Barring improved conditions for children, will it lead to an increase in women in the workforce? So far, that is hard to see as New Mexico’s already dismal workforce participation rate has actually dropped from 57.6% in November 2026 when free childcare started, to 56.9% as of June 2026.
Minnesota may have received the biggest national headlines with its “learning centers,” but, unlike New Mexico’s childcare program, Minnesota’s program is not free to the user. It is also limited to low-income families and only 22,000 children participate. New Mexico’s program is free to all participants, and it already serves 33,000 children before it became universal.
From an urban-policy perspective, California’s similar experiment with free transitional kindergarten (TK), which often serves as a replacement for childcare, might be instructive. “Many advocates hoped the move would ease childcare shortages and close learning gaps between rich and poor,” according to a 2025 article in the Hechinger Report. Instead, a UC Berkeley study looking at results in Los Angeles found that more than 150 private childcare centers subsequently shuttered.
These mostly served lower-income residents, whereas the “biggest beneficiaries” of the publicly funded program were children in the city’s wealthiest neighborhoods. The best theory is the new program “siphoned 4-year-olds away from community childcare centers and private preschools” and existing “centers lost revenue when children left, and it wasn’t easy to pivot to serving younger toddlers or infants,” per the article. The taxpayer-funded program destroyed the economics of childcare centers, thus leaving the urban poor with fewer options.
Broadly speaking, these costly state-funded programs put an enormous strain on the state’s budget, thus precluding lawmakers from passing tax cuts and economic reforms that are geared towards growing and diversifying New Mexico’s economy and funding basic services. Between Nov. 1, 2025 and the end of New Mexico’s fiscal year in July, the program was running a deficit of approximately $83 million.
Two whistleblowers have come forward claiming they were retaliated against for calling out these deficits. The Early Childhood Education and Care Department’s chief financial officer, Carmel Pacheco-Aragon, filed suit, alleging she was placed on administrative leave after reporting on the shortfall and warning about improper fund transfers without legislative approval.
The department’s former budget director, Kimberly Gonzales, filed a subsequent lawsuit claiming she was wrongfully terminated for publicly reporting that the department as a whole was facing a $258 million shortfall, driven by the state’s new universal childcare program. Nevertheless, in July New Mexico’s Supreme Court ratified the program without so much as a hearing.
While other blue states will undoubtedly look at the idea, I don’t expect many of them to follow through with it due to the steep cost. Will New Mexico’s program be a beacon for other states to shoot for in the future or yet another costly disaster by one of the most poorly run states in America? My money is on the latter, but only time will tell.
Paul Gessing is president of the Rio Grande Foundation, an Albuquerque-based think tank focused on the importance of individual freedom, limited government and economic opportunity.
