Mary Kay Papen
Taking additional money out of the state’s trust fund for early childhood programs is not only unwise, it is unnecessary.
Those who bemoan the defeat of the proposal to take more money out of the state’s permanent fund for early childhood programs are underwhelmed by arguments that the plan would have been an imprudent raid on the state’s endowment. They rightfully point to the many social ills in New Mexico and the need to invest heavily in addressing the problem early with intervention and education.
But they fail to recognize the state already is investing heavily in programs for young children within existing resources. Indeed, taking additional money out of the state’s trust fund is not only unwise, it is unnecessary.
Other policymakers already have skillfully argued that the now-dead proposal would have been too costly in the long-run because it would have eaten away at the Land Grant Permanent Fund, an investment fund that provides hundreds of millions of dollars to public schools and other beneficiaries without the need for additional taxes.
The income in the permanent fund comes mostly from royalties paid by the oil and gas industry for use of state trust land and some of the money earned on investing the fund. New Mexico is fortunate to have substantial oil, natural gas and other natural resources, and some early lawmakers were smart enough to realize those resources would not last forever.
To ensure the state receives a lasting benefit from its natural resources, the state puts that money into permanent funds and uses the investment earnings from those funds. Those investments generate about $430 million a year for public education.
A strong oil and gas industry and booming stock market helped the fund grow from $4.6 billion in 1996 to $6.8 billion in 2003, when New Mexico voters amended the state Constitution to pull more money out of the fund for undefined school reform. That increase was intended to be temporary and is supposed to step down almost all the way back to 1996 levels by 2016.
Already expanding programs
Well-meaning early childhood education advocates saw that as an opportunity to ask voters to hit the fund again, this time harder and without a phase-out.
The state absolutely should invest in early childhood care and learning – study after study shows such an investment pays off multifold by reducing future education and social service costs – but the state already has numerous programs in place, and the General Appropriation Act on the governor’s desk expands those programs within available revenue.
Of the $220 million in new spending in the General Appropriation Act, more than 10 percent is for early childhood programs. If signed into law by the governor, funding for the extended school-year program known as Kindergarten-Three-Plus would increase by $5.7 million, more than double its current $5.3 million appropriation.
Another nearly $9 million would be spent on new early reading initiatives. Funding would increase by nearly $5 million for prekindergarten, by $3 million for child-care subsidies for poor- and middle-income families, and by almost $1 million for the home-visiting program for newborns.
All of the expansions are for programs with demonstrated success, and the initiatives being considered are focused on efforts known to work.
We must resist the urge
While the advocates argue the Land Grant Permanent Fund has continued to grow over the last decade, they overlook the fact that a stock market crash or a recession can hit the fund hard. Although the market value of the fund has now recovered to pre-2007 levels, it lost billions of dollars in value during the economic bust and took a half-decade to recover.
That loss in value, naturally, means the fund generated less income for its beneficiaries.
In a state with so many legitimate needs, the state’s endowment is a tempting target. But we must resist the urge to chip away at the fund. A healthy fund with solid earnings is a greater benefit to the state and generates hundreds of millions of dollars for the beneficiaries without endangering future earnings.
Senator Mary Kay Papen, a retired car dealer, has represented Senate District 38 in Doña Ana County since 2001. She is a member of the Legislative Finance Committee and Legislative Health and Human Services Committee, chairwoman of the Behavioral Health Subcommittee and vice chairman of New Mexico Finance Authority Oversight Committee.