SANTA FE — State education executives got an earful Thursday from Democratic legislators, who said inaction by Gov. Susana Martinez’s administration could cost New Mexico millions in federal funding.

The U.S. Department of Education could penalize the state at least $34.1 million for shortchanging special education programs during the 2011 budget year.

Democrats said the Public Education Department for two years withheld all information about the budget problem from the Legislature. Republican Martinez’s administration, however, said that criticism was inaccurate and unfair.

Sen. Daniel Ivey-Soto said legislators could have tackled any deficiencies in special education funding two years ago had they only been told by the Public Education Department of the federal investigation.

“Had they been proactive, we might not be in this position of having millions and millions of dollars at stake,” said Ivey-Soto, D-Albuquerque.

Though the federal government is threatening to strip the state of $34.1 million because of one year of underfunding special education, the financial penalty could be extended to succeeding years, Ivey-Soto said.

Rep. Christine Trujillo, D-Albuquerque, was harsher in her criticisms of the Martinez administration.

“This is scandalous,” she said to Paul Aguilar, a deputy education secretary, who appeared Thursday before a legislative committee on public schools.

Larry Behrens, a spokesman for the Public Education Department, said afterward that Trujillo’s criticism was especially unfair.

Throughout 2011, he said, PED was working with U.S. Department of Education to determine if the state would need a waiver over its special education allocations. Behrens said those discussions lasted more than a year.

“It’s not unusual for state agencies to be frequently in communication with federal agencies about issues like these. Many times they don’t result in the need for legislative action at all,” Behrens said.

He said the state asked the federal government last August to hold it harmless for any funding disagreements. This was five months before the legislative session began. Behrens said the funding issue then was “thoroughly raised and discussed.”

Behrens singled out Trujillo as a legislator who hoped to seize on the trouble in hopes of using it for political gain.

“The resolution of this issue requires leadership on behalf of our students, not partisan grandstanding and political antics,” he said.

Aguilar told the committee that the state at a fall hearing would appeal the federal penalty.

He said the state already had secured a partial victory by receiving a federal waiver for its level of special education funding for 2010, and it might be able to win the second case too.

Trujillo had a tart response: “The spin coming from the PED is that we have a victory here, but we don’t. The problem has gotten worse.”

Hanna Skandera, secretary-designate of public education, was not at the legislative hearing. But in a previous interview, she said she inherited the budget that now is being challenged by the federal government.

As part of Martinez's administration, Skandera took office in January 2011, the middle of the budget year for which the state could be penalized. Funding of special education for that year already had been established by the staff of then-Gov. Bill Richardson, a Democrat. This explanation did not appease Ivey-Soto.

“They inherited what they inherited, but a change of administration is the perfect time to do an audit,” Ivey-Soto said. “Waiting until 2013 to tell us there was a problem was not the right way to handle this.”

Rep. Dennis Roch, R-Texico, said he also was disappointed that the Public Education Department did not inform the Legislature of the federal inquiry in a timely way.

But, Roch said, he did not want to overreact to the federal government’s threat to take away money from New Mexico. He said the state has a school funding formula that is a model for the country and works well.

“I'm not willing to let the tail wag the dog,” Roch said of federal dictates.

Rep. Mimi Stewart, who taught special education for 30 years, said she did not want to cast blame.

The state cut school funding during a terrible recession, said Stewart, D-Albuquerque. But, she said, she was worried that the Public Education Department has since continued to “lowball” the money needed for special education.

Instead of declaring victory in its disagreement with the federal government, Stewart said, the Public Education Department should be making certain this spring that essential special education funding is in place for the coming year.

All four Democrats in New Mexico’s congressional delegation this month introduced a bill to protect the state from federal funding penalties, other than the one year in dispute.

Milan Simonich is the Santa Fe bureau chief of Texas-New Mexico Newspapers. He can be reached at or 505-820-6898 or msimonich@tnmnp.com. His blog is at nmcapitolreport.com.