Free Child Care for All in New Mexico

Kendal Chavez : We want to set them up for success and give them high quality options that are no cost for their children, and so it’s... There are so many benefits to this, but those are the two immediate ones that come to mind. The family economic benefit, benefit for the economy at large. And then our school readiness and just general family and child well being.

Amanda : That's the voice of Kendal Chavez, Deputy Secretary of the New Mexico Early Childhood Education and Care Department. She’s here to talk about something so cool that I bet you’ve heard about. New Mexico is the first state to offer free universal childcare for all families. As you would expect, it’s a big undertaking, but we’ve got all the details on how they’re pulling this off, and it’s a game changer in all the ways you’d expect for workforce and economic mobility in the state.

And with that, let’s jump in. Welcome, Kendal, to Inside America's Best Cities. We are so super excited to have you here today to talk about something very exciting that I think we have all probably heard about. But the big headline item is… Kendal Chavez : The big headline item is New Mexico is the first state in the nation's history to commit to rolling out, deploying, implementing universal childcare for all families, no matter their income.

So we're very proud, excited, exhausted, and mostly just running off adrenaline in this moment. And yeah, so that's, that's the big headline today. Amanda : Which is amazing! Can you start off sharing, you know, what is the positive impact of this expected to be?

That can be some tangibles or intangibles because we know it's lots of both. Kendal Chavez : Yeah. So a little bit of background, Amanda. I mean New Mexico has been working towards this for decades, right.

And especially under this governor, Governor Michelle Lujan Grisham during her administration, we've been slowly chipping away at building a universal system for all families, all children. With a focus on 0 to 5. We've been chipping away, we've been slowly pulling back the income limits over the last five to six years, first going up to 200% and now going up to four, then to 400%, excuse me, FPL and then now taking the income cap off completely. For us, this is, there are so many, there are so many benefits here that we can't even list them all.

And I think, I don't know, Amanda, your background, if you have children or if your family, family members have children or friends, your network. But like high quality childcare is the thing that sets children up for success. And our child care professionals or educators are the ones that are best suited to do a lot of that work and of course parents, parents supporting and backing that up and doubling down while children are at home. So for us it's both an educational investment.

We see and we're already seeing really good data to show us that this is the direct we need to continue to lean in in our early childhood work. So it's both school readiness, setting children and families up for long term success, pull, pulling families out of poverty. That is, you know, one kind of bucket of the work. The other bucket is economy in all definitions of the word.

So for families alone, we have an average sort of cost savings for family, which actually is lower than a lot of families families are paying now for one child. So in our materials we talk about minimum, an average savings of 12,000 per year per child. We have, I know some families even in my own orbit who are paying closer to children, 20,000 a year per child, depending on the type of provider that they chose, they're choosing to send their child to. And so it's both a savings for parents and families.

They put that money either back into the economy, they invest it, they buy a better house, they buy a better vehicle, they maybe go back for a graduate degree. All of those things we think are value adds, both at the community level, family level, but also statewide. The other thing is we know, and we know this is a national statistic, not just here in New Mexico, that women are forced to stay home, often with their, with their babies and their toddlers because of a few things.

Because childcare is so expensive in most places of the state and because the supply is so limited in most places of the state. And so we're also taking that kind of issue head on. Mothers, women who want to go back to work, that is the thing that they want to do. We want to set them up for success and give them high quality options that are no cost for their children.

There are so many benefits to this, but those are the two immediate ones that come to mind. The family economic benefit, benefit for the economy at large. And then our school readiness and just general family and child well being. Amanda : Right?

Lots, definitely. So my next question is… this is probably not only is it, has it been a big expense for families, but I imagine that pulling this off now is a big expense. Can you talk a little bit about how this is being funded and what sustainability of that may look like? Kendal Chavez : So New Mexico under our, this governor and with our current legislature made very smart fiscal decisions about in the last seven to eight years.

So the first was pulling 300 million out of general fund. That was new money. New Mexico is a very cash, a resource rich state with unfortunately a lot of families who are still working their way through generations of poverty and colonialism and all the things that our families are working through. And so the, the state essentially decided to put that a $300 million pull that out of a general fund that could have been spent on anything, right?

