Why does the New Mexico Public Education Department have a $35 million shortfall?

The department has a $35 million shortfall due to an overpayment made to Gallup-McKinley County Schools after a contract cancellation.

What action are lawmakers taking regarding the $35 million education budget gap?

Lawmakers plan to introduce legislation in 2026 to prevent similar budget issues and are withholding the requested funds.

What are the other budget priorities for New Mexico's Public Education Department?

Other priorities include teacher recruitment, student meal programs, operational costs, and legal expenses for the Yazzie/Martinez case.

Home / Education / NM Education Dept Faces $35M Shortfall After Overpayment

NM Education Dept Faces $35M Shortfall After Overpayment

12 Dec

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Summary

New Mexico education department has a $35 million budget shortfall.
The shortfall stems from an overpayment to Gallup-McKinley County Schools.
Lawmakers plan legislation to prevent similar budget issues in the future.

NM Education Dept Faces $35M Shortfall After Overpayment

New Mexico's Public Education Department is confronting a significant $35 million budget shortfall, revealed by Secretary Mariana Padilla to the Legislative Finance Committee on December 12, 2025. The deficit originates from an overpayment to Gallup-McKinley County Schools after the district terminated its contract with an online learning provider. Consequently, 3,000 students transitioned to other online programs, yet Gallup-McKinley continued to receive state funding for them based on prior enrollment.

Lawmakers expressed strong disapproval of the situation, with Legislative Finance Chair Rep. Nathan Small indicating that the requested funds would not be provided. Instead, legislation is expected in 2026 to prevent such "abuses." Senator George Muñoz voiced particular anger, vowing to take assertive measures to recover the funds, even suggesting direct confrontation with the school district.