hearing. ”We don’t even have a complete count.”
That lack of clarity — particularly after virtual learning enrollment ballooned during the COVID-19 pandemic — is part of the gap in regulations HB 253 seeks to address.
Currently, school districts and charter schools do not separately report full-time distance learners, instead counting them alongside students who attend classes in person.
Students attending virtual academies operated by school districts also bring in the same amount of funding as their in-person counterparts.
Carlsbad Municipal Schools Superintendent Gerry Washburn, a supporter of HB 253, said the bill begins to address “something that’s been an issue for quite some time.” He argued online providers receive about $6,800 per student through a public education funding formula known as the State Equalization Guarantee, while it costs districts closer to $2,500 to educate students virtually.
“They’re basically sweeping SEG out of the state,” Washburn said.
The House Education Committee postponed a vote on a committee substitute for the bill Friday after nearly three hours of contentious debate over the future of virtual education. It’s scheduled for another hearing Monday.
Emergency funding fix
The 28-page HB 253 represents the state’s first major attempt to regulate virtual education since the 2007 Statewide Cyber Academy Act.
While it proposes a sweeping set of reforms, Garratt said the bill is not intended to be a rebuke of online learning.
“We recognize the value of virtual education,” she said, adding the bill “preserves vital virtual options for students while ensuring educational quality and compliance with state and federal laws.”
Under the proposal, most existing full-time virtual programs could continue operating largely as they do now through June 2028. New virtual programs, however, would require approval from the Public Education Department — a process that would not open until after a proposed pause on new virtual school applications until fall.
During that interim period, lawmakers and education officials would study virtual education statewide, said John Sena, director of the Legislative Education Study Committee, who presented the bill Friday alongside Public Education Secretary Mariana Padilla.
“We don’t think this addresses all the issues fully,” Sena said of the bill.
The bill’s urgency, officials said, is due its attempt to resolve an immediate fiscal crisis. Padilla told the Legislative Finance Committee in December the Public Education Department was facing a $35 million shortfall after paying Gallup-McKinley County Schools for about 3,000 virtual students the district no longer served.
Gallup-McKinley lost the students after ending its contract in May with Stride K12, a for-profit virtual education company that had operated Destinations Career Academy of New Mexico through the district, enrolling students statewide. After the contract’s cancellation, students in the program enrolled through Santa Rosa Consolidated Schools and Chama Valley Independent Schools — about 1,500 each.
This led to a nearly fourfold increase in enrollment for the Santa Rosa district and a fivefold increase for Chama. But because the funding formula is based on the prior year’s enrollment, Gallup was compensated for the students it had already lost, and Chama and Santa Rosa didn’t have funding to address an influx of students by the start of the school year. They are set to receive a combined $40 million for the current school year.
Without any action from legislators, districts statewide would have to absorb the $35 million in losses to Gallup. Officials said Albuquerque Public Schools alone would face a roughly $5 million hit.
“Any cuts to our district this late in our fiscal year will have a direct and unavoidable impact on the classroom,” said Superintendent Gabriella Blakey, the only person other than Washburn to speak in favor of the bill.
Their comments drew boos and head-shaking from a crowd packed with virtual school students, parents and teachers, prompting the committee chair, Rep. G. Andrés Romero, D-Albuquerque, to call for decorum.
The bill proposes removing virtual students from rural program unit calculations, a component of the State Equalization Guarantee designed to boost per-student funding for small districts.
Virtual schools, Sena said, can currently generate additional state revenue simply by being headquartered in rural districts, “even though their students are coming in from across the state.”
Lawmakers appeared poised to split the bill — until Romero asked Sena what would happen if the bill didn’t pass.
The state would pay about $20 million each to Chama and Santa Rosa, Sena said — an increase from the original $35 million, given the rural status adjustment for the districts Stride K12 moved to. Of that payout, he added, roughly $19 million from each district would go to Stride K12 under their existing contracts, while Chama and Santa Rosa would each get $1 million.
Rep. Catherine Cullen, R–Rio Rancho, previously a staunch opponent of the measure, mouthed “wow”.
“I’m seeing some shocked faces,” Romero said, noting “a third-party entity” stood to profit heavily from the state funds. He said the split showed the “critical need” for broader reforms to virtual education “so we don’t end up next year with a similar problem.”
‘Too much too soon’
Sena said the funding formula change removing the rural adjustment would be the only provision affecting virtual charter schools such as Pecos Cyber Academy and New Mexico Connections Academy, which he noted are already regulated by the Public Education Commission.
Some lawmakers raised alarms about the potential for unintended consequences from other sweeping changes in the measure.
“We just need to fix the financial part now, and then do the study later,” Cullen said, calling the bill “too much too soon.”
Several lawmakers, including Garratt, floated the idea of paring down the bill — making short-term fixes to address the funding gap while delaying broader reforms.
Cullen pointed to a provision that would stop counting virtual students in districts where they make up 70% or more of enrollment in fiscal year 2027 — a change that could strip Santa Rosa and Chama of the combined $40 million.
“Does that kind of kill the program there if they’re not getting funding next year?” she asked.
“I’m not sure,” Sena replied.
Others warned the bill would eliminate virtual options in small districts.
Mosquero Municipal Schools Superintendent Johnna Bruhn said a provision capping virtual enrollment at 10% of a district’s total enrollment would limit her district’s online program to just four students.
Another provision would restrict district-based online schools — unlike online charters — from drawing students from neighboring districts.
“That doesn’t regulate our program — it eliminates it,” she said.
Parents and students concerned about virtual school regulations that would restrict their options described medical fragility among students and families, mental health challenges and bullying as some of they reasons why they chose virtual schools. Others spoke about positive online environments.
Amanda VanVeen, a teacher at Destinations Career Academy, said she left a brick-and-mortar school after being threatened.
“I was looking up the cost of a knife-proof vest,” she said, adding administrators “did nothing about it.”
Parent Ivy Baca said bullying and instability at a traditional charter school led her to enroll her children at Pecos Cyber Academy.
“Today, my children are thriving,” she said.
Katrina Mohamed, vice president of school services for Stride K12, said in an interview after the debate, “This is all about a funding formula snafu. And it is so unfortunate that this cannot be solved outside of damaging opportunity for students.”
Mohamed disputed claims that virtual education costs a fraction of in-person education as “not even close,” adding that many students served by Stride require laptops, internet equipment and additional support.
If the company’s 3,000-student virtual school at the Chama and Santa Rosa Districts received no funding next year, as the bill proposes, she suggested Stride might need to cease operations.
“You can’t offer it for free,” she said. “I mean, things cost.”
She urged lawmakers to “educate themselves on virtual education.”
“And just remember the face of these families,” she added, “who would come to us because traditional systems have failed them.”