Multimillion-dollar question hangs over school funding case

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As Stan Rounds sat in the witness chair in a Santa Fe courtroom last week, he pondered for a moment. A plaintiff's lawyer had just asked him one of the most vexing questions surrounding a court battle over whether New Mexico is spending enough on its public schools: If the court ordered the state to pay more, where would the money come from?

None of the options, Rounds intimated, would be easy sells. The hard choices might include drawing funds from capital projects or pulling cash from the state's permanent funds. Another option would be raising taxes.

"That's not a very popular thing with either party, certainly not with the governor," said Rounds, executive director of the New Mexico Coalition of Educational Leaders and the former superintendent of Las Cruces Public Schools.

His testimony July 12 came in a lawsuit asking First District Judge Sarah Singleton to force New Mexico to ensure the state is fulfilling its constitutional requirement to provide an adequate public education for all students.

The trial, which entered its sixth week July 17 and is expected to last until early August, is being closely watched by both Democratic and Republican state lawmakers. If Singleton rules in favor of the plaintiffs, it will be up to the lawmakers to make the painful choices of how to pay for the increased investment in schools.

And for a state struggling with declining revenues and a lack of political will to increase taxes or draw from the roughly $16 billion Land Grant Permanent Fund - a state trust land endowment that benefits public education - the case poses what one leading Democratic lawmaker calls a "multimillion-dollar question."

"If there is a court order, then we have to sit down and figure out what kind of options are available to raise those kind of revenues for public education," said Senate Majority Leader Peter Wirth, D-Santa Fe.

All options cost money

The case is primarily focused on providing more support for special-education children, English-language learners and students who are economically disadvantaged in a state that ranks near or at the bottom in most national education reports.

There are two sets of plaintiffs in the case, brought in 2014 on behalf of a group of students, parents and school districts by the New Mexico Center on Law and Poverty and the Mexican American Legal Defense and Educational Fund.

One group of plaintiffs is asking Singleton to rule that the state is violating its own constitution by not giving students enough resources to succeed, thus forcing state leaders to do something about it without providing specific guidelines.

The other plaintiffs want Singleton to declare education funding levels unconstitutional, but also spell out what must be done to fix it - higher salaries for teachers, smaller classroom sizes, more dual-language programs and full-day prekindergarten classes for all eligible students, for example - and order lawmakers to find a way to fund the initiatives.

Either way, state legislators say, if Singleton rules in favor of the plaintiffs, it's going to cost money.

Both Democratic and Republican lawmakers interviewed about the case agree that Rounds' assertion that they have "several options," as he testified, is correct.

But all those choices go beyond just being unpopular, they say.

They are going to hurt.

"Where does the money come from?" asked Sen. Gay Kernan, R-Hobbs, a member of the powerful Senate Finance Committee. "Children need a good education, but there are other areas in state government that we need to provide, and when you have to take from other departments - the [Children, Youth And Families Department], the Department of Health - we hurt those children, as well."

"If you only have but an X pot of money, who are you going to take the money from?" asked Rep. Jimmie Hall, R-Albuquerque. "That's a real issue."

"You either cut more or you raise revenues," said Sen. John Arthur Smith, D-Deming, head of the Senate Finance Committee.

And that might mean tax increases, Smith said, especially because "we are at a place where we can't cut any more."

No investment, no return

Lawyers for the plaintiffs repeatedly have said they are not asking Singleton to order lawmakers to come up with a particular amount of money - or any money at all, actually - if she rules in their favor.

Still, many of their witnesses have testified that more money would enable districts to implement programs to improve outcomes for students they call "at-risk" kids.

Marisa Bono, a lead lawyer for MALDEF, said the case is not about funding, but about providing equal educational opportunities for disadvantaged students. Still, she said, that "requires resources, and that costs money."

Daniel Yohalem, a lead attorney for the New Mexico Center on Law and Poverty, echoed that thought and said the state has to invest in its children.

"If you don't make that investment, you'll never get a return," he said.

Attorneys for the plaintiffs also have hammered away at some educational reform practices that, they say, divert energy and funds from the classroom, such as the state's teacher evaluation system and initiatives like the K-3 Plus summer school program, which is not offered in all districts.

But the theme of "not enough money" has run through the first five weeks of the trial, scheduled for nine weeks in all.

