New Mexico is Changing the Child Care Industry: How State Funding is Creating a New Business.

According to Vox: After 25 years in the child care field, Crystal Romero is encountering changes in New Mexico for the first time. “Twenty years ago, I bought everything for the classes at thrift stores and fairs, trying to repair and repaint things,” she says.

Today, Romero and her husband run the Early Learning Academy, which includes four preschools in the Albuquerque area. They plan to open two more facilities in 2026. With approximately 165 employees and about 700 children enrolled, Romero claims their program is the highest paying in the state. All employees receive a full benefits package, including medical and dental insurance, as well as retirement benefits. In October, Romero announced to applause that every staff member's wage would increase by $5 an hour.

This has been made possible by New Mexico's investment in child care. Initially, funds came through the American Rescue Plan, then through increased subsidies for care, and now — through a state universal program. Although not all qualifying families receive subsidies, and supply may not meet demand, this initiative is an important step forward.

The state subsidy covers full-day child care, even if they attend the facility only three or four days a week. This has allowed Romero to enroll more students while maintaining the same number of staff and adhering to the teacher-to-child ratio. She has backup staff who can support the team in case of an increase in student numbers.

As part of her program, ELA hosts an annual event where each child receives a new pair of shoes. “Nike and Air Jordans,” she explains. “We gave away 500 pairs at this facility,” she speaks about the original Early Learning Academy in Albuquerque. This year they also sponsored a wish request for a child with a brain tumor and paid $8,500 for the family’s trip to Disneyland.

Child care has traditionally been considered a low-margin industry. But the influx of state funding can change the business model in any sector — and New Mexico is not the only state changing the economics of owning and operating early education facilities.

Changes in Kindergarten Funding

Increased state funding has not only raised wages in local preschools but also attracted attention from the business community. Now that preschools have improved their profit margins, they can invest more and become more attractive clients.

In particular, child care centers have garnered more attention from private investors. Private equity groups are pooling resources to invest in businesses in order to maximize profits, often in the short term. They have always been involved in this sector, but became more prominent in 2022 when the American Rescue Plan provided substantial funding to support child care centers. To date, investment-supported networks control 10-12 percent of the licensed child care market.

“The more state funding becomes available in child care, the more it attracts various players,” notes Elliot Hasper, a senior associate at Capita.

Quality of Care and Profitability

Most child care providers in the country have low profits. Romero faces much criticism from those who believe she is using public money for her enrichment. However, she is confident that such criticism supports double standards.

Romero believes that the quality of the product is the main factor in their success. For her, good compensation and care for staff are priorities, and significant state funding allows this to be realized.

“Employees come first because if they are happy and safe, it will be reflected on our children and families when they enroll,” she says.

Thus, changes in the child care funding system in New Mexico are opening new opportunities for growth and improvement in working conditions in this field. With a reduction in the workforce shortage and an increase in service quality, positive changes can be expected in the lives of children and their families.

These transformations pose new challenges for society, as it is important not only to increase funding but also to ensure its effective use for improving the quality of education and child care in the region.