New Mexico Plaintiffs Claim State is Backtracking on Capital Funding

Three rural New Mexico school districts who sued the state seven years ago over its inequitable facilities funding have accused the state of backtracking on improvements made to its funding system after a state district court ordered the legislature to create a more equitable system in 1999. The system, which evaluated the adequacy of facilities in each district and created a waiting list for funding based upon relative need, was bypassed during this year’s legislative session as state legislators provided $90 million in extra funds to high-growth districts. This funding, lawyers for the plaintiff districts claim, reverts to the state’s previous inequities by prioritizing large, powerful districts over poor, rural districts in providing facilities funding.

History of the Lawsuit

The lawsuit, known as Zuni School District v. State was filed in 1998 by three plaintiff districts whose property tax bases were primarily made up of Native American and federal landholdings that could not generate the local property taxes used to fund capital improvements in other New Mexico districts. According to the Albuquerque Tribune, District Court Judge Joseph L. Rich found that the state had violated the “uniformity clause” in the state constitution, and ordered the state to devise a “uniform funding system.” It took the state several years to fully organize the current funding system, which assesses district need based on a state definition of adequacy, and provides aid based upon the taxing capacity of each district.

In 2002 a state-appointed Special Master, former New Mexico Supreme Court Justice Dan McKinnon, concluded that the state was making a “good-faith effort” towards fulfilling the court’s order, according to the Albuquerque Journal. McKinnon further recommended that the court establish periodic reviews of the state’s efforts to comply with the lawsuit.

Current Controversy

One such review was prompted by this year’s legislative session, in which $90 million of extra funding was directed to capital projects in high-growth areas, mainly Albuquerque’s West Side. The $90 million was funded largely at the behest of Governor Bill Richardson, and was completely outside of the facilities funding stream that the legislature had established over the past seven years.

The plaintiffs felt that the current system was already struggling to meet the needs of the plaintiff districts; plaintiff attorney Ron VanAmberg describes it as “underfunded” and of “limited flexibility,” and the districts have charged that the formula unfairly emphasizes the federal assistance the districts receive when calculating how much facilities funding the state will contribute (see below). The latest move by the legislature has crossed the line, according to plaintiff attorneys, who went before Judge Rich in March to argue that the added funding is unfair to smaller districts. Fast-growing districts such as Albuquerque, which plaintiff attorneys noted is not taxing at the maximum level locally, are able to use their political clout to receive extra funding, violating the principle of uniformity that had been carefully embedded in the current system. The hearing in March convinced the Judge to call a “review” for the fall, which will debate the constitutionality of the way the state is currently funding facilities needs. “We just want the same opportunity to provide the same quality of school facilities,” plaintiffs’ attorney VanAmberg says.

Suit in Federal Court

The plaintiff districts in the Zuni case have also pursued their complaints in federal court, where the 10th Circuit Court has agreed to hear their case. The plaintiff school districts receive federal impact aid because of their limited capacity to raise local revenue through property taxes. According to the Albuquerque Journal, the districts charge the state with unfairly penalizing them for the federal aid they receive. If successful in the case, Karen White, superintendent of one of the plaintiff districts, claims that her district would be owed $132 million from the state for missed contributions over the years since 1999.

Prepared by Nelly Ward, May 11, 2006