Lawmakers express budgetary unease over universal child care initiative

SANTA FE — The price tag of a universal child care program launched this fall by Gov. Michelle Lujan Grisham’s administration drew pointed questions this week from legislators, who also expressed misgivings about the initiative’s rollout.

Early Childhood Education and Care Secretary Elizabeth Groginsky disputed some legislative cost estimates for the program, while defending the department’s request for $160 million in additional funding to run the universal child care initiative in the coming year. That would bring total state child care assistance spending to roughly $600 million per year.

“Part of the promise of universal child care is that families across the income spectrum understand that child care assistance is for everyone,” Groginsky told members of the Legislative Finance Committee.

But lawmakers took issue with the governor announcing the initiative, which took effect Nov. 1, before securing the long-term funding to keep it in place. The announcement made New Mexico the first state to offer state-subsidized child care for families, regardless of income levels.

Sen. George Muñoz, D-Gallup, the LFC’s vice chairman, asked Groginsky during Tuesday’s hearing which other state agencies should face cuts during the 30-day legislative session that starts next month in order to accommodate the early childhood department’s budget request.

“I agree with the program, but I don’t agree with how the governor did it,” said Muñoz, who also told Groginsky she was advocating for “big government.”

Several other legislators, including Rep. Jackie Chatfield, R-Mosquero, also said they were caught off-guard by the universal child care initiative announcement, which drew national attention.

“Not only was it offensive to me, but to a lot of other legislators I’ve talked to,” Chatfield said.

The legislative pushback comes as lawmakers are dealing with pared-back state revenue estimates.

Specifically, new revenue projections released this week estimate lawmakers will have roughly $105 million in “new” money available to spend in the coming year. That’s down from $892 million in new money during this year’s 60-day legislative session.

In addition, a state early childhood trust fund created in 2020 will have an estimated balance of nearly $10.5 billion at the end of the current budget year, but the distribution levels from that fund will not be enough to cover the projected cost of the child care initiative.

Revenue forecast clouds budget request

Given the state’s revenue slowdown, several legislators questioned the wisdom of the state removing previous income limits for receiving state-subsidized child care.

Prior to November, state-paid child care was only available to families making less than 400% of the federal poverty level, or $128,600 for a family of four.

Rep. Meredith Dixon, D-Albuquerque, said under the new system, the state has already essentially given tax rebates to roughly 540 families making more than $321,000 in annual income.

“I 100% don’t agree with this approach,” Dixon said during Tuesday’s hearing at the state Capitol.

In addition, an LFC report released this week found state spending on child care assistance has already more than tripled over the last four years — from about $150 million in 2022 to roughly $440 million as of this year.

The report also projected the cost increase posed by the universal child care initiative could ultimately end up being about $400 million per year — or more than double the ECECD’s request of $160 million.

Previous LFC research has found that state-provided child care has led to increased wages for parents, but has not found it improves educational outcomes for children.

Rep. Rebecca Dow, R-Truth or Consequences, said the implementation of universal child care could end up crowding out lower-income families, as children from higher-income families take more of the available slots.

“I think this is going to squeeze out the families it’s intended to benefit the most,” said Dow, who previously founded a nonprofit child care center.

The case for funding universal child care

Groginsky, who is the first secretary of the Early Childhood Education and Care Department after it was created in 2020, said the agency is committed to ensuring low-income New Mexico families have access to child care.

She also said the increased spending on child care assistance would benefit the state’s economy, in part by making the state more attractive for employers and employees alike.

“Yes there is a (budgetary) increase, but the results are incredibly promising,” said Groginsky, who said her agency has received 114 applications from potential new providers since the universal child care initiative was announced.

The final funding levels for the state’s child care assistance program will be determined by lawmakers during the 30-day session that begins Jan. 20. Both the governor and the Legislature will release final budget recommendations before the session starts.