CHILDCARE PROGRAM USE OF FUNDS

HB0269

HOUSE BILL 269

57th legislature - STATE OF NEW MEXICO - second session, 2026

INTRODUCED BY

Linda Serrato
and
Javier Martínez

AN ACT

RELATING TO CHILD CARE; PROVIDING LIMITATIONS FOR USE OF FUNDS
RECEIVED BY A LICENSED CHILD CARE PROGRAM AND LICENSED EARLY
CHILDHOOD CARE PROGRAM IN CONTRACTING WITH THE EARLY CHILDHOOD
EDUCATION AND CARE DEPARTMENT; PROHIBITING THE EARLY CHILDHOOD
EDUCATION AND CARE DEPARTMENT FROM CONTRACTING WITH CERTAIN
BUSINESS ENTITIES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1.
Section 32A-23C-1 NMSA 1978 (being Laws 2018,
Chapter 44, Section 1) is amended to read:

"32A-23C-1. SHORT TITLE.--[
This act
]
Chapter 32A, Article
23C NMSA 1978
may be cited as the "Early Childhood Care
Accountability Act"."

SECTION 2.
A new section of the Early Childhood Care
Accountability Act is enacted to read:

"[
NEW MATERIAL
] LICENSED CHILDHOOD CARE PROGRAMS--APPROPRIATIONS MADE TO THE DEPARTMENT--LIMITATIONS.--

A. As used in this section:

(1) "department" means the early childhood
education and care department;

(2) "investment firm" means a corporation,
limited partnership or limited liability company that has as
its primary business activity the investment of funds in return
for equity in or debt of businesses for the purpose of
purchasing a direct or indirect ownership share or controlling
interest in companies or investing in other assets; and

(3) "investment fund" means an entity managed
by an investment firm that makes, manages or sources
investments in businesses and that:

(a) invests money as a primary business
activity in return for equity in or debt of a business for the
purposes of purchasing a direct or indirect ownership share or
controlling interest in companies or investing in other assets;
and

(b) accepts investments only from
accredited investors as defined pursuant to Section 2 of the
federal Securities Act of 1933 or from federally recognized
Indian nations, tribes and pueblos with at least five million
dollars ($5,000,000) in investment assets.

B. Money provided pursuant to a contract between
the department and a licensed child care program or a licensed
early childhood care program shall not be used:

(1) to pay:

(a) monitoring, franchise or management
fees paid to the program's ultimate parent company; or

(b) executive compensation or bonuses to
an investment firm or investment fund; or

(2) for operations outside of New Mexico.

C. A licensed child care program or licensed early
childhood care program contracted with the department shall
not:

(1) pay out dividend recapitalizations or
other capital distributions to investors or owners; or

(2) sell real property held by the program,
extract proceeds from that sale and enter the program into a
lease or other financial arrangement to pay rent to a business
entity other than the program.

D. By December 1, 2026 and every December 1
thereafter, the department shall provide a report to the
legislative health and human services committee. The report
shall include:

(1) the business structure of any controlling
business entity, including the business type of the entity and
other affiliates under common control, subsidiaries and
management services entities of the entity, as of the date of
the submission of the report;

(2) executive compensation for the ultimate
parent company of a licensed child care program or licensed
early childhood care program;

(3) the debt-to-earnings ratio and the amount
of debt incurred by each individual program and all operations
within New Mexico in total;

(4) any acquisitions or closures of child care
programs and related services in New Mexico by the ultimate
parent companies of licensed child care programs or licensed
early childhood care programs in the past year;

(5) fees or dividends paid to investors;

(6) real estate leases and purchases for
property used or intended to be used for licensed child care
programs or licensed early childhood care programs, including
expenditures on rents and maintenance, property taxes paid and
the name of the leasing company; and

(7) any other information as determined by the
department."

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