Cash, K12, public safety tax, tax rebates, et cetera. And just. And invested it so that 300 million is now almost $10 billion. That is very smart fiscal policy that every other state is trying to figure out how to replicate.

And the point here being that every state has some source of revenue or some source of economic development that they can pull from. They just have to prioritize early childhood. That's what it's about. So we have a $10 billion trust fund that supports all things early childhood.

We essentially pull up to 500 million a year. It's just interest. We're not actually touching the corpus. This is just the interest off of the fund itself.

And that supports childcare, our universal pre K, almost universal Pre K for 3 year olds, home visiting, early intervention, etc. That is a huge piece of stability that has given a lot of confidence to both our legislature, the department, this governor and our community at large. Our advocates have been fighting for this for literally decades. And so there's a lot of consensus around again, smart fiscal policy and there being enough resource to do this.

Voters also decided to tap the land grant permanent fund, which I believe is sitting at about 60 to 80 billion, which is traditionally used for K12. Some of that is now used for pre K, early pre K. We have a very sophisticated, robust, mixed delivery system, but also a mixed financial system that's funded off of a few different trust funds. And then our general fund, New Mexicans will not see a tax increase.

They will not see any impact on their taxes across the board. This is really all coming from existing funds that were invested years ago as well as our increased general fund that's coming in. And New Mexico has, continues to have kind of record recurring resources based on our economy doing better, especially under this administration, and also our oil and gas and the other kind of natural, natural resources that we have here in the state. So we have a lot of confidence and have been again, have been slowly working towards this for years.

And so by slowly pulling the income cap off, we've been slowly building confidence, slowly socializing this, slowly just making this the thing that everybody agrees with. And two, pulling the income off completely just made sense to us in this moment in time. Amanda : Yeah, very cool. So really just deciding that it's a priority and being able to direct resources that might go to something else to this, which makes a lot of sense.

So talk about this. Seems like it would be a pretty big undertaking in terms of administering it. You know, getting everyone set up, streamlining enrollment, making sure everyone, you know, is aware what is that process part look like..? Kendal Chavez : So again, I think we are set up for success more, more than other places because we've been slowly building this universal system across our programs for years.

We have gone through this sort of major jump in eligibility for. We did it for pre K a few years ago, Universal pre K going from, I forget the percentage all the way to universal in a matter of a year and then slowly pulling off the income cap or child Care. I think we have been socializing and investing in this for, you know, years. And so.

But of course, people, this is a massive policy change that will take time to shake out. It's an iterative process that is extremely messy, as you mentioned. So we know that we have to be like out in the world all the time. So we're out in community at road shows, we're doing virtual office hours for families.

We're engaging every kind of power broker or authority figure we have in the state to join us in this effort and to talk to their people about the benefit of this amazing world class thing that we're doing here. So that's like chambers, that's K12 system, that's higher ed, that's all the big employers are all at the table and they have to act as proxies. They have to give the message to their own people versus the department being that voice for every community member. And the other thing I think is very special about this department, even in compared to our other departments here in New Mexico, and I would say probably nationally, is because this is a new agency that has had community engagement and family voice at the heart of the work.

The community piece is just built into the way we do business. So we have a local coalition in almost every county we are literally out across, no matter how rural, frontier or tribal, we are there in community with community. And so that again, it sets us up for success. But there will be a little bit of a learning curve for families who have not engaged in the child care system, in the paid child care assistance program.

Excuse me, before. So you have to create an application, you have to go through a simple interview. So coaching people on that process, giving them confidence and being very clear about what it takes to get from A to B. We are laser focused on that in this moment.

Amanda : Right. So say that you are a family that's had a child in childcare and you haven't qualified for this assistance until now that it's been opened up for everybody. So is the idea that you would, you know, stay put wherever you are and it just changes to where instead of private pay, you're just not, you know, doing that anymore once you go through the right steps. Kendal Chavez : We want families to stay.

