SANTA FE — New Mexico’s Children, Youth and Families Department spent more than $4.2 million from a $20 million legislative appropriation on expenses that did not align with lawmakers’ intent to expand children’s behavioral health services, according to findings from the state auditor.
In a Feb. 18 letter to the Legislative Finance Committee, the Office of the State Auditor said the questioned expenditures represented nearly 38% of the money spent so far from the 2022 appropriation, which was intended to develop new behavioral health providers and support startup costs for services eligible for Medicaid or Title IV-E reimbursement.
The auditors found that some funds were used for expenses unrelated to provider development, including $5,542 paid to a provider for 31 contraceptive kits, as well as purchases such as cellphones and payments tied to services that did not meet the legislative intent of the appropriation.
The audit identified several categories of questionable spending, including roughly $2.5 million tied to journal entries recorded before provider agreements were executed, about $768,000 for services that did not comply with legislative intent, and $1.3 million in reimbursements with insufficient documentation.
Auditors also raised concerns about contracts with congregate care or “multi-service home” settings that appeared to include services typically associated with child protective services rather than behavioral health.
The findings were uncovered after the Legislative Finance Committee asked the auditor’s office in 2025 to examine how CYFD and the state’s Health Care Authority used the funding.
Beyond the spending concerns, auditors cited weak internal controls, procurement issues, and inadequate documentation that made it difficult to determine whether some expenditures complied with state law or the conditions of the appropriation.
The auditor’s office said it will refer the findings to the Department of Finance and Administration for further review.
CYFD officials have previously said they believed the spending aligned with efforts to expand behavioral health services and strengthen the state’s child welfare system, though the department acknowledged documentation and internal oversight could have been improved.
Both CYFD and the Health Care Authority have submitted corrective action plans aimed at improving oversight, documentation and compliance with legislative funding requirements.
