House committee advances substitute tightening oversight of full‑time distance learning; Gallup faces large funding cut

The House Education Committee on Tuesday advanced a committee substitute for House Bill 253 aimed at strengthening oversight of full‑time distance‑learning programs and addressing unexpected growth in online enrollment. The committee voted 8 to 4 to recommend the substitute to the full House.

The substitute keeps virtual options for students but replaces a requirement that providers seek prior program approval with a system in which the Public Education Department (PED) evaluates programs and certifies whether they comply with the public school code and related rules. Director John Cena told the committee the department "may withhold up to 100% of funds for those particular students" when a full‑time distance program is out of compliance.

Lawmakers and PED staff said the bill removes several earlier restrictions — including a requirement that full‑time distance learners reside in the serving district and a 10% enrollment cap — while adding reporting duties, temporary finance provisions for FY26 and a pause on creation of new programs. PED and LESC staff told members the combined changes are intended to stop unexpected unit generation and to give the state data and tools to assess program quality.

The committee heard detailed fiscal estimates and local impact concerns. PED staff described two related dollar figures: one analysis showing a roughly $40 million effect on the statewide membership formula and a second estimate calculating an approximate $49 million reduction to Gallup School District's allocation under the substitute as written. "That would actually mean a reduction in Gallup's budget of about $49,000,000," a department witness said; staff added that the substitute would redistribute roughly $40,000,000 to other districts and charters.

Members worried about the local consequences. Representative Vincent asked about job and service continuity in Gallup; PED staff replied that districts contracted with third‑party providers before the academic year and that students are currently enrolled and receiving instruction, but that removing future units may force districts to decide how to cover costs. "If you remove the funding from their current year budget, that may mean that they might have to find other sources to pay that potential fiscal liability," a staffer said.

The committee also heard criticism that some for‑profit providers generated outsized revenue and were operating on profit splits described in committee materials. LESC data presented by staff showed lower assessment performance among full‑time distance learners compared with in‑person peers on state reading, math and SAT measures, a point several members cited in support of closer oversight and study.

The substitute preserves reporting requirements for full‑time virtual students, gives PED explicit authority to evaluate programs, and keeps temporary provisions addressing growth. Committee members said the study and reporting elements are intended to inform any later rulemaking.

The committee approved the substitute on a motion recorded as a "do not pass" on the original HB253 and a "do pass" on the committee substitute; roll call returned a due‑pass recommendation by a vote of 8 to 4. The committee record shows the motion was made by Representative Latta and seconded by Representative Corolla.