SFPS Plans for Budget Shortfalls

Santa Fe Public Schools faces a “perfect storm” of challenges in next year’s budget as schools are left to deal with low state funding, loss of pandemic relief money and a Public Education Department mandate requiring an extended calendar year, according to Superintendent Hilario “Larry” Chavez, who laid out the factors at the Board of Education’s May 2 budget study session.

In the upcoming school year, SFPS’ operating budget will be about $452.7 million—an $8.16 million decrease from this year’s budget, according to information presented at the study session. And while funding from the state is not final, projected funds are expected to be about $138 million—a $3.6 million increase from the past year.

As examples, Chavez noted that in the past year, the district managed to save $2 million from cleaning up unbudgeted positions; another $1 million by paying a flat rate for natural gas and utilities each month; and additional savings from decreased workers’ compensation costs and reallocating funds for nursing contracts to be absorbed by Medicaid.

This, Chavez said at the meeting, means the district needs to make up a $5 million difference next year, adding that the district could utilize its cash reserves to absorb the costs after the district pushed to increase its cash reserves for the past few years.

“We’re able to absorb those impacts because site and district level staff have done a great job of staying within the budget,” Chavez explained at the meeting. “This year, for the first time since I’ve been here, we’ve not had to replenish anything in our cash balance, we’ve been able to try to increase it slightly.”

As examples, Chavez noted that in the past year, the district managed to save $2 million from cleaning up un-budgeted positions; another $1 million by paying a flat rate for natural gas and utilities each month; and additional savings from decreased workers’ compensation costs and reallocating funds for nursing contracts to be absorbed by Medicaid.

Despite these savings, Chavez notes the per-student based unit value the PED set for this year’s state funding formula—$6,442.55—is “too low,” particularly when schools statewide must extend the school year after the PED’s adoption of a rule requiring 180 school days per year.

“We’ve mentioned many times that the unit value was only increased at 3.22%...a 3.22% increase is not covering our operating costs for any additional time we are going to be required to give,” Chavez said. “We’re looking at two days of added instruction, but we’re still at a loss of $1.5 million to $2.5 million. It’s not covering the impacts for the next school year.”

He added that he has spoken with several superintendents from around the state on this issue, and that they are advocating for the PED to release $60 million in “just-in-case” funding it currently is holding back for K-12 Plus units, reserved for schools meeting the 180-day rule.

”It’s pretty disappointing, and a lot of superintendents are upset because they’re having a difficult time covering that gap. We all want better student outcomes, but when you’re not investing appropriately, it makes it difficult, because you’re going to have to make cuts,” Chavez said. “A couple of superintendents I spoke to said, ‘I’m going to have to make cuts, lay off positions.’ When you’re talking about how to improve our position, 50th, you have to fund it.”

Board members Sarah Boses and Kate Noble expressed similar frustration with state funding.

“We need the money to be there to support public education, and to let the superintendents, the staff, the teachers and everybody do the work to catch kids up from the pandemic,” Noble said.

As other school districts in New Mexico balance their budgets in the wake of the 180-day rule, the New Mexico School Superintendents Association has filed a lawsuit against the PED, with the support of 57 New Mexico School districts and their respective superintendents—including Santa Fe Public Schools.

In response to a request for an interview, Chavez tells SFR “the complaint speaks for itself.”

The lawsuit seeks a temporary restraining order and preliminary injunction to prevent the PED rule from implementing or enforcing this rule on school districts, which has received significant backlash from educators across the state since last fall.

Stan Rounds, executive director of the New Mexico Coalition of Education Leaders, which hosts the New Mexico School Superintendents Association, tells SFR the purpose of the lawsuit is to “get immediate relief from this rule for this year.”

“We would love to see a year hiatus on the rule, or for the rule to be removed, because we don’t think it’s properly acquainted with statute,” Rounds says.

Additionally, 25 Republican lawmakers in the state’s House of Representatives sent a letter of intent to join as plaintiffs in the lawsuit on April 27.

“While  [Gov. Michelle Lujan Grisham] and PED continue to note this policy is intended to improve student outcomes they continue to mislead the public into believing this will create accountability at most schools,” the letter says. “The department’s rule will not result in any significant calendar changes for more than 90% of the state’s students. In other words, this new rule is only a political stunt intended to mislead the public into believing real, positive impacts are imminent.”

The lawsuit was filed in Curry County’s 9th Judicial District Court on April 18, but the New Mexico Supreme Court chose 5th Judicial District Court Judge Dustin K. Hunter to preside over the lawsuit after all judges in the 9th Judicial District Court recused themselves from the case.

The lawsuit’s primary argument states the rule is unenforceable because it directly conflicts with state statute, which as of this year only requires school districts to provide students at least 1,140 instructional hours per year (excluding half-day kindergarten, which requires a minimum of 550 hours per year).

“The mandate of 180 instructional days for all school districts and charter schools does not align with the Legislature’s clear intention to allow local flexibility while still requiring 1,140 instructional hours with no requirement for a specific number of days,” the complaint states.

The lawsuit also argues PED “lacked the authority to implement a rule mandating a minimum number of instructional days,” and that because the law does not go into effect until July 1 this year, school districts should not be required to create school calendars or operating with this rule in mind when both are due to the PED on dates before July 1.

Rounds also notes that this year’s state appropriations for public schools did not account for the extra funding needed to cover additional days of school, including funds for free meals, transportation and increased teacher pay.

“Districts simply won’t be able to provide these services, and if they do that, they’ll break the law, because they have to provide that service,” Rounds tells SFR. “And the rule clearly eliminates, essentially, the 4-day [school] week in New Mexico, which is a tool that 32 New Mexico school districts use…this puts rural education in New Mexico in peril.”

Rep. Susan K. Herrera (D-Embudo), who is also part of the Legislature’s Education Study Committee, notes that legislators voted to add language to this year’s General Appropriations Act that said funds appropriated to the PED cannot be used to implement or enforce a rule requiring a minimum of 180 instructional days each school year. However, Lujan Grisham line-item vetoed this language from the bill.

“They’re trying to push it through by promulgating new rules, and I don’t think it’s going to work,” Herrera says. “There was clear legislative intent on this. We voted against this, the governor was for it. We said, ‘No, it doesn’t make sense for rural districts, and we’re going to stand with our districts,’ and then they put out this new rule. I don’t think they’re right on this, and I don’t think they’re going to win, but it’s unfortunate that they’re following through with this.”

When SFR contacted PED for comment, Deputy Director of Communications & Public Relations Janelle Garcia responded with a written statement.

“We are fully committed to upholding our responsibilities and ensuring the best interests of our students while doing everything in our power to improve educational outcomes, including the increase in classroom time,” Garcia’s statement reads. “While we do not comment on pending litigation, we want to assure New Mexicans that their Public Education Department remains dedicated to promoting a robust learning environment and fostering excellence in education throughout New Mexico.”