Senate Finance hears Early Childhood budget request; many increases tied to trust fund bill

The Senate Finance Committee on Thursday heard the Early Childhood Education and Care Department’s budget request and related recommendations from the Legislative Finance Committee (LFC) and the House Appropriations and Finance Committee (HAFC). Agency officials and LFC staff described a package of increases aimed at expanding infant and toddler child care, growing home visiting and early intervention capacity, and advancing workforce pay initiatives — but they said several HAFC increases are contingent on a bill to increase trust fund distributions.

The department’s cabinet secretary, Secretary Graginsky, told the committee that the department’s request centers on three priorities: “we have to build capacity,” improving program quality and “accountability,” adding that the budget request “builds on this great partnership that’s happened over the past five years.”

Why it matters: Committee members pressed officials on whether the state can expand slots and workforce without destabilizing private providers, and whether one-time needs can be covered if the trust fund bill does not pass. Many of the HAFC increases are marked in the agency handout as contingent on House Bill 71, which would accelerate larger annual distributions from the Early Education and Care Trust Fund.

Most significant numbers and contingencies

Kelly Klunt of the Legislative Finance Committee walked the panel through the department’s appropriation tables and said HAFC added multiple increases above the LFC recommendation. Those HAFC additions include a $67,300,000 increase for childcare assistance (an additional $56,100,000 above LFC), $1,500,000 for IT, $5,000,000 for state matching for the Family Infant Toddler program (FIT), $10,000,000 for home visiting, $1,000,000 for child nutrition, $2,500,000 for early educator incentives and $25,000,000 for pre-K expansion. Klunt emphasized that HAFC’s orange-highlighted increases are “contingent on a bill that would increase distribution of the trust fund.” She identified that bill as House Bill 71, which would raise distributions to $500,000,000; she said the HAFC recommendation increases distributions to $400,000,000 while the LFC projection for a FY26 distribution under current statute would be about $289,900,000.

Marybeth Densmore of the Department of Finance and Administration told the committee the agency has a nonrecurring supplemental request of about $7.5 million for the Family Infant Toddler entitlement because the program is projecting roughly a 5% increase in eligible children and the trust fund cannot be used to cover that supplemental in FY25. Densmore also identified an information-technology modernization request: HAFC included $1,000,000 from the trust fund and the agency seeks an additional $3,000,000 to update data systems that track children served.

Officials said HAFC included language directing the additional childcare assistance funding toward expanding infant and toddler slots; Klunt and staff stressed the state has broader coverage for three- and four-year-olds but remains undersupplied for children aged birth through three.

Workforce and pay

The department highlighted two avenues to raise early educator pay. Secretary Graginsky described a $10,000,000 base request for a wage and career ladder pilot and a larger executive special recommendation of about $104,600,000 (part trust fund, part general fund) intended in part to raise a wage floor from $15 to $18 per hour; department staff said roughly $74,000,000 of that larger request would be needed to raise wages from $15 to $18. Marybeth Densmore noted the GROW fund pilot for parity and wage supports exists (three-year, $55,000,000 figure cited for the pilot) but that data on turnover and stability are not yet available.

Department priorities and programs

Secretary Graginsky said the department seeks to expand supply and capacity, improve quality (including redesigning the quality-rating system and using classroom observation tools) and increase accountability for nearly $1 billion in requests. She noted New Mexico is universal for four-year-olds and that the department’s ask would move the state closer to universal coverage for three-year-olds. Officials said home visiting expansion (including a “universal touch” Family Connects model) and the FIT program — which the department said will serve over 17,000 children and is 71% Medicaid-enrolled — are major drivers of the budget.

Tribal coordination and community coalitions

Officials described local early childhood coalitions across the state and a separate tribal advisory coalition. Assistant Secretary Kotilian Sneddy (Native American Early Education and Care) and other staff noted tribal investments and intergovernmental agreements; the department requested additional tribal investment funding in its budget ask.

Other items noted to the committee

• Dolly Parton’s Imagination Library: Secretary Graginsky asked for a supplemental $548,000 to expand the program to full statewide coverage; the department said the program mails a book monthly to registered children from birth to age five and needs an additional $548,000 to reach every county.

• IT modernization: the department asked for additional nonrecurring funds to modernize data systems used for eligibility and program tracking; HAFC included $1,000,000 and the agency seeks $3,000,000 more.

• CARA and home visiting: Senators noted pending legislation moving aspects of CARA (plans of safe care) to the Health Care Authority; committee members asked whether home visiting capacity and Medicaid reimbursement will be sufficient to serve CARA-identified families. Department staff said many home visiting models are Medicaid-reimbursable and that a fiscal-impact analysis is likely to follow if the bill advances.

Committee concerns and next steps

Committee members repeatedly asked whether expanding funded slots and pre-K grants would risk crowding out private or smaller rural providers; department staff said they are conducting a supply-and-demand study with private funding to map licensed providers and child-care “deserts” and will use that analysis to guide awards. Several senators pressed the department on attendance and family engagement as complementary strategies to the department’s investments.

The department and LFC staff told the committee that many HAFC increases are contingent on passage of House Bill 71 and that, absent the bill, the changes marked in the HAFC column would revert to the LFC recommendation. Officials said they will provide further fiscal detail and be available for follow-up committee questions.

Ending

No formal votes were held during the hearing; the committee closed the session after a period of member questions and departmental responses.