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Indian Education News

Posted: February 18, 2021

Impact Aid and New Mexico Public School Funding Challenges

The State of New Mexico made history in 1974 by creating the Operational Funding formula known as the State Equalization Guarantee (SEG). The new SEG was revolutionary in its intent to move away from reliance on local property taxes to fund operations in local schools. Unfortunately, the State did not pass an equalization funding formula for Public School Capital Outlay in 1976, as was originally planned. The lack of Capital Outlay equalization forced school districts to rely on local property taxes, issuance of general obligation bonds tied to property valuations, and direct legislative appropriations for capital outlay needs. Impact Aid districts, who receive Impact Aid payments to replace lost property taxes and lower bonding capacity, saw millions of dollars swept into the Operational Funding formula. From 1974 to 2002, Impact Aid Districts had little to no ability to replace or repair school facilities and utilized its operational funding to support capital outlay needs. From 2002 to the present, Impact Aid Districts have had to rely on operational funds and an adequacy system to replace or repair school facilities. This presentation will discuss Impact Aid, public school funding changes, funding challenges, and the consequences that these decisions have had on Districts like Gallup-McKinley County Schools.

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