New Mexico’s state-subsidized childcare program has the better part of $1 billion over the next several years to fund an expansion to free, universal access.
But the state Early Childhood Education and Care Department started overspending just weeks into the launch of the expansion, analysts from the Legislative Finance Committee said last week.
The overspending, fueled by unforeseen enrollment increases, could continue to snarl budgeting efforts in coming years, committee staff said, and has led to renewed questions about the sustainability of one of New Mexico’s flagship programs for improving the well-being of young children.
“I’m not shocked at all,” said Rep. Mark Duncan, a Kirtland Republican who has frequently questioned the viability of universal childcare. “… We’re supposed to have a data-driven process, and yet we had no earthly idea what this was going to cost us. None.”
Gov. Michelle Lujan Grisham announced she would make New Mexico’s childcare assistance program universally accessible in September 2025. The expansion went into effect Nov. 1, and the state was adamant during the following months the program was funded through the rest of the current fiscal year, so it largely focused its efforts on securing funding for the future.
Those efforts culminated in a deal between lawmakers and Lujan Grisham, known as Senate Bill 241, to allow the state to draw up to $700 million from the Early Childhood Education and Care Fund over five years to cover expansion costs.
But in reality, the agency started overspending almost immediately, with unforeseen costs possibly reaching $50 million, Legislative Finance Committee Director Jon Courtney said in an interview.
“The universal expansion went into place in November, and we started seeing the overspending in December,” committee spokesperson Helen Gaussoin added.
Early childhood department spokesperson Julia Sclafani acknowledged in an email enrollment in universal childcare “scaled faster than initially projected, which affected the monthly scale-up in costs.” However, she maintained the department has not overspent its budget.
“As clarified during the LFC meeting, the department is currently meeting child care expenditures within available revenues,” Sclafani wrote. “… ECECD is working in close coordination with the Department of Finance and Administration and the Legislative Finance Committee to find a solution to ensure there is no shortfall.”
Some 6,069 families who were not previously eligible for childcare had enrolled in the program from Nov. 1 to March 26, Sclafani wrote. Those families made up 44% of all the families who have enrolled since the expansion rolled out.
Overall, close to 18,100 children enrolled in universal childcare from Nov. 1 to March 26, Sclafani wrote.
Staff and lawmakers of the Legislative Finance Committee have not sounded the alarm yet about the issue, reiterating they are working with the state to address the problem before the end of the fiscal year in late June.
“We’ve been in close touch with [ECECD] to address this issue and develop solutions to help the Department prevent significant overspending for FY 26,” Rep. Nathan Small, D-Las Cruces, the LFC chair, said in a statement. “We will continue closely working with [ECECD] to monitor spending and outcomes, as the state begins to fully implement this transformational program in the coming months.”
Courtney said the committee has pitched several ideas to contain the overspending, including prioritizing low-income families, prioritizing funding for infant and toddler slots, and not approving new after-school sites.
He said the early childhood department has been “open and responsive to talking about potential solutions.”
Gaussoin noted the agency used $28.7 million in federal funds to help offset the overspending.
Although universal childcare is funded for the coming fiscal year, Gaussoin said that may not be the case in future years.
“We’re going to have to come up with an additional approach, or an expanded approach,” she said. “The approach that we have planned now will have to be tweaked in some way.”
Sclafani wrote in her email projections examining whether the department will overspend on the program in the future will be finished by Aug. 1.
The overspending has caused some concern about the viability of the program. Sen. Steve Lanier, R-Aztec, said in an interview funding for universal childcare is “not sustainable” at the current rate.
Lanier, who joined gubernatorial candidate Duke Rodriguez in filing a legal challenge last month against the state to undo rules governing the childcare program, said lawmakers should have done more to establish funding streams for the initiative during the legislative session — like implementing copayments for wealthier families right away.
Such a move would ensure more responsible spending for a program Lanier acknowledged fills an important need for New Mexico families.
“It’s our job to be good stewards of money,” Lanier said. “… We need to make sure that that money is spent correctly and that they know what the ask is.”