BY BARBARA PHELPS
Member
Los Alamos County Health Council
On March 10, 2026, Governor Michelle Lujan Grisham signed Senate Bill 241 — the Child Care Assistance Program Act — making New Mexico the first state in the United States to offer free, universal child care. The law codifies into statute a program that had been operating by executive action since November 1, 2025.
The assistance is available to any family in New Mexico who is working or going to school, regardless of income or immigration status.
The legislature may appropriate up to $700 million between 2026 and 2031 from the Early Childhood Education and Care Fund, provided the fund remains above $10 billion. The fund currently stands at approximately $11 billion.
Co-pays are eliminated for virtually all families. Co-pays can only be imposed under specific economic triggers (e.g., inflation spikes or oil revenue declines), and even then only on households earning above $163,920 annually (600% of the federal poverty level), with 90 days’ notice. The FY2027 child care budget is $606 million, a $160 million increase, plus $30 million over three years for an early childhood wage and career ladder.
If demand outpaces available slots, the Early Childhood Education and Care Department (ECED) may institute waitlists, prioritizing children with disabilities, developmental delays, and other vulnerable circumstances.
There are new transparency and reporting requirements; a cost estimation model to inform reimbursement rates; wage incentives for centers paying entry-level staff at least $18/hour and offering 10 hours of care per day.
Statewide, the rollout has hit structural problems immediately.
The state began overspending within weeks of the November 2025 launch. What the Legislative Finance Committee initially estimated as a $50 million overrun has now been quantified at $83 million by the agency’s own CFO.
Total new money projected for FY2027 dropped to $105.7 million — down sharply from an August 2025 forecast of $484.8 million — raising questions about long-term funding adequacy.
As of 2025, there were only enough licensed child care openings for roughly one in three babies under age two statewide. The shortage is even more acute in rural counties where almost no licensed infant care exists.
Los Alamos presents a sharper version of statewide implementation problems.
Structural constraints compound the problem. Los Alamos County currently has only twelve registered child care providers. Most hold a two-star rating under the state’s FOCUS quality system, with just one provider at five stars. Moving up the FOCUS ladder is limited to one star-level increase every twelve to twenty-four months — meaning providers are largely stuck at lower reimbursement tiers even as demand rises.
The underlying structural issue for Los Alamos is a reimbursement structure that does not differentiate by cost of living. Los Alamos is one of New Mexico’s highest-cost counties — approximately 8% above the state average overall and more than 20% above for housing. These elevated costs flow through to child care operations: staff salaries, food delivery, janitorial services, and rent all run higher than elsewhere in New Mexico.
Yet the state’s payment model pays a licensed center in Los Alamos the same rate for a full-time infant as a center in a far less expensive county. As a result, some Los Alamos centers have been effectively subsidizing state-assisted slots out of their own margins — treating subsidized seats as a form of charity — which is not a sustainable business model for providers already operating on thin margins.
Summary
New Mexico’s universal child care law is a genuine policy landmark — the first of its kind in the nation, backed by a dedicated $11 billion trust fund with bipartisan legislative origins, and now legally settled after the NM Supreme Court dismissed the Republican challenge. For the majority of families statewide, especially lower-income families outside high-cost urban areas, the program delivers real, immediate financial relief.
However, implementation is uneven and several structural risks remain. Costs have overrun projections by at least $83 million. Provider capacity still falls short of newly eligible demand. Oil-revenue dependency makes long-term funding uncertain.
For Los Alamos, specifically, the flat statewide reimbursement structure disadvantages a high-cost county. There is a thin provider network (12 licensed centers) that limits capacity. The slow FOCUS quality-rating ladder restricts providers’ access to higher payment tiers. Families using higher-cost private providers may find themselves effectively excluded from the program’s benefits.
The law’s intent remains sound. The gap between intent and implementation — particularly in high-cost, lower-provider-density communities like Los Alamos — is the central challenge going forward for our community.
Barbara Phelps is a long-term resident of Los Alamos. She is a member of the Los Alamos County Health Council as well as a member of the Christus St Vincent Hospital Foundation. Barbara is a retired educator, reading specialist, and special education coordinator with career experience in Indiana, Ohio, Tennessee, and California. She initiated the beginning of the Public Education Foundation in Oak Ridge, TN. She served two non-partisan elected terms on the Oak Ridge, TN Public School Board.