New Mexico Child Care Fund Faces 2048 Shortfall
Families relying on universal childcare should watch state budget decisions that will determine how long the trust fund can pay for the program.
Updated on Nov. 1, 2026 in Child Care
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New Mexico's chief legislative economist told lawmakers the Early Childhood Education and Care Fund may be unable to support universal childcare by 2048. Lawmakers diverted $1.9 billion of fund deposits to Medicaid and Behavioral Health trust funds in the 2025 session, pushing the fund toward insolvency.
Why it matters
Universal child care in New Mexico is funded by a trust fund that has grown to $11 billion from surplus oil and gas tax revenues, but payouts for the program have exceeded its returns. Families who rely on the program face a long-term funding risk that lawmakers must address by finding other revenue sources or slowing withdrawals.
New Mexico's universal child care program draws up to $700 million from the fund, which grew from about $300 million in 2020 to $11 billion. In the 2025 session, $1.9 billion in fund deposits was redirected to the Medicaid and Behavioral Health trust funds.
The players
Michelle Lujan Grisham
Governor of New Mexico who signed the state's universal child care program into law.
Early Childhood Education and Care Department (ECECD)
New Mexico state agency that runs the universal childcare program and its family satisfaction surveys.
The details
The fund's payouts for universal childcare have exceeded its returns, which is what pushes it toward insolvency. Its balance is projected to shrink at an exponential rate by 2031, and by 2048 it is projected to be empty and unable to support the program. Lawmakers must find other revenue sources and slow withdrawals to restore the fund's solvency.
Timeline
2020: Early Childhood Education and Care Fund created with $300 million.
2025 legislative session: Lawmakers diverted $1.9 billion from the fund.
Earlier in 2026: Gov. Michelle Lujan Grisham signed universal child care into law.
2031: Fund balance projected to begin shrinking at an exponential rate.
2048: Fund projected to be empty and unable to support universal childcare.
The Home Front
The universal childcare program is funded from New Mexico's oil and gas tax surplus, a revenue base tied to commodity prices rather than a fixed budget line. The 2020 fund creation and its 2025 diversion to Medicaid and Behavioral Health trust funds show how state trust funds can be drawn on for competing needs.
If your family uses or plans to use New Mexico's universal child care program, keep track of program updates from the state's early childhood agency as lawmakers decide on new revenue. Consider building a backup childcare plan now, since future funding levels are not yet settled.
The takeaway
Universal childcare in New Mexico depends on a fund that is projected to run dry by 2048 without new revenue or slower withdrawals. Families should watch for state budget decisions that affect program funding and plan childcare arrangements with that uncertainty in mind.
Further reading
For more on how states fund these programs, see Child Care coverage across New Mexico.
Source note: This article includes information reported by The 74.
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