State risks losing federal money if it’s not spent soon

Millions have yet to make their way to people in New Mexico for rent relief, education and more

By: - April 28, 2022 2:51 pm

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Since the start of the pandemic, the federal government has allocated more than $26 billion in funding to New Mexico, but much of that money has yet to be spent, and some of it could be lost if the state government fails to appropriate it, the Legislative Finance Committee heard Wednesday. This includes more than $1 billion for public schools that could be lost if it’s not allocated by deadline. 

Deadlines for spending federal $$$ on NM schools

September 2022: First round — $97.7 million

Progress: Nearly 90% spent

September 2023; Second round — $488.2 million

Progress: Nearly 42% spent

September 2024: Third round — $979.1 million

Progress: “Very little,” according to PED, though the numbers are not yet posted

Total for education: $1.52 billion, and 90% must be awarded directly to public school districts and state-chartered schools, according to PED.

Numbers come from the PED dashboard on April 28, 2022

“They’ve gotten almost a billion and a half dollars that now they need to spend by the fall of 2024, which seems like a long ways in some ways. And in other ways, it’s not,” LFC Program Evaluation Manager Micaela Fischer told the committee. 

The school funding at risk of being lost comes from a variety of federal programs, but the bulk of it was allocated by the American Rescue Plan Act, a $1.9 trillion-dollar program championed by President Joe Biden that passed late last year. Only $11 million of the nearly $1 billion allocated to education in New Mexico from ARPA has been spent, according to a report from the LFC. 

And only half of the nearly $500 million allocated to New Mexico education from the separate Coronavirus Response and Relief Supplemental Appropriation has been spent, according to the LFC. That spending faces a tighter fall 2023 deadline. 

Part of the problem is that ARPA requires 20% of the funds to be spent on evidence-based efforts to combat learning loss. According to the LFC report, “there are few solid plans from districts … to catch kids up now that school has returned.”

The state also has $140 million left to allocate in non-school ARPA funding from $1.75 billion allocated in the ARPA State Fiscal Recovery Fund. LFC Analyst Eric Chenier told the committee the state has until the end of 2024 to allocate the money. 

The hearing also focused on upcoming deadlines for competitive grants under the Infrastructure Investment and Jobs Act passed late last year. The Infrastructure Investment and Jobs Act increases federal funds to the state by $163.2 million annually, and also includes opportunities for grants that the state can apply for — if it meets the various grant deadlines. 

Of particular concern to legislators are potential grants to improve broadband access in New Mexico. The infrastructure package earmarked $42.5 billion to improve broadband access with a state minimum of $100 million. Sen. Michael Padilla (D-Albuquerque) said the state needs far more than that, and he hasn’t seen a plan from the Office of Broadband Access and Expansion to apply for additional funding. 

“I’m very concerned that we’re going to miss out on this giant pot of money that can help a rural state like ours,” he said in the hearing. “I want to get $1.3 or $1.8 billion from that $42.5 billion that’s available out there because we may never see that kind of money for a project like this again.” Chenier noted that the Department of Information Technology will meet this week to discuss the issue. 

Broadband officials ask lawmakers to trust the process

Sen. Bill Tallman (D-Albuquerque) echoed Padilla’s concerns about the potential loss of funds, adding that between 20% and 25% of New Mexico residents lack broadband access.

Department of Finance and Administration Secretary Deborah Romero said she had seen a draft plan created by the office but wasn’t sure of the plan’s status. 

“Have they already sent that off to the feds? Has it been approved? I don’t know,” she said. “But I know I did see a draft plan.” 

Other federal funding that has not yet been allocated includes $47 million from the Homeowner’s Assistance Fund, $10 million from the Governor’s Emergency Education Relief Fund and $5.5 million in unspent CARES Act money. 

As for where the money has been spent, the bulk of the $26 billion the state has received was given out in direct pandemic assistance to individuals and businesses. Another $5.7 billion went in stimulus payments to individuals, $5.1 billion went in assistance to businesses and $3.5 billion was given in additional unemployment benefits. 

And $655 million was given to Medicaid, while $262 million was spent on food assistance.

Food banks to lawmakers: The need for state funding is urgent

Other federal funds were earmarked for the state, including $126 million for FEMA, $49 million for substance abuse and mental health grants and $9.5 million for justice and courts. 

The LFC did not offer a precise breakdown of how much of the money for these programs has already been allocated, noting that “There remain several key unexpended federal grants such as the coronavirus state fiscal recovery fund, capital project funds, homeowner and rental assistance funds, school emergency relief funds, and many other smaller competitive grants directly allocated to state agencies.”

The state has so far pushed out over $136 million in federal funding on emergency rental relief but has not managed to spend its way through the first tranche of funding, which is necessary to unlock the second. 

DFA Secretary Romero said the first pot is tied to COVID-hardship relief, but once that money has gotten out to folks, the state will be able to access additional funding with less restrictions. 

The state still has to spend $34 million from the first round of funding before it can access $49 million.

Rec center apps open June 15

Romero said the state has also been given $45 million for recreation centers and will have an application process launching June 15 that will be open to communities.

Romero also announced the creation of several new online dashboards to allow New Mexicans to track the use of ARPA and rent-relief funds in the state. The dashboards, planned to launch in the upcoming weeks, will be similar to the Capital Outlay Dashboard already available on DFA’s website, which provides easy-to-read graphs and charts showing spending in the state. Romero said the dashboards will make it easier for New Mexicans to track the spending of federal funds — and, presumably, keep track of which funds still haven’t been spent.

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Andrew Beale
Andrew Beale

Andrew Beale has 15 years of reporting experience, starting with the UNM Daily Lobo. He's reported for national and international publications including the New York Times, Vice and al-Jazeera from locations as far-flung as Portland and Palestine. He has a master's degree from the UC Berkeley Graduate School of Journalism, and he resides in Southern California.