Fewer students are entering the doors of Santa Fe Public Schools, and its fiscal constraints are only growing heavier. Facing a potential loss of more than 400 students next school year, district leaders are grappling with a tough budget equation: how to keep programs going, pay growing labor and healthcare costs, and tackle mounting operational expenses as enrollment — the lifeblood of public school funding — is on a downward slope.
The district projects revenues of about $153.8 million in income next year against expenditures of about $156.2 million. Given the situation, officials need to tap nearly $18 million from cash reserves to balance the books.
Although the overall enrollment is shrinking, the district still expects about a $300,000 increase in annual state funding. A mix of demographic shifts and changes in how the state allocates money per student has driven the increase.
Enrollment has fallen among at‑risk students, English, and bilingual learners. Those in fine arts programs also decreased. The numbers are shrinking elsewhere, but growth in special education and gifted keeps funding up, bringing in increased funding for the district.
“I guess we could spin this as positive news that someone thinks our at-risk needs are less,” Richard Halford, the district’s chief financial officer, told board members during recent budget deliberations. “But it of course means less funding as well.”
The district’s budget includes capital outlay and debt service. It is expected to exceed $418 million, lower than this year’s nearly $430 million spending plan.
Enrollment Declines Reshape the District
The enrollment downturn mirrors demographic changes that shape Santa Fe. These changes, such as rising housing costs and an aging population, have resulted to fewer school-age children in the city.
Last year, the district documented an enrollment of 10,299 students, reflecting a year‑over‑year drop of more than 400. Officials now project the enrollment could slide further to roughly 9,809 students by next fall — bringing the district to less than 10,000 students for the first time in recent history.
Education officials expect the decline to hit some campuses hard. They expect Santa Fe High School to lose 184 students, while Capital High School could decrease by 89 students. Enrollment projections indicate declines at El Camino Real Academy and Ramirez Thomas Elementary.
But not every school’s enrolment is shrinking. Projections show that Mandela International Magnet School will gain 85 students next year. And that Early College Opportunities High School and Aspen Community School are also expected to grow their school population.
Board President Kate Noble cited strong school leadership for Aspen’s growth. “Good principals are like gravity,” she said. “They start to grow populations in schools.”
State Mandates Add New Costs
Rising mandated expenses intensified the district’s fiscal woes. Officials estimate it will require more than $1 million to comply with the state’s mandated 1 percent raises for public employees. School districts may need some $1 million to meet a new requirement to cover 80 percent of employees’ healthcare insurance costs.
The district must also prepare for the minimum wage hike in Santa Fe to $17.50 an hour by January 2027. The wage increase will affect dozens of workers, including custodians, mechanics, and secretaries.
Unexpected costs further complicate the budget process. District officials said they have to add more than $523,000 to cash reserves to comply with state estimates, spend some $532,000 on lawsuits and settlements, and bankroll over $253,000 in penalties and interest to the Internal Revenue Service.
The board has already pulled back from at least one proposed cut after public opposition. Board members rescinded a proposal to cut $60,000 in yearly funding for Communities In Schools of New Mexico. The funding provides student services coordinators in at‑risk schools.
Other proposed investments include nearly $650,000 for behavioral and disciplinary interventions at five schools, and $1.1 million for instructional improvements in literacy and mathematics.
Frustration Over a $3 Million Substitute Teacher Contract
One of the debates centers on the district’s $3 million contract with ESS, a staffing agency for substitute teachers. Board members expressed concern upon discovering that over $542,000 of the contract goes to the company rather than directly to substitute teachers.
Moreover, the agreement with ESS includes an automatic renewal clause, effectively locking the district into another year of spending unless officials act months earlier. “I am really struggling with finding out that we’re trapped in this $3 million contract,” said board member Sarah Boses. She suggested that the district consider gradually hiring substitute teachers under district control.
The debate comes as teacher absences continue to rise abruptly. District data revealed that schools recorded 18,904 staff absences that need substitute coverage during the 2025 school year. That number has already increased to 24,109 this year, even before the end of the current school year.
Another board member, Juan Blea, asked whether the district was facing a deeper problem behind the surge of absenteeism. “Paying a company to do this kind of feels kind of icky,” he said. Blea urged the district to examine teacher burnout and workplace pressures.
The debate, for district leaders, underscores a bigger challenge public education systems in the United States are facing: Maintaining structural adaptability while managing fewer students and rising costs of education.