Should Voters support a Constitutional Amendment for increased educational funding from the Land Grant Permanent Fund (LGPF)?
Responsible withdrawals from the Land Grant Permanent Fund (LGPF) are key to providing for our children’s education in perpetuity. It also saves taxpayers approximately $950/year per household in taxes. To increase withdrawal rates and risk our children’s future is irresponsible and would jeopardize the fund. We already have two “permanent” funds, Tobacco and Severance Tax, that are either dead or dying because of over depletion. We don’t need to use the LGPF as yet another example of how to kill a fund.
Despite numerous policy proposals and actions, New Mexico’s expenditures on its educational challenges have not yielded the return on investment promised. The answer is not to increase the rate of LGPF disbursements, but instead to focus on direct learning programs that yield beneficial results without violating federal requirements. That could be accomplished if the state would stop funding special interest groups and put the money into our teachers and quality educational materials.
The increase voters are being asked to approve would be an additional one and one-fourth percent of the average of the year-end market value of the permanent school fund for the immediately preceding five calendar years.
- From 1995 to 2021, educational funding in New Mexico increased $5.15 billion per year ($1.45 Billion to $6.6 Billion).
- New Mexico is ranked 19th in the nation for per pupil funding, yet 50th in the nation for educational outcomes.
- The state is currently taking a distribution of this fund at a rate of 5%. If passed, there would be an additional 1.25% taken out annually. According to the SIC, distributions will continue to grow (with a 5% distribution rate) reaching a distribution of a billion dollars a year by 2025.
- New Mexico: 9 public universities providing 4-year degrees; population of Arizona: 4 public universities providing 4-year degrees; population of 7.2 million
- “We have more money than we need,” Patricia Lundstrom, Chair of the House Appropriations and Finance and Legislative Finance Committees. 8/26/21
History: The Land Grant Permanent Fund (oil and gas extraction tax) Congress established when NM became a state in 1912.
It is NOT a rainy-day fund; it is an asset depletion fund.
Focus of fund is educational endowment. General Fund spending for Public Education is approximately 44% of the state’s budget. It has increased by more than $700 million in the last 11 years with a 25% increase in 2013.
We have had absolutely no improvement in educational ratings with the increased funding.
Is the fund in danger? Not yet, but we’ve got to be careful. Smart states take no more than 5 percent/year out of their funds. We’ve been as high as 5.8%. Current statute requires the rate to drop to 5% in 2016, but there is a campaign to take it to 6 percent or higher.
If that happens, it could deplete the fund which will lead to higher taxes.
According to the SIC, distributions will continue to grow (with a 5% distribution rate) reaching a distribution of a billion dollars a year by 2025.
That analysis also shows that the permanent fund will have more than doubled its value in 10 years (if we don’t mess with the distribution.)
– Up until the 1990s, it was a 50-50 split (50% for bonding and 50% in the fund), with half the amount of taxes collected each year earmarked for bonds and the rest set aside for savings.
– 1999 to 87.5 percent in 2000 and to 95 percent in 2004.
– 2015 savings-and-bond split back to pre-2004 levels, with 12.5 percent of taxes going to the fund each year and 87.5 percent to bonding.
New Mexico is ranked 19th in the nation for per pupil funding, yet 50th in the nation for educational outcomes.
New Mexico: 9 public universities providing 4 year degrees; population of 2 million. https://www.collegesimply.com/colleges/new-mexico/four-year-colleges/
Arizona: 4 public universities providing 4 year degrees; population of 7.2 million
8/26/21 “We have more money than we need,” Rep. Patricia Lundstrom, Chair of the House Appropriations and Finance and Legislative Finance Committees.