Federal education officials have granted the state of New Mexico a waiver for a 2010 violation of federal rules on spending for special education, but refused to grant a waiver for 2011.
The Santa Fe New Mexican reports that the federal decisions put the state at risk of losing $34 million in federal funds.
Federal officials also are also questioning spending on special education for fiscal years 2012 and 2013, which ends June 30.
The amount at risk for 2012 is about $26.4 million.
New Mexico Public Education Department Secretary-designate Hanna Skandera says the state will seek other avenues to appeal the decision.