Constitutional Amendment 1 - Permanent School Fund Distribution Amendment

Summary

A "yes" vote supports amending the constitution of New Mexico to provide for additional annual distributions of the permanent school fund for enhanced instruction for students at risk of failure, extending the school year, teacher compensation and early childhood education; requiring congressional approval for distributions for early childhood education.

A "no" vote opposes amending the constitution of New Mexico to provide for additional annual distributions of the permanent school fund for enhanced instruction for students at risk of failure, extending the school year, teacher compensation and early childhood education; requiring congressional approval for distributions for early childhood education.

Arguments

"With the proposed additional distribution from the Land Grant Permanent Fund in this constitutional amendment, public education and early childhood education programs will receive an increase in educational funding statewide from that fund. According to Legislative Finance Committee estimates, which are dependent on projected investment returns, the 1.25% distribution increase in the constitutional amendment could result in the distribution of an additional $211.5 million in funding for education in fiscal year 2023. This would deliver approximately $126.9 million for early childhood education and $84.6 million for public education. The projected additional funding for early childhood education may help close the funding gap that the Early Childhood Education and Care Department presented in its recent finance plans, which estimated that an additional $505 million was needed by fiscal year 2026 to provide New Mexico with universal access to early childhood services. Additionally, the funding for public education would be used for enhanced instruction for students at risk of failure, extension of the school year and public school teacher compensation." - New Mexico Legislative Council Service, Summary of and Arguments For & Against the Constitutional Amendments Proposed by the Legislature in 2021 and 2022, in support of Constitutional Amendment 1 (Learn more)

"According to a 2020 report by the Legislative Finance Committee, pre-kindergarten programs are among the most effective education reform measures for improving student outcomes. Low student achievement at an elementary level can lead to serious implications for future educational outcomes. Participation in pre-kindergarten led to higher high school graduation rates, and pre-kindergarten participation for students with special needs also led to improved outcomes. The Legislative Finance Committee, through its report, saw an increase in graduation rates for English language learners and low-income participants, a reduction in grade retention and a reduction in chronic absenteeism. Additionally, participation in pre-kindergarten programs correlated to higher test scores throughout students' academic careers." - New Mexico Legislative Council Service, Summary of and Arguments For & Against the Constitutional Amendments Proposed by the Legislature in 2021 and 2022, in support of Constitutional Amendment 1 (Learn more)

"Providing more high-quality early childhood education programs has not only been proven to have a greater impact on students' educational outcomes, but it also provides a significant return on investment. The benefit to taxpayers for pre-kindergarten programs is estimated at $16,000 per student. These benefits are a result of those students on average earning higher lifetime wages and paying higher taxes, as well as savings resulting from lower crime and social program spending. Increased spending on early childhood education and public schools, as provided by this constitutional amendment, may further capitalize on this return on investment." - New Mexico Legislative Council Service, Summary of and Arguments For & Against the Constitutional Amendments Proposed by the Legislature in 2021 and 2022, in support of Constitutional Amendment 1 (Learn more)

"Funding provided by a new distribution provided in this proposed constitutional amendment may not be necessary to sufficiently fund early childhood programs. In 2020, as an alternative to a similar proposal as this constitutional amendment, the state created a new trust fund, the Early Childhood Education and Care Fund. The law provides that the fund distribute at least $30 million for early childhood education and care services and programs every year. The Legislative Finance Committee projects that distributions from the fund for early childhood education and services will reach $68.25 million in fiscal year 2024, $127.97 million in fiscal year 2025 and $173 million in fiscal year 2026, providing nearly three-fourths of the $505 million the Early Childhood Education and Care Department estimates is needed by fiscal year 2026 to provide New Mexico with universal access to early childhood services. It is estimated that the proposal in the joint resolution will provide $134.31 million in fiscal year 2024 and $141.3 million in fiscal year 2025. Rather than risk the corpus of the Land Grant Permanent Fund and a possibly significant reduction in future distributions to existing beneficiaries, it may be more appropriate to rely on this existing resource to fund early childhood programs and to allow the continued growth of the hundreds of millions of dollars in benefits the Land Grant Permanent Fund already delivers to New Mexico schools every year." - New Mexico Legislative Council Service, Summary of and Arguments For & Against the Constitutional Amendments Proposed by the Legislature in 2021 and 2022, in opposition to Constitutional Amendment 1 (Learn more)

