Education 101: The 2015 Budget Proposals for K-12 Education in New Mexico

Education 101:
The 2015 Budget Proposals for K-12 Education in New Mexico
By Save Our Schools Los Alamos

In previous articles, we’ve reviewed the very tight control the New Mexico government exerts over K-12 education, in contrast to the approach taken in many other states where local communities have substantially greater control over school funding.  New Mexico’s state government controls 70 percent of the K-12 funding for Los Alamos, with Federal money (22 percent) and Local money (8 percent) making up the difference.

State control is exercised both by the Governor and her staff; and by the New Mexico State Legislature which has a House of Representatives with 70 State Representatives and a Senate with 42 State Senators. Legislators representing Los Alamos County, Senators Richard Martinez and Carlos Cisneros and Rep. Stephanie Garcia-Richard, along with their fellow legislators from across New Mexico, will be taking up the issue of school funding when they convene for a 30 day session Tuesday, Jan. 21.

An important part of the annual legislative process is the adoption of a budget for the coming fiscal year. As part of this process, both the Governor and the Legislature introduced budget proposals that reflect their priorities.  These proposals will be deliberated and voted on; and some subset of them will be enacted into law and executed by the Governor’s cabinet departments. Funding for K-12 education is a large portion of the overall budget and a topic that receives a lot of time and attention during this process.

In this column, Save Our Schools Los Alamos will review some of the education funding proposals made by the Governor and the New Mexico State Legislature — and consider how they might impact Los Alamos Public Schools. 

The High Level Summary:

This is a complicated subject; if you only have a few minutes to read, the next few paragraphs provide a high level overview. 

Based on our analysis of the budget proposals presented by the Governor and the Legislature, there are several key disagreements involving K-12 education funding. They involve: 1) the size of the increase for the State Education Equalization Guarantee which funds school operations; 2) philosophically different strategies about who should decide how K-12 education funding is spent; and 3) differences over compensation for teachers and staff.

The Governor is requesting an overall annual increase to K-12 education funding of 3.9 percent ($100 million), while the Legislature is requesting a 5.6 percent ($143 million) increase.

Under the Governor’s proposal, the State Equalization Guarantee would rise by 1.9 percent (by $45 million); with this growth tied primarily to covering increases in fixed costs like utilities, employer pension contributions for schools staff, and healthcare. As a reference point, last year the State Equalization Guarantee was increased by 3.9 percent. This year the Governor is proposing an increase of half as much; and the Legislature is proposing an increase that’s one-third higher.

The rest of the Governor’s proposed increase in K-12 education funding ($55 million) would be channeled to specific State-sponsored programs.  The largest education reforms in the Governor’s budget are described in more detail later in this article.

The important thing to note is that by taking this approach, the Governor’s budget shifts decision making about how new K-12 education funds are spent from local school boards to the New Mexico Public Education Department. By proposing a modest increase to the funding pot that provides operating funds to local school boards, and directing more funds to education reforms managed by the State Public Education Department, the Governor’s budget would further increase the Public Education Department’s control over New Mexico K-12 education.

The Legislature, on the other hand, proposes to assign almost all of its recommended increase to the State Equalization Guarantee ($125 million) with the remaining new money (about $18 million) to sustain currently existing successful Public Education Department special programs. Under this approach, the Legislature would provide funding to cover the anticipated higher fixed costs as well as to provide school boards with some funding to improve services at their local discretion. In its budget materials, the Legislature states that it relies heavily on the State Equalization Guarantee to distribute K-12 education funding, indicating that it views local school boards as the appropriate decision makers for the majority of K-12 education spending decisions.

The approach to compensation is another significant variance between the proposals offered by the Governor and the Legislature. The Governor proposes $14.2 million in pay increases for state employees who are in jobs that are challenging in terms of recruitment and retention, some of which might flow to public school employees. The Governor has also recommended $6.5 million to raise salaries for new teachers from $30,000 to $33,000; and has recommended a merit pay pilot program for highly effective teachers and principals. The Governor has not budgeted an across-the-board pay increase for teachers, school staff, or for other state employees; all of her proposed pay increases are tied to performance or need.

In contrast, the Legislature has budgeted a 1.5 percent across-the-board pay increase for all state employees and public school employees, as well as $40 million for targeted pay increases, a portion of which would be available to school districts. The Legislature has budgeted for an increase in the starting salary for teachers to $32,500, as well as for cost-of-living increases for education assistants.

