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New Mexico May Face Loss of Federal Special Education Funds

A New Mexico newspaper is reporting that the state could be docked up to $93 million in federal special education funding because it made reductions to the program without U.S. Department of Education approval.

The state is facing a penalty because it did not follow a rule known in federal funding circles as "maintenance of state financial support." Normally, states can only keep special education funding level or increase that funding from year to year. But in the depths of the recent recession, several states asked for permission to make temporary cuts because state revenues were falling off. The Education Department granted waivers in some cases, but those that did not get a waiver put their federal special education dollars at risk.

According to the Santa Fe New Mexican, New Mexico asked for a waiver for the 2010 and 2011 school years, but recently learned it may not get it. From the article:

The state first requested a waiver Aug. 10, 2012, citing "an unforeseen decline in the financial resources of the state" as its reason for reducing spending, and amended that request in September. In December, the Department of Education notified the state that it may not get the waiver and that New Mexico was likely to lose at least $40 million in special-education funding. It gave the state until Feb. 1 to appeal.

[Albuquerque Democrat Rep. Mimi Stewart] and members of the Legislative Education Study Committee then contacted Michael Yudin, acting assistant secretary for special education and rehabilitative services for the U.S. Department of Education, who confirmed the state would not receive a waiver for failing to meet the grant requirements. Yudin estimated New Mexico's liability would be about $53.7 million for fiscal year 2010 and about $39.7 million for fiscal year 2011—a total of more than $93 million.

The Education Department has penalized South Carolina and Kansas for failing to follow maintenance of state financial support rules. South Carolina is appealing its penalty.

CORRECTION: An earlier version of this blog entry referred to "maintenance of effort" instead of the technically correct term, "state maintenance of financial support." The terms refer to the same issue: states are not supposed to reduce their support for special education from year to year, and districts are not supposed to reduce their expenditures on special education from year to year except under specific circumstances (such as a decrease in the number of students enrolled in special education, or the departure of special education personnel.)However, for school districts, the term "maintenance of effort" is used in the Individuals with Disabilities Education Act, while "maintenance of state financial support" refers to state obligations. Just an extra bit of complexity to an already complicated money issue!


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