Letter to the editor
On September 23, New Mexicans will be asked to approve a funding scheme to pay for so-called public school reforms.
Constitutional Amendment 2 is risky and will most certainly jeopardize an endowment created more than 100 years ago with the idea in mind that it would serve as a reliable source of funding for New Mexico’s public schools. I urge voters to consider the facts before they head to the polls.
The basic premise behind the LGPF was threefold: (1) proceeds from oil and gas were the major source of funding for our public schools; (2) someday oil and gas would be depleted or gone and the LGPF would replace oil and gas as our funding source; and (3) the fund was to be a permanent fund, or endowment, to pass on to future generations of New Mexicans.
Supporters of the amendment say that insufficient funding has been a major hurdle to accountability in education, however in the last eight years, the state Legislature and Gov. Gary Johnson approved $600 million in new money to pay for teacher pay raises and public education reforms; thereby increasing New Mexico’s education budget to $2 billion. That is half of our entire state budget!
Proponents believe the extra money will pay for needed education reforms and be directed into the classroom, however According to the State Department of Education’s own analysis, very few dollars go to solve problems in the classroom but go instead toward teacher pay raises and professional development.
Still not a bad deal, unless you consider that the increased distribution will be deposited into the black hole of the general fund. On that point, let us consider the enormous costs of New Mexico’s Medicaid program, a whopping $532 million. Gov. Richardson has to find $125 million in new money by next June to cover the cost. Keeping that in mind, there is no guarantee that the permanent fund revenue will be used as intended. Teachers may never see those pay raises! Not to mention that even if the money is used as intended, it is only a 12-year Band-Aid. Where is the long-term commitment for something as important as your paycheck or your retirement income?
Let me address the misconception that public schools will see an additional $78 million every year for the next 12 years. The initial payout is $78 million, but drops significantly in subsequent years. The State Investment Council’s own fiscal impact report shows that, by 2017, the payout to public schools is expected to be $15 million less than if the rate remains at 4.7 percent, and $30 million less by 2021.
In fact, the same SIC report indicates that the projected balance in FY-2017, at the proposed 5.0-5.8 percent distribution rate, is $2 billion less than it would be if the current 4.7 percent distribution rate remains in effect.
The resolution includes a so-called “safety valve” which will automatically cap the distribution if the fund’s five-year average falls below $5.8 billion. What it doesn’t tell you is that the fund could drop to $0 (that’s zero) and the fund could still show a five-year average of $5.8 billion.
Moreover, the New England Pension Consultants, the Richardson administration’s very own financial consultants, warn against his spending scheme, citing that the long-term spending target for endowments larger than $1 billion is 4.9 percent, not 5.8 percent as the governor is proposing.
Oil, gas and mineral royalties contribute the bulk (92 percent) of the Land Grant Permanent Fund’s income. What the proponents neglect to mention is that oil and gas are a non-recurring source of revenue; they are non-renewable. When they’re gone, they’re gone. Then, who will pick up the tab? The burden will fall upon every New Mexico taxpayer, who by the way saves $400 a year, on average, at the current distribution rate.
Lastly, the so-called reforms mentioned in the editorial that “wonít happen without ample funding” are funded and in-place. “No Child Left Behind” is federal requirement that meets our state Board of Education’s performance measures for standard-based testing and requires a redistribution of existing funds; full-day kindergarten was implemented back in 2000; and, a professional licensure system, annual teacher evaluations and parental notification of teacher qualifications are all lumped together with teacher salaries.
Although the balance of the fund might seem like a lot of money, consider this: If a homeowner has $1,000 in a savings account along with a 30-year mortgage with a $500 monthly house payment, and withdrew $100 a month from his/her savings to help make the house payment, the saving account would be empty within 10 months but the homeowner would still have another 29 years and 2 months of payments.
Don’t pay the bills with our children’s education trust fund. Constitutional Amendment 2 is a short-term fix that will lead to enormous problems in the future. Voting “no” IS a vote for education.
By Walter Bradley
Assistant Commissioner of Public Lands