New Mexico’s universal child care program reshapes the industry, drawing private investment and debate on profits
State funding is expanding access and raising wages, but critics warn profit motives could threaten quality as investor interest grows nationwide.
New Mexico’s universal child care program is reshaping the economics of running a center, expanding access, boosting wages and drawing investor interest as it changes how providers price slots and recruit staff.
In Albuquerque, Crystal Romero and her husband operate Early Learning Academy, a network that now includes four centers in the metro area and is slated to add two more in 2026. The business line spans roughly 165 employees serving about 700 children, with plans to grow further as the state’s funding model evolves. In October, Romero announced a $5-an-hour raise for every staff member, a move she said was enabled by the state’s shift from American Rescue Plan dollars to higher child care subsidies and, more recently, the universal program.
The arrangement is unusually generous by industry standards because the subsidy pays for full-time child care even if children only show up for three or four days a week. That feature lets providers enroll more students without expanding staff ratios, provided attendance fluctuates within the state’s guidelines. Romero tracks average daily attendance to optimize enrollment, keeps floaters on hand to cover breaks, and aims to maintain the teacher-to-child ratios mandated by state rules. The operation also invests in perks that keep staff engaged, including lounges with free snacks and comfortable seating.
The Romero family’s community programs are part of a broader strategy. Early Learning Academy has hosted events where every child receives a brand-new pair of shoes, often sneakers like Nike or Air Jordans; at this location, the program distributed hundreds of pairs. The centers also fund community initiatives, such as sponsoring a Make-A-Wish trip for a local child with a brain tumor, paying about $8,500 to send the family to Disney World. These efforts illustrate how state funding can support not only salaries but also broader quality and stability within the workforce.
Across the country, the flow of public money into child care is changing who participates in the market. Vermont’s Act 76 expanded the number of families eligible for subsidies and raised provider rates, while Massachusetts has set aside about $475 million per year for grants to child care providers. Connecticut created the state’s Early Childhood Education Endowment to sustain funding at up to $300 million annually, drawing on budget surpluses with the option to add funds in subsequent years. Elliot Haspel, a senior fellow at Capita and a fellow at New America, said the increased funding can attract new players, including private investors, but also raises policy questions about balancing profit with quality.
As more public money becomes available in child care, it attracts different kinds of players, Haspel said. “It does pose a policy challenge — how does [providing child care] square with profit-seeking?” The funding shift has helped some center operators raise wages and expand, but watchdogs caution that profit-driven growth can threaten quality and stability if not carefully guarded.
Private equity involvement in child care has grown alongside public investment. Industry data show investor-backed chains control roughly 10 to 12 percent of the licensed market, and these groups often target higher-income families to justify higher fees. While profit is not inherently opposed to high-quality care—and some operators use excess revenue to expand staff and spaces—critics warn that aggressive enrollment and cost-cutting can erode program quality. The Open Markets Institute has highlighted cases where private-equity-backed centers were reorganized to maximize returns, including moves to consolidate ownership, extract profits from real estate, or reduce staff hours and available slots.
The rise of investor-backed providers has coincided with greater interest from the educational technology sector. EdTech companies—some backed by venture funds—have begun offering bookkeeping software, curriculum tools and even targeted marketing to connect families with openings. Elizabeth Leiwant, vice president of public policy and research at Neighborhood Villages in Massachusetts, notes that EdTech firms are responding to providers’ greater discretionary spending as subsidies rise, even as many operators enter the field with limited business training. The new market has drawn attention from venture capitalists and technology firms seeking to monetize the administration and delivery of early education, a shift not as pronounced before the influx of government funds.
The broader question — if child care becomes more profitable, can it still be quality care? A large share of providers still earn slim profits and pay workers low wages, with the average pay in the industry often around $15 an hour. Romero says her model demonstrates that quality care and competitive compensation can go hand in hand, arguing that treating staff well is foundational to serving families effectively. “Staff come first before our families, because if they are happy and treated right and feel safe and secure, that is going to be received with our children and families when they enroll,” she said. “If not, it leads to burnout.”
Advocates say the path forward lies in guardrails that preserve care quality while allowing providers to reap the benefits of a more stable, professional workforce. In Massachusetts, for example, permanent grants came with restrictions on large for-profit firms, including a cap on the share of grant funds that such providers can receive, requirements to devote a portion of funds to staff salaries and benefits, and a mandate that subsidy recipients enroll at every program site. The rules apply to providers with 10 or more locations, regardless of whether they are investor-backed or privately owned, emphasizing quality and access over scale alone.
As states continue to chart the balance between public investment, private capital, and care quality, Romero remains focused on people. She will measure success not only by enrollment growth and payroll costs but by the stability and well-being of the children and families she serves. “If the staff are not happy, the families will reap the consequences, and I can’t have it.” The industry-wide shift remains a work in progress, with advocates urging guardrails that ensure profits do not come at the expense of children, families and educators, even as the economy of child care continues to evolve in the United States.