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New Mexico education officials say they are relieved to see the nine-year legal battle over federal dollars end, with the U.S. Supreme Court backing the state's school-funding formula.

"We do have one of the most equitable funding formulas in the country," state Education Secretary Veronica Garcia said Tuesday. "It's a tremendous relief to have this issue put to rest."

The U.S. Supreme Court earlier Tuesday ruled against the Zuni and Gallup-McKinley County school districts, which had claimed the U.S. Department of Education unfairly deprived them of $20 million a year for their predominantly American Indian students.

The court, in a 5-4 decision, rejected the northwestern New Mexico districts' arguments that federal education officials deliberately shortchanged them by using the wrong public school funding formula.

The Zuni district, on Zuni Pueblo, and the adjacent Gallup-McKinley County district, which includes a large amount of Navajo land, argued that the federal government failed to follow a funding formula that provides aid for districts in which there is a large federal presence, such as a military base or Indian reservation, that makes it difficult to raise local tax dollars.

The state of New Mexico is allowed to take the federal money and redistribute it through an equalization formula.

Zuni sued the state in 1998 in an attempt to keep the federal money. The Gallup district later joined the lawsuit.

The federal government contended the two districts wanted the U.S. Department of Education to use a formula that would produce funding inequity among states.

New Mexico and 54 of its 89 school districts opposed the lawsuit, contending the adjustment the districts sought would disrupt funding equity statewide.

The 41 public schools in the two districts lie deep in Indian Country. More than 80 percent of students in the Gallup-McKinley district and all the students in the Zuni district are American Indian.

The districts said they needed money to more quickly repair or replace crumbling buildings, to pay teachers a premium to live and work in remote areas and to provide additional academic programs their students need.

Garcia recognized that the Zuni Pueblo and the Gallup-McKinley school districts would be disappointed with the decision.

But in New Mexico, the federal funding has been distributed equally across the state, and no district has been allowed to keep the funds it generated, Garcia said.

"It's in the best interest of all children in New Mexico to continue with an equitable formula," she said.

Rep. Rick Miera, an Albuquerque Democrat who leads the House Education Committee, said while the funding formula has been validated, small school districts like Zuni "need more money flowing to them to meet their needs."

He said the Legislature plans to review the distribution of funds so smaller districts will benefit. "We will be changing the way we flow the money to them," Miera said.

Garcia said the nine-year legal battle was costly. A Washington, D.C., firm was hired to represent the state. Legal fees paid to the firm Brustein and Manasevit since 2004 were estimated at $172,000.

"It was a lot of time, energy and resources that could better be put to education," Garcia said.

In a separate agreement with the Zuni Pueblo over capital funding for school buildings, the state has ranked all schools statewide based on adequacy standards so that the buildings with the greatest needs are repaired or replaced before others are built.

"All districts are ranked in order of need," Garcia said. "Our progress is being reviewed in state District Court by a special master."

The Associated Press contributed to this story