If they love their child care provider, we want them to stay. We want. Because that connection between teachers and educators and staff and families is essential and takes time to build. I'm thinking of even when I drop my son off, it took about three to four weeks for him to really connect with his educators.

So you Don't. If you like your provider, you don't. We don't want families to have to start over. So the tension here is that these are private.

These are private businesses and nonprofit businesses for the most part. There are some governmental entities mixed in and tribal government, but for the most part, these are private entities who make their own business decisions who we have no authority over, for better or for worse. And so we've done a few things over the last month through the kind of rulemaking process, and we heard directly from our providers that the rates weren't high enough. For example, we heard from them around a few kind of administrative things that I think aren't as interesting to the general public.

But we increased the rates again by another 13%. And so we, we met the moment we think that the, that the revenues providers are going to receive from the state far outpace private pay in most situations. And so our goal is to get to 100% participation. But we likely may be on the provider side.

We likely may be for philosophical reasons or maybe religious reasons, the provider doesn't want to accept state or federal subsidy. Our goal is to get to like 95, 97% participation would be phenomenal. So in those scenarios, a family would say, stay with their provider. If they like their provider and their child is connected to those educators they would create, go through a very simple application through the department.

You can do that on the phone, online, in person. And then we also give families 90 days to give us all the documentation they need. That's another kind of administrative change that allows families to get care immediately versus having to wait until their contract is executed. So ideally all providers will accept assistance and then the family's able to stay there.

They create the application and then the state kicks in, takes over payment whenever the contract is executed. That's sort of how it looks. Amanda : Okay, that makes sense. Thinking about capacity and how this could potentially open up a lot more demand in a great way.

Right. But that could be kind of happening all at once. So what about, you know, getting additional people trained into this field as providers? Will additional facilities be needed?

I know you mentioned a facility fund, I think, or building fund. So wanted to get you to talk through some of that. Kendal Chavez : So we worked… we did a robust study in partnership with the Low Interest Investment Fund LIFF about last year, and that report is on our website. And so that gave us a roadmap of where the deltas are.

So which communities at the county level and down to the municipality level have deltas, have gaps in supply, and so we are keeping those areas of the state like front and center and all the work we're doing. And so the one you mentioned, the child care revolving loan fund, so that's a low interest loan fund that actually is being deployed in the moment. We have hundreds of applications sitting wanting, you know, just a little bit of capital for shovel ready projects that are ready to expand by 100 seats or to build a new classroom or to get the capital they need to put in the bathrooms to meet the regular, the zoning code to expand their classroom.

And so we are very excited and encouraged by the interest in that fund. We also have infant and toddler contracted slot RFP that went out which is a like even higher revenues for providers that want to provide wraparound full service care like this includes diapers, formula, any support the families need for very low income families, I believe under 200% FPL. And so that's. So we have a lot of sort of strategies running along at the same time as removing the income cap.

Because just removing the income cap isn't alone like we know those are sustainable. Those are revenues that providers know they're going to get every month. And so the shift to the state taking over payment is huge for business models. But you can't that alone without investing in the educators.

Expanding facilities, creating more slots would just create more attention. We're doing all of the strategies at lunch, which is again exhausting but required in the moment. Amanda : Yeah. And just thinking about from the perspective of people that work in this field, it's kind of a tough field to work in in a lot of ways, which is why they struggle to get high quality teachers at that level because it's not always, you know, the highest paid.

There's lots of rules and regulations you have to keep up with and know about it. It's demanding, you know, not everyone is good at spending all day with the, the under five set and we do. Kendal Chavez : Amanda, can I add one more thing to that? The other, the other element that we haven't talked about is so in the new in the universal child care model, the again rulemaking ended.

Final rule was submitted. Oh my God. Last week or the week before where you have two different rates. So for providers that want to provide to be open, they're committing to be open 10 hours a day for five days a week for working families, which is a issue we're running into here in New Mexico and probably nationally that providers aren't open when families actually need it.

