Three school districts sue over fed aid

Complaint says New Mexico’s method of distributing millions in funds is unfair

Three school districts in New Mexico are accusing state education officials of submitting inaccurate information to the U.S. Department of Education in an effort to continue diverting federal funds from needy schools.

At stake, those districts say in a new lawsuit, are tens of millions of dollars for programs serving at-risk students.

School boards for Gallup-McKinley County Schools, Grants-Cibola County Schools and the Zuni Public School District filed a complaint Tuesday in the state’s First Judicial District Court seeking an order for the New Mexico Public Education Department to ensure they receive their federal Impact Aid funds.

Andrew Sanchez, an attorney for the plaintiffs, did not respond to an email or phone call seeking comment.

Speaking on behalf of the state’s Public Education Department, Judy Gibbs Robinson, deputy director of communications for Gov. Michelle Lujan Grisham, said in an email the department does “not comment on pending litigation, but I know that the lawsuit was only received in the last few hours and is being reviewed. PED is fully working with the U.S. Department of Education (DOE) on the issue of Impact Aid — the department was provided all information requested by DOE. PED will continue following both state and federal law.”

The federal government’s decades-old Impact Aid Program provides funding for districts nationwide to offset property tax losses from tribal lands, military bases, national forests and other tax-exempt federal property within their boundaries.

New Mexico, which doesn’t fund its schools through property taxes, like many states do, essentially redistributes much of that aid — over $63 million in 2019 — by taking federal aid credits against districts that receive it. This leads to a reduction in state funding for those schools.

Many districts have clashed with the state for years over the practice. In the past few legislative sessions, some lawmakers have introduced measures that would increase funding for poor districts that rely on the federal aid — mostly without success.

The U.S. Department of Education told New Mexico

Public Education Secretary Ryan Stewart in April the state had failed a so-called disparity test — which assesses differences in per-student spending among districts — and therefore had to stop diverting millions of dollars designated for Impact Aid districts.

The state has appealed that decision, but a hearing on the issue has not been held.

Until the Department of Education makes a final determination, the lawsuit says, the state Public Education Department should be ordered to stop offsetting the federal aid by reducing state funding for districts.

The plaintiffs also accuse state education officials of providing financial information to the federal government that creates an inaccurate picture of both the state’s funding formula and its disparity test.

The complaint calls for relief through a number of measures, including requiring the Public Education Department to set aside funds for future Impact Aid payments, pending the outcome of the hearing.