Is the answer more money? Absolutely not! The facts speak for themselves. New Mexico is ranked 32nd in the nation for per pupil annual spending. Some of the states that spend less per student rank higher for the quality of its education. More money is obviously not the answer, but how we spend it is. If we invested in competitive teachers’ salaries that support quality personnel, we might see a difference. We also need to invest in quality educational materials and equipment for our children rather than investing in special interest groups.
What New Mexico desperately needs is accountability for the funds currently being spent. We’ve increased funding significantly, but many of our children are still failing to meet minimum standards. Who’s responsible for this failure and why does it seem that little, if anything, is being done about it?
Special interest groups focused on educational funding are always on a quest for more money and the Land Grant Permanent Fund (LGPF) is the easiest target. Many of these special interest groups think that the LGPF is a rainy day fund, but it is not. The LGPF was established with New Mexico’s statehood in 1912 and is held in trust for our public schools as New Mexico’s education endowment fund. It was never meant to be a source of special interest funding.
While enrollment in New Mexico’s schools has been relatively consistent, the education budget has increased over $900 million in the last 12 years. Over one-third of that increase came from the LGPF. And while the activists hold protests and rallies to demand more money in the form of greater distributions from the fund, take a look at what the fund is producing for education:
2008-2012: Distributions were at 5.8% and reached a peak of $553 million.
2017: Distribution rate dropped to 5% and the fund produced $638 million.
2018: If distributions are left at 5%, it is estimated that the LGPF will produce $688 million.
2025: If distributions are left at 5%, Distributions are expected to reach $1 billion.
The distributions continue to grow because the fund is healthy and growing. So, why does the distribution rate matter?
Economists and responsible fund managers will tell you that a five percent distribution rate allows for the fund to grow through the cumulative effect of up and down market cycles. It also assures that distributions can continue to grow as shown in the table above. Distributions greater than five percent, however, risk eating into the corpus of the fund during down economic cycles, putting the fund at risk and our children’s future educational opportunities in jeopardy.
Responsible withdrawals from the LGPF are key to providing for our children’s education in perpetuity. It also saves taxpayers close to $1,000/year per household in taxes. To increase withdrawal rates would be irresponsible to our children as well as to our state’s taxpayers.
But special interest activists are seeking increased disbursements of one to two percentage points or $1 billion as an additional amount to go to childhood services. They promise this investment will truly change the educational outcome for our children and it’s worth any potential risk. They say that more money and younger intervention is the answer to changing our educational outcomes. This is the same thing they’ve been promising for over 10 years and, unfortunately, nothing has changed with the quality of our educational system.
Is it worth the risk of increasing distributions for yet another experiment of burning through a permanent fund? No!
New Mexico has already destroyed other ‘permanent funds’ by being irresponsible in the management of those funds and taking too much from them. We don’t need to experiment with the last healthy fund New Mexico has available and risk destroying it like we have the others. Nor do we need to continue throwing more money into our problem educational system, when accountability is the answer – not more money.
Advocates want these increased fund distributions for ‘services’. Because those ‘services’ are not defined, we’ve got a problem right out of the gate. Add to that the continual problem with lack of accountability and you have the formula for disaster.
Gary King, former Attorney General, reviewed the federal constitutional requirements for the LGPF and confirmed that: 1) the state constitution directly prohibits the state from using money from the LGPF for private entities; and 2) distributions from the LGPF must be limited to learning programs provided by public schools.
If New Mexico is funding private entities from LGPF distributions, the state is in direct violation of federal requirements. One of the ways it tries to get around the question of federal compliance is to run the money through the Children Youth and Families (CYFD) to private entities.
The practice begs the following questions:
1) How many nonprofits are receiving state funding for doing work that falls under the purview of our educational departments?
2) Where is the accountability for the money these nonprofits are receiving compared to the dismal results they are producing?
3) Most importantly, who or what state agency is responsible for assuring that the fund is in compliance with federal standards?
Currently we have several nonprofits providing ‘services’ for our underserved populations that amount to little more than babysitting services. That’s the reason New Mexico can continue to lower the age for children to receive ‘services’ and yet see no benefit whatsoever for the education of our kids.
And, yet, the activists want more!
Despite numerous policy proposals and actions, New Mexico’s expenditures on its educational challenges have not yielded adequate results. The answer is not an increased rate of LGPF disbursements, but instead a 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 and tools for our children.
New Mexico needs to provide quality educators and education – not enhanced babysitting or other ‘services’ that do not translate into quality education for our children.
By Carla J. Sonntag
President and Founder, New Mexico Business Coalition