According to the Legislature’s chief economist, New Mexico’s early childhood trust fund is projected to be insufficient to fund the state’s universal childcare program by 2048.
Fund Facing Shortfall
The Early Childhood Education and Care Fund began in 2020 with about $300 million to back the newly created Early Childhood Education and Care Department. Deposits from surplus oil and gas tax revenues have since increased the fund’s balance to $11 billion.
Ismael Torres, the chief New Mexico legislative finance economist, told the interim Economic and Rural Development and Policy Committee that the fund’s health is threatened by two large withdrawals. During the 2025 legislative session, lawmakers diverted $1.9 billion of deposits meant for the fund to support the Medicaid Trust Fund and the Behavioral Health Trust Fund. Then, earlier this year, Gov. Michelle Lujan Grisham signed the state’s universal childcare program into law, which included up to $700 million from the fund.
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Torres said these payouts exceed the fund’s returns and threatened its long-term sustainability. By 2031, he added, the fund’s balance will shrink at an exponential rate and will be empty — and therefore unable to support the universal childcare program — by 2048.
Solutions and Concerns
State Rep. Doreen Gallegos (D-Las Cruces), who co-sponsored the creation of the early childhood trust fund, said lawmakers “are busy patting ourselves on the back” about being the first state in the nation to offer universal childcare, but “for us to be sitting here…looking for solutions for solvency is not good.”
Torres said the way to “course correct” is to “find other sources of revenue than the trust fund” to fund universal childcare, such as recurring dollars from the state’s general fund, and to “slow down the withdrawals, which is the primary method by which you can bring the fund back into solvency.”
Hailey Heinz, the Early Childhood Education and Care Department’s director of policy, research and quality initiatives, said the department is “very focused on ensuring the sustainability” of the universal childcare program. She noted the program is showing positive results for families in New Mexico.
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ECECD’s 2026 Family Engagement and Satisfaction survey shows that 93% of families utilizing New Mexico’s universal childcare policy report a positive impact on their well-being. Survey respondents named direct-cost relief more than any other theme when describing the programs’ impact on their families’ lives.
State Rep. Patricia Roybal Caballero (D-Albuquerque) praised the universal childcare program as a way to “uplift the working poor” and urged lawmakers to be “careful, intentional and implicit” as they approach the next legislative session and work to solve the issue of early childhood fund solvency. Roybal Caballero added that “the rest of the nation is looking to us for all of our successes and our pitfalls and how we’re addressing them.”
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