The philosophical disagreement between the Governor and the New Mexico Legislature on whether new K-12 education funding should be distributed through the State Equalization Guarantee with control by local school boards or by the State Public Education Department is probably the most controversial education issue to watch in the upcoming legislative session.

The State Equalization Guarantee formula was created in 1974 to distribute education funding to school districts based on a complicated formula that heavily factors economic need. It has been the primary method used by the State over the past 40 years, and it was designed to ensure that students in New Mexico’s lower income communities are not disadvantaged. A shift in funding emphasis from the State Equalization Guarantee to the New Mexico Public Education Department’s targeted programs would be a significant change in New Mexico policy.

For Los Alamos, this question boils down to whether our students would be better off with new funding flowing to state mandates or to increases in the local School Board’s discretionary funding. There will be a funding gap for the Los Alamos Public Schools under all the scenarios unfolding, and the level of State Education Equalization Guarantee funding ultimately provided to the School Board will determine the size of that funding gap.

Our teachers and staff will be most impacted by the final decisions regarding compensation. Will the Legislature’s approach for across the board increases prevail; or will the Governor’s approach for merit and need-based targeted increases prevail?

Read on for more detail:

The Governor’s Proposals for K-12 Education Funding

The Governor’s proposed budget for state operations and activities for 2015 is $6.07 billion in recurring spending. Of that amount, $2.67 billion is proposed for ongoing K-12 public education expenses, representing 44 percent of the state budget and reflecting a $100 million (3.9 percent) increase over the 2014 funding level. New Mexico provides education funding in two ways; which are commonly characterized as “Above the Line” and “Below the Line.”

Above the Line

“Above the Line” spending is provided through the State Education Equalization Guarantee formula to school boards to fulfill the duties you would normally think of in running a school system, like teacher salaries and school maintenance costs.  It’s the money that local school boards can control and use to meet community priorities.

Of the $100 million increase in the Governor’s budget, 45 percent, or $45 million, is assigned to “above the line” spending, which is a 1.9 percent increase over the prior year. This increase is what the Los Alamos Public Schools would have when determining teacher compensation, class sizes, and for dealing with the negative financial effects of declining enrollment and retirements of highly-qualified teachers.

Of the $45 million in new money flowing to the school districts where some local control is allowed, the largest uses detailed are $15.2 million to pay increased insurance and other fixed costs, $11.5 million to pay employer contributions for staff retirement programs, and $11.1 million to reflect that there will simply be more students in the State of New Mexico in 2015 than in 2014. These certainly seem to be necessary expenses, but they are expenses that do not translate into improving the status quo. To restate, of the $45 million of “Above the Line” funding increase proposed by the Governor, $37.8 million is largely devoted to these big ticket costs that will do nothing to enhance educational excellence or to improve teacher compensation. 

The largest “Above the Line” item tied to enhancing school quality is the Governor’s proposal to increase the starting teaching salary from $30,000 to $33,000, at a cost of $6.5 million.

Below the Line

“Below the Line” budget items are specific programs sponsored by the Governor and her staff at the Public Education Department. This money does not flow through the State Equalization Guarantee formula used by local school districts to cover operating costs; but is only available to implement specific programs and mandates identified as priorities by the Governor.

The Governor’s 2015 budget proposal dedicates 55 percent of all proposed K-12 funding increases ($55 million) to “Below the Line” mandates and programs. The current year’s budget contained $69 million in “Below the Line” funding. The Governor’s proposed $55 million in targeted increases would substantially increase “Below the Line” spending to $124 million.

We’ll briefly summarize the Governor’s larger “Below the Line” ideas.

The Governor has recommended $12 million for a pilot program that provides merit pay for high performing teachers and principals. The pilot program would be designed with locally-based performance measures and would provide information to inform any future State-wide incentive programs. It is possible that Los Alamos could be a candidate for this pilot program, and might benefit from it, at least in the short run.

The Governor has recommended $15.5 million to address a significant reading challenge. During fiscal year 2013, just 55.2 percent of New Mexico third grade students scored as “proficient” or above in the reading sections of the Standards Based Assessment (SBA.) The reading program, called Reads to Lead, involves purchasing assessment products from Amplify, Inc.,  a News Corporation subsidiary. The New Mexico Public Education Department would purchase the assessment products at the State level and provide them to local school districts for use with K-3 students. 

