New Mexico's universal child care program reshapes the economics of running centers

New Mexico is tightening the economics of child care through a universal program funded by federal relief dollars and state subsidies, a shift that is enabling higher pay, expanded services, and more ambitious growth plans for providers.

Crystal Romero, who has spent 25 years in the field, described a stark transformation in the industry. “Twenty years ago, I had to furnish classrooms by shopping at thrift stores and yard sales, sanding things myself and repainting them,” she said. Today, Romero and her husband run Early Learning Academy, which operates four centers in the Albuquerque region and is under contract to add two more locations in 2026. With roughly 165 employees and close to 700 children enrolled, Romero says they are the highest-paying child care program in the state, and all staff are eligible for full benefits, including health, vision, dental, and retirement.

In October, Romero announced with staff cheering and shrieks that every employee would receive a $5 per hour raise. This is possible because the state relies on a mix of American Rescue Plan dollars and ongoing subsidies to fund full-time care, even if a child attends only three or four days per week. The subsidy model enables centers to enroll more students without increasing staffing ratios, provided attendance remains within state rules. Romero keeps floaters on hand so that staff can take breaks, ensuring coverage if attendance spikes unexpectedly. As part of its community program, ELA hosts annual events that provide new shoes for every child, a gesture Romero called essential for the families they serve. The West Albuquerque site, which began as Early Learning Academy, has supported hundreds of children with donated sneakers and other outreach efforts, including sponsoring Make-A-Wish trips for local families in need.

The broader trend toward state-funded child care is not unique to New Mexico. Vermont’s Act 76 has widened subsidy eligibility and raised provider rates, while Massachusetts has earmarked about $475 million annually for grants to child care providers. Connecticut has established an Early Childhood Education Endowment to expand access, funded by up to $300 million a year from the state budget’s surplus with room to add funds. Policy experts say such investments attract a wider array of players to the sector, including private equity and educational technology firms, and raise hard questions about how to ensure quality as profitability expands.

“As more public money becomes available in child care, that is going to be what attracts different players,” said Elliot Haspel, a senior fellow at Capita. “It does pose a policy challenge — how does providing child care square with profit-seeking?” The influx of funds has drawn more business interest, enabling providers to increase salaries and benefits and, in some cases, pursue growth through additional centers. Private equity groups have become more visible in the space since the ARP funding helped stabilize the market in 2021 and 2022. Today, investor-backed chains control roughly 10 to 12 percent of the licensed child care market, typically serving higher-income families who can bear higher fees.

Watchdog groups have urged caution. Open Markets Institute has criticized rapid expansion by investor-backed chains, warning that a focus on enrollment and cost-cutting can undermine staff hours and classroom quality. A 2022 New York Times examination of a consortium of investor-backed providers found some groups publically supported subsidies while privately questioning plans that would subsidize tuition for middle- and upper-income families if profits were threatened. Educational technology firms have also moved into the space, pitching products ranging from bookkeeping software to classroom curricula and targeted marketing tools for parents seeking available slots. Proponents say EdTech can help providers manage larger operations and improve outcomes, while critics warn that a focus on technology and scale can risk diluting hands-on, development-focused teaching.

The balance between profit and quality remains at the center of the debate about how public funding reshapes child care. National averages reveal a challenging baseline: most providers still operate on slim margins, workers are often paid near or at minimum wage, and states vary widely in how much they invest in their systems. The new funding models in places like New Mexico have produced tangible results for some operators: higher wages, more comprehensive benefits, and clearer paths to growth. Romero frames this as an opportunity to improve the sector from the inside out, arguing that staff welfare is inseparable from child outcomes.

“Staff come first before our families, because if they are happy and treated right and feel safe and secure, that is going to be reflected in the children and families when they enroll,” she said. “If the staff aren’t happy, the families will reap the consequences, and I can’t have it.” The path forward, she adds, includes creating guardrails that protect quality while allowing successful providers to expand and sustain good wages. Massachusetts’ experience—where a permanent grant program includes caps on large for-profit funding and requires a minimum share of funds be spent on staff—offers one model for preserving quality as profitability grows.

This report is based on reporting supported in part by a grant from the Bainum Family Foundation. Vox Media had full discretion over the content of this piece.