Last week, for example, Jesse Levin, principal researcher for American Institutes for Research in Washington, D.C., testified about a 2008 report he helped author for the state that said New Mexico was underfunding public education by 14.5 percent, or about $335 million per year.

Factoring in inflation rates, several legislators said that would equate to well more than $500 million by today's standards.

"I'm a firm believer that money actually does matter," Levin told The New Mexican. "Look here in New Mexico, which has some of the lowest spending on education in the country and some of the lowest student achievement rates in the country."

Unpleasant funding choices

Last month, the U.S. Census Bureau reported that New Mexico ranks 34th in per-pupil funding, at $9,752 per student.

Defense lawyers have countered that there is no evidence that pouring more money into education will result in better student performance. At least one national expert who argues that money will not make a difference is expected to take the stand sometime in the next few weeks.

In the meantime, state legislators are contemplating the unpleasant options they might have to face.

Sen. Bill Soules, D-Las Cruces, chairman of the Senate Education Committee, said one path Singleton could consider in the case is to ask the state to increase its annual investment in public education, from 44 percent of the overall budget now, or about $2.7 billion, to 50 percent over a period of several years. That would give lawmakers time to find ways to slowly increase the education budget.

To do that, he said, "You fund education first because it's a requirement, and then everybody fights over what's left."

Sen. Mimi Stewart, D-Albuquerque, chairwoman of the Legislative Education Study Committee, believes that eliminating or decreasing "tax breaks to the wealthy" and reducing the capital gains tax could help raise money for schools. She also believes a "more reasonable tax on gasoline" could increase revenues.

Gov. Susana Martinez has long opposed approving any new taxes.

Hall said legislators could look at revamping the state's student population-based education funding formula, known as the State Equalization Guarantee, but that would not necessarily increase the amount of money the state commits to education. It would simply reallocate funds, and somebody would still end up losing out as a result, he said.

Consolidating small school districts could save a little money, Hall said, but that's not an option many lawmakers favor, as those districts often financially anchor the rural communities around them.

Both Republicans and Democrats agree that drawing from the state's Land Grant Permanent Fund for recurring costs is not a good idea in this case.

Wirth said lawmakers are watching similar court cases play out in other states to see if they can predict what might happen in New Mexico.

In Kansas, for example, Republican Gov. Sam Brownback just signed a bill authorizing an extra $293 million in public education spending over the course of two years after that state's Supreme Court decided in March that Kansas was not adequately funding its schools.

The state Supreme Court of Washington ruled in a similar fashion in 2012, giving state legislators until 2018 to find extra money to adequately fund schools. In 2015, the court said lawmakers were moving too slowly to respond to the order and cited them for contempt.

Not all such cases have been decided in the plaintiffs' favor. In Texas, for example, the Supreme Court ruled in 2016 that the state was "barely" meeting its constitutional mandate to fund schools and thus ruled for the defendants.

Other cases, such as a similar one in New York City, have continued for years without any clear outcome.

Big question, answer unknown

If Singleton does rule in favor of the plaintiffs, the state is likely to appeal, Smith and other lawmakers said, which will draw out the proceedings. In that case, time may temporarily be on the Legislature's side. A 1988 federal class-action lawsuit accusing New Mexico of failing to deliver federal food and medical benefits to residents entitled to them has dragged on for decades and still remains unresolved.

And perhaps, in the interim, the state will start working to address the issue without any pressure from the court, Stewart said.

"I am hopeful that when we have a new governor in a year and a half, that person will understand the need to support public schools and be ready and willing to help improve the way we fund them," she said.

Soules agrees. "What we need to do is step up and decide that education is important in New Mexico, and that means we have to pay for it," he said. "We have to make education 50 percent of the budget. That's a moral and ethical decision that we have to discuss."

He wonders what the courts would do to legislators if they failed to come up with a solution under a court-mandated order.

"Can the judiciary tell the Legislature, 'You must shape your budget this way'?" he said. "I think the court can, but can the Legislature just ignore that? I don't know. Until the judiciary branch tells us, 'We are going to put the people in charge of this in jail because you are ignoring us,' maybe [it can]. These are big questions. And I don't know the answers."

Contact Nott at (505) 986-3021 or rnott@sfnewmexican.c­om. This story was first published in The Santa Fe New Mexican, a sister publication of The Taos News.

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