There is a recommendation for $8.5 million to develop a training program for teachers and principals, working together with New Mexico institutions of higher education. The program is part of a larger effort to develop a highly-effective education workforce. Another proposal recommends $2.5 million for a Science, Technology, Engineering, and Math program that would train and reward highly effective math and science teachers.

An additional initiative would provide a $4 million increase to an existing $5M program aimed at helping the state’s lowest-performing schools improve their student achievement. Currently, funds are available to schools scoring overall grades of D and F. The new funding would support schools that have scored an overall C. The program provides training and other interventions to help struggling schools and would be used to offset some losses in federal funding tied to the federal sequestration.

Other special earmarks from the Governor include non-recurring (one-time) appropriations of $1.6 million for the controversial new teacher evaluation system; $2.5 million for continued implementation of the Common Core Curriculum; and $10 million to be available for special education programs in the event federal funds are cut. 

In summary, the Governor’s proposed budget provides for modest increases to ongoing operating expenses (the area where LAPS forecasts an increasing deficit in the coming years due to anticipated negative trends in declining enrollment and the retirement of experienced teachers), coupled with stronger support for the Governor’s top education reform priorities: aligning compensation with teacher performance; addressing the K-3 reading challenge; and helping the poorest performing schools. 

The New Mexico State Legislature’s Proposals for K-12 Education Funding

The New Mexico State Legislature proposes a budget of $6.15 billion for state operations in 2015; 4.3 percent increase. Created by the Legislative Finance Committee (LFC), the Legislature’s budget calls for $2.7 billion in K-12 education spending in 2015, a 5.6 percent increase ($142.9 million) versus the Governor’s 3.9 percent increase ($100 million.)

Above the Line

The LFC budget proposal relies heavily on the State Equalization Guarantee Formula to distribute funding to school districts and charter schools. It proposes adding 5.3 percent, or 95 percent of the new money ($125 million), to the State Equalization Guarantee where its use would be determined by local school boards. By proposing that almost all of the funding increase flow Above the Line with spending discretion in the hands of local school boards, the Legislature is taking a position that is starkly at odds with the Governor’s proposed approach.

Below the Line

The LFC budget states that “Recommendations for related recurring below-the-line initiatives controlled by PED are limited to existing programs that have demonstrated improved student outcomes.” The Legislature has budgeted $18 million in new money for a limited number of programs and is not proposing any new state-run programs.

In addition to the budget proposed by the LFC, there are at least 50 specific bills proposed by individual legislators that could impact K-12 education. These bill proposals will be sent to the Education Committee for consideration during the legislative session.

In Conclusion

Different stakeholders with different priorities will reasonably disagree over the very divergent approaches proposed by the Governor and the Legislature.  What is clear is that everyone involved is well-intentioned and wants to take action to improve K-12 education in New Mexico; and that’s a great start. 

Whatever your position, Save Our Schools Los Alamos encourages you to follow the debate on education spending during the upcoming legislative session; and encourages you to engage with our legislators to shape this important debate.

Save Our Schools Los Alamos is hopeful that meaningful progress will be made in the forthcoming legislative session, but we are not optimistic. We remain concerned that under any of the proposed funding outcomes, Los Alamos Public Schools will be challenged to maintain the quality of studentintellectual, cultural, social, and athletic enrichment enjoyed by prior generations in our community.

The extent to which the Governor’s education reform initiatives benefit Los Alamos is unclear. We admire the Governor’s focus on accountability and funding geared to performance-based programs, and clearly there are many communities in New Mexico that could benefit from them —  but it is not obvious to us that Los Alamos will gain under this approach. What is very clear to us is that Los Alamos receives 70 percent of its operating funds from the State Equalization Guarantee and the decision about its funding will have a meaningful impact on LAPS. 

To us, it seems unfortunate that there isn’t enough money to both adequately fund the State Equalization Guarantee and to implement education reforms. We question whether there is enough funding to do either well.

We continue to believe that it will be necessary to supplement funding from the New Mexico Public Education Department with more local resources if we are to maintain the quality of our public schools. We are continuing to press NMPED on the issue of local operating supplements for public education, and we continue to encourage Los Alamos County to absorb support costs currently borne by the public schools  to free up limited state funding for educational enrichment and excellence.

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