New Mexico Public Education: Funding, Sufficiency, and Evidence-Based Policy Charles Sallee, Deputy Director for Program Evaluation November 10, 2018 1
Presentation Overview Summary of How New Mexico Public Schools are Funded Description of the New Mexico Education Sufficiency Lawsuit Review of Education Research and Evidence-Based Programs 2
Total State Funding: General Fund Revenue Forecast for FY20 The New Mexico Consensus Revenue Estimating Group is comprised of economists from the LFC and the state departments of finance, taxation, and transportation. As of August 2018, the Consensus Revenue Estimating Group forecasts $1.2 billion in new money for the state in FY20. 3
New Mexico’s Fiscal Stability: Recurring General Fund Year-Over-Year Revenue and Appropriations Growth 15% 10% 5% 0% -5% -10% -15% FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Est. Est. Revenue Growth Appropriations Growth Source: LFC Files 4
Stress Testing State Energy Revenues (Gross Receipts Taxes, Severance Taxes, and Federal Mineral Leasing) Source: LFC Brief (August 2018) Consensus Revenue Estimate, p.6 5
thousands of employees 760 780 800 820 840 860 2008 Jan Employment Levels and Growth New Mexico’s Lost Decade: Source: Bureau of Labor Statistics (CES data) 2008 Jul New Mexico Monthly Employment Levels 2009 Jan 2009 Jul 2010 Jan (in Thousands of Employees) 2010 Jul 2011 Jan 2011 Jul 2012 Jan 2012 Jul 2013 Jan 2013 Jul 2014 Jan 2014 Jul 2015 Jan 2015 Jul 2016 Jan 2016 Jul 2017 Jan 2017 Jul 2018 Jan -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 2011 Jan 2011 May 2011 Sep New Mexico Monthly Year-over-Year 2012 Jan 2012 May 2012 Sep 2013 Jan Employment Growth 2013 May 2013 Sep 2014 Jan 2014 May 2014 Sep 2015 Jan 2015 May 2015 Sep 2016 Jan 2016 May 2016 Sep 2017 Jan 6 2017 May 2017 Sep 2018 Jan 2018 May
Medicaid’s Rapid Growth: From 5 Percent to 15 Percent of the State Budget Percent of State General Fund Operating Budget, FY93-FY19 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Public Education Higher Education Health, Hospitals, & Human Services (Excl. Medicaid) All Other Public Safety Medicaid Source: LFC Files 7
Prioritizing State Funding to meet New Mexico’s Challenges Less Efficient: 100 Buckets to 100 Fires More Efficient: 100 Buckets to 3 Fires 8
New Mexico General Fund Appropriations for FY19: $6.227 Billion Total (in Millions) Medicaid, Other, $933.6 , 15% $1,311.2 , 21% Public Safety, $436.5 , 7% Higher Education, $792.1 , 13% Public Schools , $2,754.5 , 44% Source: LFC (May 2018) Post-Session Review. 9
State Funding for Public Schools, FY19 Operational (“Above-the-Line”) Funding: $2.6 Allocated by a funding formula called the State Equalization Guarantee (SEG) formula. Billion School districts and charter schools have discretion over how to spend operational funds. Categorical (“Middle-of-the-Line”) Funding: $116.6 Allocated by formulae for specific programs, e.g. transportation or instructional materials. Million School districts and charter schools must use categorical funds for categorical programs. PED Initiative (“Below-the-Line”) Funding: $90.9 Allocated by the Public Education Department (PED) for initiatives and pilot projects. Million School districts and charter schools generally apply for competitive grants from the PED. Source: LFC (May 2018) Post-Session Review. 10
State Equalization Guarantee (SEG) Funding Formula for Public School Operations The SEG funding formula was established in 1974, and was hailed as a national model for equalized funding for education. The SEG formula supports the Legislature’s policy that all students are entitled to an equal education opportunity despite differences in local school district wealth. The SEG formula is student-driven: districts and charter schools are awarded funding based on student enrollment, needs, and program participation. The SEG formula is an evolving formula and has been amended over 80 times in statute since its inception. 11
SEG Funding Formula Components The formula uses 28 distinct components to generate formula units and allocate over $2.6 billion in operational funds to public schools. Formula units are the product of the number of students enrolled in a given program multiplied by the cost differential assigned to a program in statute. 12
