A second high-ranking official has sued the New Mexico Early Childhood Education and Care Department, alleging she was fired after raising concerns about overspending related to the state’s fledgling universal childcare program.
Former budget director Kimberly Gonzales’ lawsuit, filed in state First Judicial District Court in Santa Fe on Tuesday, comes on the heels of a suit filed on July 29 by Carmel Pacheco-Aragon, the agency’s chief financial officer. Pacheco-Aragon’s suit accuses the state of making moves to fire her after she raised concerns about an $83 million deficit related to the state’s rollout of universal childcare.
In her lawsuit, Gonzales estimated the department entered the current fiscal year with a nearly $260 million budget deficit, much of which was attributed to the universal childcare program launched last year.
“Two of the highest-ranking financial officers in that agency, beginning at the end of last year and continuing until they were shown the door, were raising the alarm both inside and outside of the agency about overspending,” attorney Jacob Candelaria, who is representing both women, said in an interview. “The agency now has a very clear, in our view, pattern of getting rid of people who dare to air out the agency’s wrongdoing to people outside of the top executives.”
Deputy Secretary for Policy and Programs Kendal Chavez wrote in an email the agency has not and will never retaliate against employees for coming forward with information, questions or concerns. The department has the money needed to pay for the program, she wrote, adding any additional needed funding would be addressed in the 2027 legislative session.
Chavez also took aim at Candelaria, who represented onetime Republican gubernatorial candidate Duke Rodriguez and others in filing a lawsuit dismissed by the state Supreme Court last month challenging the rules underpinning the universal childcare program. She argued the new suits represent “yet another manufactured and unfounded lawsuit by Jacob Candelaria, who is clearly dedicated to taking down Universal Child Care and harming New Mexico’s families and children at all costs.”
“These latest allegations are false, just like those contained in his now-dismissed lawsuit that challenged the constitutionality of Universal Child Care,” she wrote.
‘Irregularities’ alleged
Gonzales worked as the department’s budget director for about eight months, according to the lawsuit, starting work just days before Gov. Michelle Lujan Grisham’s administration rolled out universal childcare.
Soon after the program launched, Gonzales started identifying “irregularities” in its payment system, such as double payments and payments delivered before childcare services were provided. The complaint alleges department leaders failed to address these problems.
Ahead of the start of the legislative session in January, Gonzales identified a projected deficit of between $43 million and $46 million in the universal childcare program, according to the complaint. When lawmakers ultimately did not include a $60 million supplemental appropriation for the program, Gonzales and Pacheco-Aragon told Cabinet Secretary Elizabeth Groginsky she needed to request a special session to adequately fund universal childcare and prevent a budget deficit, the lawsuit states.
Department leaders instead relied on transfers of funding from other programs to cover universal childcare, the suit claims.
In an effort to correct the record and draw an accurate amount of money from the state’s early childhood trust fund, Gonzales sent a June email to officials with the State Investment Council and the state Department of Finance Administration breaking down the agency’s trust fund revenue and funding streams through transfers, the lawsuit states. That led to the State Investment Council indicating to the early childhood department it would release roughly $155 million less than originally expected, the complaint adds.
In all, the lawsuit alleges the early childhood department entered the current 2027 fiscal year with an estimated deficit of $258 million, including the missing $155 million from the trust fund and an additional $83 million for universal childcare payments for the current fiscal year. The lawsuit acknowledges Gonzales does not know the exact amount of the shortfall.
Soon afterward her email, the lawsuit alleges the department launched an internal investigation into Gonzales; she says she was not told what the allegations against her were.
On July 13, shortly before she was scheduled to meet with investigators, the agency placed her on administrative leave, the lawsuit states. Just over a week later, she was fired, receiving a letter stating she had engaged in “inappropriate behavior and unprofessional conduct.”
State denies retaliation
Pacheco-Aragon is currently on administrative leave.
The department has denied retaliation in both cases and has said Pacheco-Aragon’s being on leave has nothing to do with her allegations. In a statement released Monday, the agency said she is “currently on administrative leave due to an HR investigation of misconduct.”
Candelaria said that statement was the first time Pacheco-Aragon was told her administrative leave was potentially due to misconduct, adding he plans to update that lawsuit to reflect the state’s failure to articulate the allegations against her.
“The agency, in their retaliatory zeal, denied our client the rights afforded to all classified state employees,” he said. “Which is you’re entitled to receive what’s called a ‘notice of contemplated action’ in writing from the agency that tells you what you allegedly did wrong, what policies or rules or laws you violated … and what the agency intends to do about it. This agency afforded my client none of those rights.”
