A new school funding law in New Mexico, known as House Bill 63, is causing significant budget shortfalls for some of the state's highest-performing charter schools. The legislation, designed to redirect funds to students with greater needs, has resulted in funding cuts exceeding a combined $1.5 million for several top-rated institutions, forcing them to consider staff reductions and program changes.
While lawmakers unanimously passed the bill to create a more equitable funding system, leaders at the affected schools argue that the policy penalizes academic success. They now face the challenge of maintaining their high standards with substantially fewer resources, sparking a debate about the unintended consequences of the state's new financial model for education.
Key Takeaways
- New Mexico's House Bill 63 changed how schools receive funding for "at-risk" students.
- Previously, charter schools used their district's at-risk index; now, each school has its own based on its student body.
- Several high-performing charter schools with fewer at-risk students have lost over $1.5 million in total funding.
- Affected schools are cutting staff, shortening the school week, and using cash reserves to manage the budget deficit.
- The law is seen by proponents as a necessary step to address educational inequities highlighted in the 2018 Yazzie-Martinez court ruling.
Understanding the HB 63 Funding Shift
During the last legislative session, New Mexico lawmakers passed House Bill 63 without a single dissenting vote. The bill's primary goal was to increase financial support for schools serving a higher concentration of at-risk students. The Public Education Department (PED) defines this group as students who are Indigenous, English language learners, from low-income families, or have special needs.
The core change involved how a school's "at-risk index" is calculated. Before HB 63, charter schools used the same index as the public school district in which they were located. This meant a charter school with a low-poverty student body could receive at-risk funding based on the higher poverty level of the surrounding district.
A Change in Calculation
The new law requires every school, including charters, to generate its own at-risk index based on its specific student enrollment. A legislative analysis predicted that this change would most significantly affect charter schools serving students from higher-income households.
Senate President Pro Tem Mimi Stewart, who sponsored the bill, noted that the change was made in response to requests from the charter school community itself. "We have heard every year from charters wanting their own at-risk index. We heard that from them repeatedly," Stewart said. "We changed it so that everybody gets their own at-risk index. And now, of course, some of them don’t like that."
High-Performing Schools Face Financial Strain
The financial impact of HB 63 has been immediate and severe for several charter schools that consistently rank among the best in the state. Many of these institutions hold "spotlight" designations from the PED, placing them in the top 25% of schools based on academic proficiency.
Explore Academy Loses $1 Million
Explore Academy, a charter school in Albuquerque serving more than 1,000 students, experienced the largest dollar-amount loss. According to head administrator Jake Kolander, the school's budget was hit hard.
"Overall, our school found a deficit of about $1.2 million going into this year than what we would have had prior to the passing of HB 63," Kolander stated.
To mitigate the financial damage, Explore Academy transitioned to a four-day school week. This move allowed the school to utilize a different state funding formula and recover approximately $800,000 of the lost funds. Kolander said parents were overwhelmingly supportive, but he feels the situation put families in a difficult position.
East Mountain High School Cuts Staff
Nearly 30 miles away, East Mountain High School faced its own budget crisis. Documents show the school's at-risk funding allocation dropped from approximately $486,000 last year to just $135,809 this year. This school's proficiency rates in reading and science are more than 30 percentage points above the state average.
Funding Drop at East Mountain
- Previous Year's Funding: $486,000
- Current Year's Funding: $135,809
- Total Reduction: Over 72%
Trey Smith, the school's principal, decided not to fill three open positions to balance the new budget. The unfilled roles include a full-time fundraising and communications job, a position in the athletics department, and a part-time custodian. "I’m doing my best to not let it impact the classroom, but it does," Smith said.
A Ripple Effect Across Top Schools
The financial repercussions extend to other highly-rated institutions, forcing administrators to make difficult choices about staffing and programs.
Cottonwood Classical and New Mexico International School
John Binnert, executive director for Cottonwood Classical Preparatory School, acknowledged the positive intent behind HB 63 but criticized its execution. "Doing that to the detriment — basically taking money away from other students — wasn’t necessary," he said.
Binnert explained that despite a statewide increase in per-student funding and a mandated 4% teacher pay raise, his budget is tighter than ever. "I couldn’t afford to hire any more teachers, and in fact, might have to lay people off mid-year," he added.
Similarly, New Mexico International School lost $360,000. The school is using its cash savings to cover the deficit this year. Todd Knouse, the head of the school, expressed concern about future cuts to positions like librarians and interventionists. His colleague, finance director Corinne Teller, said saving money is a necessity. "We have remaining cash just because there’s always some sort of threat at each legislative session of a cut," Teller explained.
Proficiency Gaps
Many of the affected schools report proficiency rates in math, reading, and science that are 20 to 40 percentage points higher than New Mexico's state averages, according to the NM Vistas report.
The Equity Argument and a Landmark Ruling
Supporters of HB 63 frame it as a crucial step toward educational equity. Chelsea Morris, an assistant professor of education at the University of New Mexico, connects the legislation to the landmark 2018 Yazzie-Martinez court ruling. That decision found that New Mexico was failing to provide an adequate education to marginalized students, violating their constitutional rights.
"I think critics of the bill are carefully navigating this story of equity," Morris said. "We know everybody wants to claim equity, but then when we have to actually say that, it means that some people get more than other people, then that’s a hard thing to say." She views the bill as one of the first "tangible actions" the legislature has taken in response to the court order.
However, she acknowledged the immediate challenges for schools losing funds, stating they must make difficult, equity-driven decisions about whether to actively recruit more low-income and marginalized students.
Senator Stewart remains confident that the new system is a positive step forward. She pointed to New Mexico's $390 million revenue surplus from the past fiscal year as a potential source for future education funding increases. "This is a positive move forward for us, for everyone," Stewart said. "It’ll take a couple of years, but those charters with no at-risk students will find a way to continue."