"As a trust fund, the Land Grant Permanent Fund is invested to ensure sustainable growth over time. A larger fund equates to a larger distribution since the distributions from the fund are based on a percentage of the overall size of the fund. If more money is distributed from the fund now, then less money will be available to invest and the fund will grow at a lower rate over time. The outcome is that, while more money will be distributed from the fund, eventually the distribution based on a larger percentage from a slower-growing fund will be lower than if the current distribution rates are maintained. This point in time is often referred to as the 'tipping point' and is estimated to occur at some point in the 2040s. The time line for this tipping point is dependent on investment returns over time; however, it will eventually occur, and when it does, the diminished distribution will exist for the life of the fund." - New Mexico Legislative Council Service, Summary of and Arguments For & Against the Constitutional Amendments Proposed by the Legislature in 2021 and 2022, in opposition to Constitutional Amendment 1 (Learn more)

"If this constitutional amendment were to be approved by voters, approval from the United States Congress is required prior to the changes taking effect. The Land Grant Permanent Fund was created when the State of New Mexico was established and is subject to the federal Enabling Act of 1910. This federal act requires that if the distributions to beneficiaries of the fund are changed, prior congressional approval is required. Further, the changes made in this constitutional amendment will likely require action by the New Mexico Legislature. Forty percent of the increased distribution is provided to the public school permanent fund beneficiary. This flow of funding already exists and provides a funding source for public schools. However, 60% of the new distribution is to be provided for the provision of early childhood education. It is statutorily unclear how this money would be used and what state department, agency or entity would receive this distribution. As noted by the staff of the Legislative Education Study Committee, public schools are the primary beneficiaries of the Permanent School Fund, but most of these schools do not provide early childhood services. The State Investment Council has also noted that while public schools may be able to provide some early education programs, more than one-half of the beneficiaries either are not educational facilities or do not have a mission related to early childhood education. Moreover, it may be unlawful to use money from a new distribution from the Permanent School Fund for many of the early childhood services that are currently provided by private entities through contracts with the state. According to the attorney general, funds from the Land Grant Permanent Fund are prohibited from being used for private schools or programs, including through contracts with a state agency, which the attorney general states 'would simply be an artificial attempt to circumvent the prohibitions of the [Enabling] Act and state constitution'." - New Mexico Legislative Council Service, Summary of and Arguments For & Against the Constitutional Amendments Proposed by the Legislature in 2021 and 2022, in opposition to Constitutional Amendment 1 (Learn more)

"This constitutional amendment will increase funding from the Land Grant Permanent Fund to be used for public education and early childhood education, at least in the short term. However, public education and early childhood education receive significant portions of their budgets from other sources, including other existing funds in state law and also General Fund appropriations that are made annually. This constitutional amendment does not ensure additional funding for at-risk students, additional school days, teacher compensation or early childhood education because nothing prevents the legislature from reducing the money it now provides for those purposes with appropriations for other purposes. This means that the state could lower distributions and appropriations from other funding sources for use elsewhere. While the potential freeing up of this funding for other uses could be framed as a benefit, the often-stated purpose of the constitutional amendment to increase funding for public education and early childhood education is not an inevitable outcome." - New Mexico Legislative Council Service, Summary of and Arguments For & Against the Constitutional Amendments Proposed by the Legislature in 2021 and 2022, in opposition to Constitutional Amendment 1 (Learn more)

Measure Details