Overpayment leaves New Mexico education department with $35 million deficit

The New Mexico Public Education Department is working on damage control after admitting it overpaid one of its vendors – amounting to millions of taxpayer money lost.

“What should have been a routine public meeting … quickly derailed as (the department’s secretary Mariana) Padilla explained her agency faces a $35 million shortfall after overpaying one school district,” reported Source NM in a Dec. 11 article.

The overpayment stems from Gallup-McKinley County Schools canceling its contract with K12 – an online learning company – in May.

However, the company is still “drawing money for the 3,000 virtual students who have been enrolled elsewhere for months” as districts receive state funding based on the previous year’s enrollment numbers, the news outlet reported.

Sen. George Muñoz (D-Gallup), chair of the Senate Finance Committee, threatened to reach out to the New Mexico State Police and Gov. Michelle Lujan Grisham for further action.

“I’m not going to let our school district ruin an entire department’s budget over greed,” he said at the meeting, according to journalists.

Legislative Finance Chair Rep. Nathan Small (D-Las Cruces), warned the department to “expect to see proposed legislation in 2026” to avoid future incidents of overpayment, calling it “an abuse” of resources.

In response, the district’s deputy superintendent, Jvanna Hanks, told journalists she believes legislators have misunderstood the situation.

“There are components of the funding formula that are included in the current year,” she told Source NM, noting the district has received funding for services already rendered in the previous academic year. “It could appear that there is duplicate funding. It is actually all within the statutory funding formula.”

Overall, Padilla requested an increase in educational spending for the state.

“The PED budget request included $2.3 million in a base funding increase, which includes nearly $400,000 for building rent, $1 million in healthcare costs and $244,000 for increased full-time equivalent employee positions,” Source NM wrote. “Currently, the department has 361 positions but only has funding for 340, according to Padilla’s presentation.” 

‘Our kids still face the worst outcomes nationwide’ 

As previously reported by The Lion, New Mexico ranks last in the nation for educational outcomes despite a record $4.4 billion allocated to schools in the 2025 fiscal year. 

“For decades we were told that New Mexico is a ‘poor’ state and that if only we poured more money into government pre-K, K-12, and numerous other taxpayer-funded programs that improvement would come,” Paul Gessing, president of Rio Grande Foundation, wrote in an op-ed. 

“But, for the last decade the money to improve New Mexico has been available thanks to record-setting growth in oil and gas production. Despite massive spending growth in education and the creation of taxpayer-funded universal pre-K, our kids still face the worst outcomes nationwide.” 

As a result, more families are withdrawing from the state’s public education system altogether, a former NASA aerospace engineer concluded. 

“When I ask parents why they pulled their kids out of school, common reasons include poor academics, classroom behavior issues, bullying, sexualization and indoctrination of kids,” wrote Sarah Smith in an opinion piece for Las Cruces Sun News. 

“The 2024 test results for Mayfield High School (where my two teens would attend if we weren’t homeschooling) show that only 9% of kids are proficient in math and 23% are proficient in reading. If kids can’t read or do math, how can they be successful as adults?”