Oil and gas fuel free child care in New Mexico
New Mexico is setting a national precedent. Starting Nov. 1, it will be the first state in the U.S. to provide free child care for all families.
All families in New Mexico, regardless of income, will be able to use the state’s child care assistance program with copayments waived starting in a couple of weeks. The big question following Gov. Michelle Lujan Grisham’s Sept. 8 announcement is how the state plans to cover the cost.
“Child care is essential to family stability, workforce participation, and New Mexico’s future prosperity,” said Lujan Grisham.
The plan has been in development since 2019, when the New Mexico Legislature created the Early Childhood Education and Care Department. The governor and lawmakers initially focused on expanding universal child care to families at or below 400% of the federal poverty level.
How is New Mexico footing the bill?
New Mexico is funding its universal child care expansion largely through two special state investment funds built on oil and natural gas revenue. The biggest is the Early Childhood Trust Fund, created in 2020 with a $300 million endowment. Thanks to a surge in oil and gas production, the fund has grown dramatically and is now worth billions. Money from this fund helps cover child care subsidies, provider pay incentives, facility expansion and other early childhood education costs.
The second source is the Land Grant Permanent Fund, a long-standing reserve supported by income from oil, gas and mineral rights. In 2022, voters approved a constitutional change allowing a portion of its annual earnings to go toward early childhood programs, including child care. This provides a steady stream of funding to keep the program running, although state leaders say they will need additional legislative support in future budgets to meet the full cost of expanding access to every family.
New Mexico ranks last in child well-being
The 2025 Kids Count Data Book from the Annie E. Casey Foundation ranks New Mexico last in the nation for child well-being. The foundation notes that a child’s opportunities are shaped not just by family or community, but also by the state in which they grow up. According to the report, roughly 112,000 children in New Mexico live in poverty.
New Mexico’s real median household income rose to about $64,140 in 2024, a modest gain over previous years, but that still places many families one paycheck away from financial stress.
For many families, child care is a major expense. In the U.S., full-day care for one child can cost between $6,500 and $15,600 a year, or 8.9% to 16% of median income. Part-day programs for school-aged children still run up to $9,200 annually. By comparison, median rent in 2022 was about $15,200. New Mexico’s program could save parents roughly $12,000 per child each year, significantly easing that financial strain.
To meet the demand, the state is putting $12.7 million into a loan fund for child care centers, with another $20 million requested for 2027. Expansion will focus on infants, toddlers, children with special needs and low-income families.
Officials are also raising provider reimbursement rates, adding incentives for programs that pay staff at least $18 an hour and offer longer hours of care. An estimated 5,000 more early childhood workers will be needed to make the system fully universal.
Expanding access, facing challenges
Over the past 15 years, New Mexico’s investment in early childhood programs has grown dramatically, from less than $200 million in 2012 to nearly $1 billion in fiscal year 2026. Most of that money goes to child care assistance and prekindergarten, allowing thousands more children to enroll.
Pre-K participation has grown nearly tenfold since the program began, and child care assistance now supports almost 27,000 children. Today, funding levels are high enough to give nearly all low-income three- and four-year-olds access to early learning. Still, the Legislative Finance Committee points out some challenges.
Rural districts lag in pre-K access, and child care assistance doesn’t show the same impact on school readiness as pre-K. Expanding eligibility to higher-income families also risks squeezing out those with the greatest need. To address these issues, state officials are studying where child care deserts remain and weighing how to balance growth with quality and equity.
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Ella Rae Greene, Editor In Chief
