January 2008

The study defines sufficiency (commonly referred to as “adequacy” in school finance literature) as the opportunity for all K-12 students to achieve state goals regardless of classification or location. AIR conducted a public engagement process to define “sufficiency.” The definition is based on the Goals Statement, and it was used as the foundation for the cost estimates and to provide guidelines in the development of the project designs in the study.

The study concludes that in order to achieve sufficiency state support for public schools should increase by 14.5 percent or $334.7 million in 2007-08 dollars. This amount was determined by a formula developed from a marginal cost study of 2006-2007.

Projected cost to achieve sufficiency for 2006-07 = $2.84 billion
Total current educational spending in 2005-06 inflated to 2006-07 dollars = $2.50 billion

Base and per-pupil costs were calculated for urban, suburban-small town, and rural-remote districts for 2007-2008.

Estimated total spending amount to achieve sufficiency:

- Urban districts: $1 billion
- Suburban-small town districts: $1.37 billion, plus an additional $0.7 million in emergency supplemental funding
- Rural-remote districts: $268 million, plus an additional $6.3 million in emergency supplemental funding

Current base spending:

- Urban districts: $912.3 million
- Suburban-small town districts: $1.17 billion
- Rural-remote districts: $215 million

The study estimated the per-pupil cost to achieve sufficiency at $8,144, which represents a 14.5 percent increase over the $7,110 budgeted for that year. Per pupil dollar amounts to achieve sufficiency were also calculated for urban, suburban-small town, and rural-remote districts.

Estimated per-pupil spending to achieve sufficiency:

- Urban districts: $7,666
- Suburban-small town districts: $8,178
- Rural-remote districts: $12,507

Current per-pupil spending:

- Urban districts: $6,964
- Suburban-small town districts: $6,989
- Rural-remote districts: $10,016

Calculated Additional Costs for 2007-2008:

The study used the formula below to derive a 2007-08 district-level formula that accounts for a series of adjustments that provide additional funding applied to a base per pupil cost. The base per pupil cost ($5,106) denotes the sufficient per pupil cost for the average-sized district (3,532 students) with average shares of K-5, 6-8, and 9-12 enrollment (44.0 percent, 23.4 percent, and 32.5 percent, respectively) and no additional student needs.

Sufficient Per Pupil Cost = Base Per Pupil Cost

X Poverty Adjustment
X English Learner Adjustment
X Special Education Adjustment
X Mobility Adjustment
X Share 6-8 Adjustment
X Share 9-12 Adjustment
X Enrollment Adjustment

This formula is meant to promote funding equity across districts and minimize incentives to pursue funding unrelated to student needs (by making use of adjustment factors beyond a district’s control).

Major Recommendations:

AIR recommends that New Mexico increase school funding by $334.7 and adopt a revised and simplified funding formula that incorporates simplified weighting systems. In addition AIR recommends that a single weight be used for special education funding (and for other classification categories) and that a census-based system be utilized for special education allocation.

Furthermore, AIR recommends that New Mexico require districts to align their spending plans with the priorities outlined in their Educational Plan for Student Success (EPSS), reports reviewed by the State Department of Education in which schools show how they will improve student achievement.

The study finds that New Mexico’s current school funding system does not provide adequate learning opportunities for all students. It also finds that most school districts are spending at levels below sufficiency.

This study accounted for students with special needs, including English language learners, students in poverty, students with disabilities, and students in rural areas.

The study also accounted for additional cost factors associated with differences between school districts based on size, geographic location, and percentage of poverty.

AIR examined growth and decline trends by district as well as distribution of student population.

This study did not consider food service costs, costs associated with community services, adult education, capital costs (such as school building construction), or debt cost services. These costs are ordinarily excluded from adequacy studies.

Preschool was not included in the study.

This study uses an “enhanced” Professional Judgment Approach as the primary costing-out methodology. However, it also incorporated the expert/evidence based model and the successful schools approach by providing specific materials – such as expert briefs and resource profiles of successful schools – to the Professional Judgment Panels before their deliberations. The panels were comprised of educators at different levels representing the diversity of urban, suburban-small town, and rural-remote school districts.

In developing the study, AIR also counted on the cooperation of the Project Advisory Panel, the Public Education Department, and several individuals and organizations that assisted and participated in their research.

The study ties increased funding to increased accountability, calling for districts to develop a comprehensive Educational Plan for Student Success to show how schools will improve student achievement.

AIR recommends that governing bodies, the Legislature, and individual districts work together in a multi-year phase-in of additional funding. The House Education Committee of New Mexico plans to create a task force to further study the question of accountability and report back in one year.