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New Mexico promised its students free college. Then oil prices tanked.

New Mexico promised its students free college. Then oil prices tanked.

by Ben Kesslen | NBC News  |  Published on November 30, 2020

The New Mexico governor’s office made sure to alert The New York Times before the big announcement last year that a public college education would soon be free for all residents.

Gov. Michelle Lujan Grisham said New Mexico, notoriously poor and almost last in state education rankings, would be the first state to take the step, thanks to a blue wave that swept the state in 2018, when Democrats elected Lujan Grisham after eight years of a Republican governor, flipped the state’s sole Republican seat in Congress from red to blue and strengthened majorities in the state Legislature.

“This program is an absolute game changer for New Mexico,” Lujan Grisham said at the time. “In the long run, we’ll see improved economic growth, improved outcomes for New Mexican workers and families and parents.”

In New Mexico, the median household income is around $12,000 less than the national average, and the poverty rate hovers near 18 percent. Lujan Grisham, who is known to have national political ambitions, went on a National Public Radio show to talk about the idea, which she said would boost not only the state’s economy but also its reputation and students’ futures.

But the plan, to be funded by revenue earned from fracking in the Permian Basin, never materialized. Grisham faced opposition in the Legislature, even from members of her own party, and from some college presidents skeptical about how much it would help low-income students.

Instead, the state implemented a massively scaled-down version of the idea during the 2020 legislative session that provides tuition assistance for residents enrolled in two-year colleges.

Students like Emily Jaramillo, 18, who was a high school senior when the free college plan was announced, suddenly felt like they were out of options. Jaramillo, a Pueblo woman, grew up on a reservation and was relying on a tuition-free education to become the first person in her family to attend college.

“The plan meant kids, especially from the reservation, would be able to get their education on their homeland,” she said. “A lot of us got our hopes up, and it all went down the drain.”

When the plan was first announced, New Mexico’s oil industry was booming, accounting for almost 40 percent of the state’s general fund revenue in 2019. Suddenly, New Mexico could afford to invest in education, child care, highways and health care.

“Our fiscal house is in order. We’re saving money, ” Lujan Grisham said last year. “We do have an oil and gas boom.”

The free tuition plan was supported by the New Mexico Oil & Gas Association, whose leadership thought it was exactly the kind of big thinking the state needed. But it also had its detractors.

“We are in the biggest boom cycle ever, but what’s it going to be like when we are in a bust cycle?” state Sen. Antoinette Sedillo Lopez, a Democrat, said in October 2019. But, she said recently, she “didn’t anticipate the source of revenue would almost completely tank” as soon as it did.

After the coronavirus pandemic devastated international oil markets in April and prices tanked, Lujan Grisham could no longer pull cash out of the Permian Basin, an oil field in west Texas and southeastern New Mexico that had become the country’s top-producing oil field through new horizontal fracking technology. As the economy slumped, the state was forced to cut its budget and to reconsider ambitious and expensive legislation.

Covid-19 also led to less revenue and more expenses. In May, citing the state’s “high degree of sensitivity to changes in the oil and natural gas markets,” a group of state economists wrote in a memo that the pandemic could cost New Mexico from $2.1 billion to $3.9 billion in anticipated revenue over the next 12 months — a massive loss considering that the entire state budget for the 2021 fiscal year totals $7.22 billion.

“I’m not going around saying I told you so,” said Sedillo Lopez, who sponsored an unsuccessful bill last year calling for a fracking moratorium for environmental reasons. “I’m very sad about it. Our state was on a collision course with itself.”

Sedillo Lopez, who called Lujan Grisham an “excellent governor,” said she hopes the moment serves as a wake-up call and forces the state to reassess its relationship with oil and gas.

“What happened is what we feared would happen,” said Kyle Tisdel, a lawyer based in Taos with the Western Environmental Law Center. “When New Mexico took such substantial hits with the price decline and the corresponding loss of royalties, education was the first thing to go.”

Jonathon Juarez-Alonzo, 18, a freshman at the University of New Mexico, said he’s grateful that he didn’t fall victim to the state’s love affair with oil. Juarez-Alonzo, who is involved in local climate activism, described the free college plan as a “hostage situation,” in which his future was being funded by the very thing he thought would kill it.

He said he’s fortunate that his family is in a position to help him with his $20,000-a-year tuition.

“I wasn’t trying to bank on the fact that our governor had promised free college, because I didn’t think the money was always going to be there,” he said. “It was one of the most attention-grabbing topics, but lo and behold, it didn’t pass through our governor’s Democrat-controlled legislature.”

Lujan Grisham’s office said it was too busy handling the Covid-19 crisis to comment on whether she still plans to pursue the free college plan. Her office deferred questions to the state Department of Higher Education, which said in a statement that “investment in higher education continues to be a priority” and that increasing revenue from sources other than the oil and gas industry is “more important than ever.”

But the state has said that to diversify the economy, it needs to invest in education. To invest in education, it needs revenue. And to get revenue, New Mexico relies heavily on oil.

“I fully support diversifying our economy and seeing our state have more than one thriving private-sector industry that’s generating revenue and jobs,” said Ryan Flynn, executive director of the New Mexico Oil & Gas Association.

Even now, when times are tough for the industry, underground oil wells are keeping the state budget afloat.

Jaramillo had hoped to study education at the University of New Mexico and use her degree on her reservation, Pueblo of Isleta, teaching Indigenous studies to her community. Instead, she took a job as an essential worker at a pharmacy after she graduated from high school in May.

While teaching remains her goal, she’s not sure how she’ll reach it. She said the governor’s fanfare around the proposal frustrated her.

“I don’t think it’s right for someone in a place of power to get students’ hopes up like that,” Jaramillo said.

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