Or there's like school breaks, there's a break every week or every two weeks, kind of really trying to address that for families that both parents have to work. Also in that increased rate is a wage floor depending that increases, depending on the quality level of the child care center or the, or the provider. So we are making some very clear assertions and signaling what the department and what the administration thinks about wages. And so those at the highest level, the wage floor for the enhanced rate, which is the higher rate, I believe, is $19 an hour.

So we are, we could not require that across the board because not all, again, all business model, every business is different. These are, you know, thousands of private providers, for the most part, nonprofit providers. And so we didn't feel right about requiring across the board, but also being clear to your point that these are hard jobs and that we want people who love these professions and who are built for these professions and are suited for them to stay in them. And part of that is compensation.

Amanda : Yeah, definitely true. Well, it sounds like you've really thought about it for a long time and from all angles. You know, sometimes it seems like, oh, we're just now hearing about it, but it sounds like all those potential challenges are things you're really thinking through. So, I mean, I think it's awesome, hopefully generating a lot of positive attention for you all and going to make a really positive impact for a lot of people and for the workforce.

So it seems like wins all around. What thoughts would you have on people in other states, policymakers who might want to implement something like this? What would be a key takeaway or couple that you might share? Kendal Chavez : It's interesting.

I think the secretary and I and staff have done more presentations and discussions with state legislatures and New York City called. So, like, there's a lot of, a lot of states and a lot of communities who are thinking on both sides of the aisle who are thinking about this issue really deeply. Because no matter what perspective you're standing, no matter what perspective you're looking at child care from, it is essential for business, for education, for child well being, for poverty, all the things.

And so I guess the, the recommendation we always make and again, the assertion that you have to prioritize early childhood as a critical, like the most critical moment in a child's life or investment. I mean, looking at the, like the Heckman equation, right? I mean, these funds could sit in a fund and they could accrue interest every year at the, you know, 5 to 7 rate, or they could be invested in children and families at the 0 to 5 range, bringing back way more economic return right up to 13% is the, in the, the Heckman equation that everybody uses.

We believe in that, in our guts and our hearts. And so we've leaned fully into that. And if other states want to join this effort, they have to also kind of embody that understanding that funds sitting in investment funds or going out through all activities are important. Government is responsible for everything which touches every part of our lives.

But investing in early childhood specifically, 0 to 3, 0 to 5, like, is the smartest investment we could possibly make. And so that's the one. And then that every state has some source of revenue. It's just deciding that to prioritize it for early childhood and being very smart and intelligent and using some foresight on how to invest those funds so they do become productive funds in the future for things that are very expensive, like universal child care, universal pre K, but that are really critical to a child's life course.

Amanda : Yeah, I mean there's so many, you know, what is it they call it again? Critical windows, I think, and hearkening back to my child psychology class, but kind of those times where that might be the only time you can pick up like a certain skill or learn something a certain way. And so arguably, like, yeah, why wouldn't you prioritize that and giving people a great start? Kendal Chavez : Yeah, they, I, we've heard our, you know, our governor has been, has talked about early childhood educators as brain architects.

I don't think she came up with that terminology, but it's that it's it that is it like this moment is the most important moment in their life. And they could be, you know, even with auntie or mama or grandma or who, whomever is watching the child at home, you know, maybe the TV is on or maybe there's a screen or maybe, you know, the, the, the, the caretaker is responsible for doing dishes and cleaning the house and doing all the other things that we have to do while we're home at a high quality childcare center.

They are, their synapses are firing like every thousands of times every single second because of the educational environment they're in. And so, and I have to say too, this is about family choice. So we're not going to of course, if a family, if a mom or a dad wants to stay home with their child through early pre K and pre K and they can afford it, amazing. We support that.

But for families that do want to go back to work and see especially women who want to continue their career, I mean most women are having babies at a very critical part of their career for those people that want this resource, it's here New Mexico is. We're leading fully into this and creating a system that works for every family. Amanda : Yes, love it. Well, we always close with a fun question, but before we get to that, anything else you'd like to add on our topic at hand?

