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PED’s $150 million mistake and cover up puts entire state budget at risk

PED’s $150 million mistake and cover up puts entire state budget at risk

Senate Finance Chair: I’m “shocked and dismayed”

Santa Fe – A legislative committee notified the legislature on Monday that the state is set to lose between $93 and $151 million in federal special education funding – a reduction of 96-156% - because the Public Education Department underfunded and underreported special education funding formulas, then quietly sought a waiver from the law but was denied.

Senate Finance Committee Chairman John Arthur Smith wrote in January to US Education Secretary Duncan that he was “shocked and dismayed” after being alerted to the problem by the LFC.  LESC staff only discovered the mistake a month earlier while conducting unrelated research.

Though federal law requires states to fund special education to a certain level, New Mexico failed to do so beginning in FY10 and has continued to underfund it since. Seven other states sought and most received waivers from the law through 2011, but under Governor Martinez and secretary-designate Skandera the PED did not seek a waiver until the Spring of 2012 at which point it was denied because the state was reporting a surplus.

Without a waiver, federal special education funding could be reduced by  96% in FY13 and up to 151% (meaning we could owe money) as FY12 reports are submitted, while we must still maintain the same levels of funding for special education programs. The state must make up the difference.

Though USED has already denied New Mexico’s waiver request, the state has asked for additional time to provide more data. That deadline is Friday.

Among other findings of the reports

  • Sec.-designate Skandera’s PED staff was aware of the underfunding upon entering office but failed to apply for a waiver for the already passed FY10 and FY11 until August 2012.
  • The PED never notified the LESC or publicly announced the shortfall, potential liability to state budgets or the waiver application.
  • USED denied PED’s waiver from federal funding requirements in December, but the PED never notified the Legislative Education Study Committee that it requested and been denied a waiver of maintenance of effort funding requirements for the Individuals with Disabilities Education Act.
  • The USED noted that data provided by PED in the IDEA waiver application, submitted in August, did not match data submitted under another waiver.  In short, the USED said that the PED was not being truthful with funding data.   
  • USED denied the request because the state had posted  a $278 million surplus for the years in question – already designated for other projects – which USED says should be used to pay back the difference in lost funds.

“This is the administration’s second $150 million mistake. We can’t afford any more of these,” says Pat Davis of ProgressNow New Mexico.

“Instead of being honest with the public and budget makers, the administration quietly submitted a waiver application hoping the approval would make it all go away.  But they were caught by USED fixing the numbers and now taxpayers are going to pay for their mistake.”

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