New funding formula has Belen Schools paying more

BELEN — Legislative changes which were supposed to make a funding formula used to build schools more equitable has caused the amount local districts pay out to nearly double.

During his report at the Jan. 24 Belen Board of Education meeting, Belen Consolidated Schools Superintendent Lawrence Sanchez raised concerns about the new formula the Public Schools Finance Authority will use to calculate cost sharing with school districts for capital projects.

In 2018, the New Mexico Legislature passed and the governor signed into law Senate Bill 30, which is supposed to improve the funding process for capital projects, such as new schools.

“As I’ve often told people throughout preparing for the building of Dennis Chavez Elementary, we are partners with the state. Every piece of property (the district) owns is owned in partnership with the state,” Sanchez said. “It either gives us money to buy or build. PSFA is always looking for equity. They felt this would make the funding formula more fair.”

Under the old funding formula, districts in New Mexico carried an average of 54 percent of the cost of a capital project and the state paid the remaining 46 percent.

Starting in the 2019 fiscal year, the state began incrementally shifting to the new funding formula with an anticipated average local cost increase of 6 percent by 2024.

“Then we have Belen. The current situation, in the 2021-22 school year, the state match was 60 percent and the local share was 40 percent,” Sanchez said, noting the DCE project is funded under that match formula.

“Starting now, it will be 29 percent from the state and the local match (for BCS) will be 71 percent.”

The superintendent said he and BCS assistant superintendent of finance Anette Torrez met with PSFA staff to find out how the district — with all its socioeconomic challenges — ended up with a local match that was the highest in the state.

“We are worse off than the rest of the districts in the state,” Torrez said at the board meeting.

Sanchez said during the meeting with the PSFA staff members, they recognized it was not a good formula.

“They are going to work on it and until then, they are proposing legislation this year that will last for three years and will reduce local matches by a third,” the superintendent said. “That will drop us to 47 percent, which is still worse off.”

As part of its presentation to Sanchez and Torrez, PSFA did comparisons of other local district matches, he said.

“I have a hard time understanding how (Los Lunas Schools) is at 52 percent, (Socorro Consolidated Schools) is 39 percent and we are at 71 percent,” Sanchez said. “I don’t get it and no one can answer that question.”

Torrez said the new formula is very discouraging, especially after seeing where other districts fall in the range of local match requirements.

“The higher percentage doesn’t sit well. We are a poor district and, with this, you look to the future and see what we can’t afford,” she said.

Right now, the only construction happening in BCS with a state match is the rebuild of Dennis Chavez Elementary; however, Sanchez pointed out that Belen High School was going to need a significant rebuild in the near future and cost estimates are running at nearly $50 million.

Belen Board of Education President Jim Danner wondered about the state’s “fair algorithm” for calculating the district’s match requirement.

“Los Lunas, with all its revenue and tax base is getting more. (Socorro) gets a lot of state money,” Danner said. “This algorithm says ‘screw Belen.’ I don’t take that back.

“It seems to me, we’ve done a great job getting back into (financial) shape. We know we have to build a high school pretty soon. How can we plan for a $50 million high school? It will take years.”

“We can’t,” Torrez said bluntly.

Board vice president Aubrey Tucker asked if the district, since the new formula was such a detriment to it, could bring legal action to hold it harmless until the issue is addressed.

“I don’t see why we have to suffer when they recognize they made a process that was not equal,” Tucker said. “Can we seek legal action to keep us safe for a time? Or at least keep it at 60/40?”

Sanchez said any change starts with the Legislature.

“There is something that is supposed to go before them (this session). We are not the only district going through this,” he said. “That’s where it doesn’t make sense.”

He continued, reiterating the current DCE project was funded under the old 60/40 split, with nothing “in the hopper” for the district.

“… we have to see that the new formula is truly doing harm. If we are going to ask for a stay, when we want to and are able to add another building, (we have to show) that causes harm,” Sanchez said. “And with as long as it takes the courts to act, do we put it in the hopper now?”

Tucker said legal action needed to be considered, “to protect the district and the community.”

Board member Larry Garley asked if the district could join other districts in legal action. Sanchez said it was possible to ask the courts for a class action designation.