New Mexico's universal child care program reshapes the industry, boosts wages and attracts investors

New Mexico’s universal child care program, funded through American Rescue Plan dollars and later expanded subsidies, is transforming the economics of running centers. In Albuquerque, Crystal Romero’s Early Learning Academy has grown to four centers and aims to add two more in 2026. The business employs about 165 workers and serves roughly 700 children, and Romero says it is the state’s highest-paying child care program, offering full benefits to staff. In October, she announced a $5-an-hour raise for every employee, a milestone made possible by the evolving funding mix.

The subsidy design in New Mexico pays for full-time care even if a child attends only three or four days per week. Romero uses attendance data to enroll more students while keeping staffing levels and compliance with teacher-to-child ratios. Her centers keep floaters on hand so staff can take breaks, ensuring coverage when numbers fluctuate. The program has also allowed ELA to expand its community outreach, including an annual event where every child receives a new pair of shoes, and it supported a Make-A-Wish trip for a local family. The overall workplace environment—lounge areas with snacks and comfortable seating—reflects the broader shift toward more generous staff compensation and benefits as state funding expands.

Across the United States, more states are directing money into child care, expanding subsidy eligibility and boosting provider rates. Vermont's Act 76 widened family eligibility and raised subsidy rates; Massachusetts has set aside about $475 million annually for grants to providers; Connecticut established an Early Childhood Education Endowment funded by surplus, with options to add funds each year. As public investment grows, policy observers warn that attracting investors and private firms must be balanced with safeguarding quality. A senior fellow at Capita, which studies early education systems, says the funding surge could draw a broader set of players into the market, but poses the challenge of aligning profits with quality care.

The influx of capital, including private equity, has grown to represent a notable portion of the licensed market, with investor-backed chains accounting for roughly 10% to 12% of providers. These groups often target higher-income families to sustain higher fees. Critics from watchdog groups point to risks: rapid expansion can come at the expense of stability and quality when cost-cutting or portfolio strategies are prioritized. A 2022 New York Times review described investor-backed chains publicly supporting child care provisions while privately voicing concerns about subsidies that would reduce profitability. Separately, education-technology firms have expanded into the space as providers look for tools to manage operations and guide classrooms.

Some states are trying to police behavior with guardrails. In Massachusetts, permanent grant funding for large for-profit providers comes with caps on how much they can receive, mandates to spend a minimum share on staff wages and benefits, and requirements to enroll a subsidized child at every program site for providers with multiple locations; nonprofit providers like the YMCA are exempt. Advocates say the goal is to let providers earn a living while prioritizing program quality and access.

Supporters of New Mexico’s approach say the improved economics help retain and attract staff, which is critical in a field with traditionally low wages. Romero says the key is placing staff welfare at the forefront, arguing that happy, secure workers translate into stable classrooms and positive outcomes for children. Critics, however, say that more funding must be paired with strong oversight to prevent profit-seeking from eroding quality. The debate over how to balance public investment, private capital, and the goal of high-quality care is likely to shape policy discussions in statehouses and at the federal level in the coming years.

Romero’s experience illustrates how policy choices at the state level can reshape the economics of child care and influence the industry’s future. The Albuquerque operator has used the expanded funding to grow, improve pay and benefits, and deepen community ties, while remaining focused on delivering quality care. As policymakers watch results from New Mexico and other states, the question remains: can a profit-driven model in child care coexist with universal access and high standards, and if so, under what guardrails? Advocates say the answer lies in continuing to expand funding alongside safeguards that protect workers and children alike.