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Page 1 | December 9, 2025 Health and Human Services: Childcare Assistance 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 Recurring Childcare Assistance Funding and Slots on Enrollment FY12-FY26 (in millions) Childcare Assistance Funding Childcare Assistance Slots +

Childcare Assistance

Since 2019, New Mexico has significantly expanded eligibility for Childcare Assistance resulting in increased participation in the program. On November 1, 2025, the Early Childhood Education and Care Department (ECECD) expanded eligibility to provide universal childcare to all New Mexicans regardless of income using the department’s existing FY26 budget of $450 million. Currently, the state has 74,011 licensed and registered capacity slots and serves 31,930 children with Childcare Assistance. ECECD has not yet provided a full cost estimate of universal Childcare Assistance, and LFC estimates that if universal assistance include 90 percent uptake of all available slots in the state currently paying privately, the cost of Childcare Assistance to taxpayers would almost double to $849.7 million annually, an almost $400 million increase, or an 88.8 percent increase over FY26 spending. As the state continues to expand eligibility and subsidize more care, policy decisions should continue to be informed by research and best practice. The new policy will increase demand for free childcare from people making more than four times the federal poverty level, or $127,500 for a family of four, that are currently private payers using the existing system. Ultimately, there is no expansion in terms of slots—the state is simply subsidizing the existing private pay market.

This brief is a follow-up to the 2025 Early Childhood Accountability Report and it summarizes previous LFC findings on New Mexico childcare, and provides recent data on enrollment and licensed capacity. This report ultimately finds 1) the cost of providing universal Childcare Assistance is almost double current spending, 2) capacity has increased slightly since 2023, but registered homes, which typically serve poorer families have decreased by 75 percent, 3) demand is growing much quicker than capacity, 4) the University of New Mexico’s Cradle to Career Policy Institute’s findings that the lowest income families continue to experience a decrease in the number and proportion of slots filled is continued, and 5) following expansions, children under the age of 2 face lower enrollment and decreased capacity.

A potential explanation of these emerging trends can be found in economic theories, which predict as demand grows when there is limited capacity, those with more resources find services more easily than those without. Given that the youngest and most socioeconomically disadvantaged families likely have the most to gain from programs like Childcare Assistance, ECECD and the Legislature should consider additional measures to address emerging challenges, including prioritizing slots for lower income families, at-risk families, and children under the age of 2.

Background

New Mexico’s Childcare Assistance Program provides care and supervision of children under the age of 14. The program, originally managed by the BRIEF: HEALTH AND HUMAN SERVICES Prepared by the LFC staff Key Points • Childcare underwent rapid growth due to expanded eligibility. • Research found benefits to childcare participation on income and health but no overall measurable improvement on academic achievement. • Recent data point towards downward trends of enrolled children under 2 and under 100 percent FPL. • Additional efforts may be needed to ensure services to the most at-risk families. Source: LFC Files