New Mexico Taps Land Grant Permanent Fund for Early Care and Education

Blog Post
Jan. 6, 2023

In the United States, early care and education is funded through a combination of federal, state, and local revenue and philanthropic, business, and family sources. Of all the different funding sources, families pay the majority of the costs in the form of tuition and fees, while public investments across the federal, state, and local levels make up the second largest share.

Families with higher incomes tend to have easier access to early care and education. There are two federal programs that support families with low-incomes in accessing early childhood programs, namely Head Start/Early Head Start and the Child Care and Development Block Grant (CCDBG), but inadequate funding levels limit their capacity to reach and serve all eligible children. State and local spending on birth to five, which includes matching CCDBG funds and state pre-K programs among other initiatives, are often subject to changes in political will and also insufficient in serving all eligible children.

Even when families can afford early learning opportunities, by paying out of their own pockets or through subsidies, there may not be enough spots available. This is different from K-12 public education, which is funded almost entirely using public dollars and available to children in all compulsory grades regardless of family income.

Early care and education has a long way to go to be recognized as a public good. In order for that to be true, public, not family, dollars must make up the majority of the costs to support all children from birth to five. There must be an adequate, stable, and consistent public funding mechanism that is insulated from economic downturns.

While the conversation at the federal level has stalled, states are taking it upon themselves to secure funding for a comprehensive early childhood system that recognizes the education and care children deserve starting from birth. Voters are in favor of it, too.

On November 8, 2022, New Mexico passed a ballot measure, also known as Constitutional Amendment 1, to amend the state constitution and allow early childhood education to be funded through the Land Grant Permanent Fund (LGPF). The amendment will draw an additional 1.25 percent from the LGPF, of which 60 percent will go toward early childhood education. This amounts to about $150 million annually, which equates to 35 percent of the state’s Early Childhood Education & Care Department’s (ECECD) fiscal year (FY) 2021 operating budget. In addition to voter approval, the funding change received Congressional approval in the FY 2023 Omnibus federal spending bill.

The LGPF, created in 1912 when New Mexico became a state, is one of the largest such funds in the nation. Its revenue comes from leases and royalties on oil and gas production and returns on invested capital. The state constitution restricts annual withdrawals to five percent of the fund’s total revenue, about $836.5 million in FY 2021. Most of the fund’s current beneficiaries are public schools and universities. Investments in children under five years old have not been allowed until now.

The ballot measure passed with an overwhelming 70 percent of voters expressing their approval. The outcome reflects a movement that started 10 years ago led by advocates at New Mexico Voices for Children (NM Voices), who saw a need to improve early childhood in New Mexico. Years of institutional and structural inequities have resulted in high child poverty rates throughout the state and, just this year, New Mexico ranked 50th in the national KIDS COUNT Data Book when assessed on 16 indicators of child well-being. State leadership has also recognized the importance of the early years. They established ECECD, created the Early Childhood Trust Fund, and increased wages for the early childhood workforce.

This past May, the state used American Rescue Plan Act funds to expand free child care to families with incomes up to 400 percent of the federal poverty level. With funds from the new ballot measure, New Mexico can continue to offer free child care for these families even when the federal relief dollars run out. The funds will go towards implementing ECECD’s strategic plan to “ensure New Mexico children and families continue to grow strong and flourish – or in the Spanish language, to florecer.”

In the 2023 legislative session, it will be important to monitor whether the new money supplements or supplants general fund appropriations for the department. If the new money leads to decreased general fund appropriations, then overall public investments could remain a small share of the total funds available for early care and education. Early childhood advocates across the country are joining New Mexico in celebrating their organizing and policy advocacy efforts. However, as Amber Wallin, executive director of NM Voices, said in a recent webinar, “This isn’t uniquely a New Mexico story. It is right now, but it doesn’t have to be.”

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