LFC: Endowments meant to expand nursing, teacher and social-work faculty have underdelivered; delays and foundation fees cited

The Legislative Finance Committee on July 24 heard that $170 million in legislative endowments intended to create long-term faculty funding for nursing, teacher education and social work has produced investment earnings but has not yet delivered the full program growth lawmakers sought.

"The endowment appropriations were sufficient to support around 87 additional faculty, but so far are supporting around 52," LFC program evaluator Clayton Lobaugh told the Legislative Health & Human Services Committee, summarizing the committee's program-evaluation report.

Why it matters: New Mexico faces projected workforce shortfalls in high-demand fields. LFC found the endowments produced investment gains (LFC reported $10.7 million from FY23 appropriations) but that colleges spent a smaller share of earnings on faculty salaries than expected. The report says some campuses used earnings to hire instructors and teach additional courses, but other institutions accumulated earnings or spent them on foundation operations rather than direct faculty pay.

Report findings and examples: LFC said the FY23 endowments alone could have supported an additional 73 faculty positions but that, by FY25, 52 faculty were being supported by the endowments. The report identified several institution-level examples: UNM's teacher-education program, Eastern New Mexico University's social-work program and Central New Mexico Community College's nursing program were cited as using earnings to support faculty. By contrast, the report said UNM's nursing endowment earned about $1.4 million in FY25 but paid no earnings to faculty salaries because of turnover and retention problems in that program.

LFC also flagged operating expenditures at university foundations. The report said NMSU foundation operations consumed roughly $1.2 million of $6.4 million in investment gains since FY23, while only about $795,000 of those gains went to faculty salaries. For UNM, LFC reported roughly $1.9 million of gains used for foundation operations and about $942,000 for faculty salaries.

HED response and follow-up steps: Secretary Rodriguez, representing the Higher Education Department, disputed some timing assertions and said the department had learned from early rollout issues. "We had a lot of staff turnover and adjustments at our agencies ... However, we are now fully staffed and all funding and guidance for higher education institution for this past fiscal year or this fiscal year, fiscal year 26, has already been issued and out the door," Rodriguez said. Rodriguez told the committee the department had convened stakeholders to design the $5 million social-work appropriation and is partnering with a nonprofit, Falling Colors, for administration of that funding.

Rodriguez said HED has issued a memo requesting each awarded institution to report headcount of faculty paid wholly or in part by the endowments, hires and separations and the numbers of students served, and that HED has contacted the Office of the State Auditor about foundation oversight.

Committee concerns and context: Legislators pressed on timeliness of awards, the mix of spending (faculty salaries versus foundation or operational expenses), accountability for institutions that disburse earnings differently than legislative intent, and whether tribal colleges were excluded by statutory definitions. Committee members repeatedly asked whether the state should require endowment funds to be invested through the State Investment Council rather than institutional foundations to reduce fees and increase transparency.

What the report recommends: The LFC evaluation recommends colleges spend endowment earnings on faculty and allowable expenses, renegotiate foundation or administrative fees where possible, and strengthen HED monitoring of implementation. HED said it has begun surveying institutions and will share results with the committee.

Next steps: HED will report survey results and follow up with institutions; the Office of the State Auditor will assist with foundation reviews; and legislators signaled interest in adding more prescriptive budget language for future endowments to ensure funds are used as intended.

Ending note: Lawmakers said they want a clear, repeatable reporting framework and performance metrics so the appropriation's long-term goals ' increasing faculty and graduation capacity in nursing, teacher education and social work ' can be tracked in coming years.