The New Mexico Model

New Mexico just began offering free universal child care at the end of 2025. I can summarize the program in just a few parts.

1. New Mexico has a large state fund made from payments on natural resource extraction. Fossil fuel companies contribute to it, and the state uses it to fund their education system. The fund itself is larger than the New Mexico state budget each year, and accumulates returns as an investment fund does. The universal childcare program is paid for with these returns instead of the principle, so the fund continues growing at the same time.

2. New Mexico centralized childcare programs under the Early Childhood Education and Care Department (ECECD) so that all of the programs in the state were searchable and subject to a single regulatory overseer. Childcare providers get licensed and listed, and parents can sign up at no-cost for providers in their area.

3. Teachers and childcare providers organized and pushed for this program's creation at the same time they pushed for increased wages. The state implemented a starting wage at $18/hour for licensed care providers and is seeking to recruit several thousand more licensed providers who will be paid by the state instead of by families. The estimated savings for families is an average of $12,000/year, so families save money while care providers make more.

Only a few states have these natural resource wealth funds like New Mexico, and New Mexico did not use their own fund at first either. They created the Early Childhood Trust Fund using covid-19 relief funding for early expansion of the program in 2021 so they could prove the concept and convince voters to amend their constitution to continue funding it in 2022. Since we're talking about trust funds, the federal government can invest money and it will continue generating returns over time instead of being wasted or lost. The federal government should establish a national early childhood trust fund in the same manner as the highway trust fund and use it to help support childcare for young children.

The costs by state program range from about $1 billion in New Mexico to an additional $5 billion in a state like New York. Wealthier states wouldn't have an issue with these costs through modest tax changes (New York's annual budget is $250 billion) but poorer, less populated states without natural resource funds would struggle (South Dakota's annual budget is just $7.3 billion). A national funding mechanism would be necessary to make the program implementable in all 50 states. After that, you could still implement the rest of the program from the state level.