FY18 Public School Operational Funding Allocated by SEG Formula Components (in Millions) Basic Program Special Education Enrollment Components, Program Cost Percent of Formula Components Components, $447.3, 18% Funding Total $1,615.8, 63% Basic Program Enrollment Components $1,615.8 63% Teacher Training & Special Education Components $447.3 18% Experience Index, $167.4, 7% Teacher Training & Experience Index $167.4 7% Size Adjustment Size Adjustment Components $114.0 4% Components, $114.0, 4% At-Risk Index $100.3 4% At-Risk Index, Other Components $109.2 4% $100.3, 4% $2,554.0 100% Total Other Components, Source: LFC files. $109.2, 4% Source: LFC analysis of PED data. 13
Historical New Mexico Public School Operational SEG Funding $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Program Cost ARRA Funds Source: LFC Files. Note: ARRA refers to the federal American Recovery and Reinvestment Act of 2009. 14
Distribution of Increased Funding in the SEG Formula FY18 School District and Charter School Formula Funding Change from FY08 to FY18 (in Millions) Student Enrollment $160 350,000 304,413 300,000 $122.3 $120 250,000 $104.2 200,000 $80 150,000 100,000 $40 50,000 24,627 $0 0 School Districts Charter Schools School Districts Charter Schools Source: LFC analysis of PED data. Source: LFC analysis of PED data. Note: Formula funding measured as program cost. Note: Enrollment measured as student membership (MEM) 15
Percent Increases in Public School Operational Spending: $370 Million (16 Percent) Total Increase from FY07 to FY17 40% 34% 30% 20% 17% 16% 16% 10% 4% 0% General and Central Instruction All Other Categories Instruction and School Administration Administration (+$231M) (+$50M) Student Support (+$6M) (+$38M) (+$45M) Source: LFC analysis of PED data 16
Statewide Public School Unrestricted Cash Balances (in Millions) $300 $253 $250 $207 $198 $193 $200 $171 $166 $141 $150 $132 $115 $114 $107 $100 $50 $0 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Source: LFC analysis of PED data Note: Cash balances shown are from the end of each fiscal year. 17
Federal Funding in New Mexico Public Schools (in Millions) Source: LFC (2018) Federal Funding in New Mexico Public Schools, p.5. 18
New Mexico Education Sufficiency Lawsuit: Yazzie and Martinez v. State of New Mexico The plaintiffs alleged that New Mexico is not meeting its constitutional obligation to provide sufficient funding and programming for at-risk public school students. On July 20, 2018, the District Court ruled that: 1) The funding provided to public schools is insufficient; 2) The state has provided insufficient programming to meet the needs of at-risk students; and 3) PED has not provided sufficient oversight and auditing over how public education funding is locally spent. 19
New Mexico Education Sufficiency Lawsuit: Legislative Actions on Funding for At-Risk Students SEG Funding for At-Risk Students During the 2018 legislative session, the (in Millions) Legislature passed House Bill (HB) 188 $123 $125 which phases-in permanent increased $104 funding for at-risk students over the next $102 $100 $100 three years $86 $77 $75 $71 $70 HB188 also aligned operational SEG funding for teachers to teacher licensure $50 levels. $25 Due to HB188, state funding for at-risk students will exceed New Mexico’s federal Title I funding for low income $0 students. FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Prelim Source: LFC files. 20
New Mexico Education Sufficiency Lawsuit: Legislative Actions Expanding Early Childhood Programs Appropriations for Prekindergarten and LFC analysis indicates that prekindergarten K-3 Plus Programs and the extended school year “K-3 Plus” $70 program can help close the achievement gap between low-income students and their $60 peers. $50 For FY19, the Legislature increased $40 funding for prekindergarten by $11 million $30 (16 percent) and K-3 Plus by $7 million (22 percent). $20 The Legislature has expanded funding for $10 prekindergarten by $50 million (341 percent) $0 and the K-3 Plus by 25 million (470 percent) FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 since FY12. Pre-Kindergarten K-3 Plus Programs Source: LFC files. 21
Evidence-Based Policy: Examining What Works in Education 22
New Mexico Public Education: Academic Performance is Well Below Targets. Source: LFC FY19 Budget Recommendation Vol I. p.85 23
National Student Average Test Scores, Grades 3-8, 2009-2013 (Green = Positive, Purple = Negative) Source: Stanford Education Data Archive. 24
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