SANTA FE, N.M. — Less than a year after New Mexico launched its no-cost universal child care program, an inflation provision could require the state to begin charging some higher-income families copayments or take other steps to limit the program’s financial exposure.
New Mexico began offering child care assistance without income limits or family copayments on Nov. 1, 2025. Just months later, lawmakers enacted legislation establishing financial safeguards for the program, including the possibility of copayments and prioritized waitlists when inflation, enrollment or other economic conditions reach specified thresholds.
The provision is drawing new attention as inflation remains above the level identified in state law. The Consumer Price Index for All Urban Consumers was 3.4% higher in August than a year earlier, according to the U.S. Bureau of Labor Statistics. Senate Bill 241 requires the Early Childhood Education and Care Department to implement one or more financial safeguards when specified conditions are met, including when the 12-month average percentage change in the index exceeds 3%.
Those safeguards can include a sliding-scale copayment system, a waitlist if demand exceeds available funding or a combination of the two. Families must receive 90 days’ notice before copayments take effect.
Any copayments would initially affect households earning more than 600% of the federal poverty guideline.
Under the 2026 federal guidelines, that means more than $129,840 annually for a household of two, $163,920 for a family of three, $198,000 for a family of four and $232,080 for a family of five. Families earning at or below those amounts would remain exempt from copayments.
For households earning between 600% and 900% of the poverty guideline, copayments could be set at up to 3% of annual household income, subject to additional limits in the law. Households above 900% could be charged up to 7% of annual income, also subject to statutory caps.
The potential introduction of copayments comes only about 11 months after Gov. Michelle Lujan Grisham’s administration expanded the Child Care Assistance Program to families regardless of income and eliminated copayments. The administration announced the expansion in September 2025, describing New Mexico as the first state to offer universal no-cost child care.
Lawmakers subsequently placed the program into statute through SB 241 during the 2026 legislative session. Lujan Grisham signed the bill March 10, about four months after universal eligibility began. The law authorized the Legislature to draw as much as $700 million from the Early Childhood Education and Care Fund through 2031, provided the fund remains above $10 billion.
The fiscal year 2027 budget also increased child care assistance funding by $160 million, bringing the total child care assistance budget to $606 million.
The Lujan Grisham administration has described the copay and waitlist provisions as safeguards designed to keep the program sustainable during changing economic conditions. The structure means that while New Mexico’s program remains universal in eligibility, its original promise of no-cost care for every income level is subject to economic conditions written into the law.
