In reviewing the history of educational finances in New Mexico from 1850 to the present, the evolution of the state's financing program and the reasons for its unique separation of educational finances from educational programs is explored. The state's rational, forward-looking approach to public education is attributed to federal neglect when New Mexico was still a territory and to the individualistic character of the state's inhabitants. The present equalization funding formula was legislated in 1974. Under this plan, the state distributes its funds to districts that cannot raise enough in local revenue to meet the state's funding level. The equalization funding formula insures adequate funding for special education; consequently, the state has refused federal funds available under P.L. 94-142. (Author/WD)