Again, our listeners are all in the economic development space, so they're thinking about any kind of issue that affects workforce and business. Kendal Chavez : I think for us, the other thing that we're taking very seriously is the kind of it's not a hierarchical spectrum, but just neither sides of this spectrum is better than the other. But the kind of range of types of providers that we have nationally here in this state. And so we have been very purposeful about uplifting and investing in homebased providers which for cultural reasons, you know, as what most, some, some of our families want.

You know, they want to send their child to a home with a provider that speaks their same language and the child is maybe with a few other kids and it's not a center. And so we, that has been a huge part of our strategy is investing in, uplifting and supporting mostly women, women of color who have these, these home based businesses who eventually may want to become build centers, right? Or they may want to build, you know, purchase another home to have multiple home based centers.

But that is another really key piece of our strategy because large centers are expensive to build. I don't know about, I, I don't know about nationally, but here it's very expensive to build now post Covid. And so really leveraging resources that we already have that are already built, infrastructure that already exists. So home based providers as well as we are keeping our eye on colleges and K12.

So if there's infrastructure that's already built for a school or for a college that maybe isn't being used because of declining enrollment or whatever reason. Like we want those, we want that infrastructure used for childcare either for students on the college side or for, or for professors or teachers and then for K12, for teachers, for recruitment and retention and for again, just supporting all working families no matter what their economic, no matter what job that they have chosen.

So I think that's another that makes delivery and really investing in all types of businesses and uplifting them all is equally as important is another huge piece of our strategy here that we think is going to pay off. Amanda : That makes so much sense. Again, seems like you've thought through every angle. I love it.

So fun question. So we always ask… so we know already, obviously you're based In New Mexico. What city are you in? Kendal Chavez : Santa Fe.

Amanda : Okay, so tell us, if someone were visiting for the first time, what is like one bucket list item they should be sure to do and maybe something a little off the beaten path of like the first tourist thing you'd see if you googled it. Kendal Chavez : Yeah, it's a beautiful, beautiful historic city. We have amazing weather and like very interesting cultural dynamics here and across the whole state. But Santa Fe specifically has a very acute focus on the cultural kind of dynamics of New Mexico and the history and the reason we are the way we are and what brought us to this moment.

I mean, you have to eat chili while you're here. That's why food is a. Our, our. Our food is, is why many people come here.

And so you would need to take, take some time to sit down at a restaurant and get both red and green chili, which some people call Christmas. Some people don't prefer that, that terminology. But sit down, have a moment to have your, you know, smothered burrito or your enchiladas with some like pozole on the side. And so like, so sit down, have a moment.

If it's the right time of day, maybe have a margarita. We have the margarita margarita trail here with plenty of. That is sort of what we, the cocktails that people prefer here is a nice, maybe a prickly pear margarita or something like that. I think so.

The plaza and the rail, there's certain parts of town that tourists come because it's historic. These are like buildings from the 1600s. Historic. Right.

And that's. And then for those of us that live here, the whole city is modeled after this pueblo art style architecture. So everything is low to the ground, everything is like adobe colored. And so I think for people just to who have never been here to see Santa Fe is its own like amazing experience.

And then we're surrounded by mountains in every direction. So while the tourist activities are, there's a bunch of museums and art galleries, that kind of thing. If you're into the outdoors, just heading up in any direction to a trail is what I would always prefer. And then having a nice thousand calorie meal after with both types of chili and your margarita is like the perfect, the perfect day.

Amanda : Sounds lovely. Well, thank you so much for sharing about this really important work that you're doing. Kendal Chavez : Thank you. Appreciate the opportunity.

Amanda : Thanks for listening to the Livability podcast, where we take you Inside America's Best Cities. At Livability, we highlight the unsung awesomeness of small and mid-sized cities across the country. We also partner with communities to reach their target companies and potential residents through digital content and print magazine programs. If you enjoyed this episode, please follow, rate, and review this show wherever you listen to podcasts.

You can also learn more about us at livabilitymedia.com. Have an idea for an upcoming episode? Email me at aellis@livability.

com. Until next time, from Livability, I'm Amanda Ellis, sharing the stories of America's most promising places.