CHILD CARE ASSISTANCE PROGRAM ACT

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AN ACT
RELATING TO CHILDREN; ENACTING THE CHILD CARE ASSISTANCE
PROGRAM ACT; ESTABLISHING THE CHILD CARE ASSISTANCE PROGRAM;
PROVIDING FOR PAYMENTS TO CHILD CARE FACILITIES THAT
PARTICIPATE IN THE CHILD CARE ASSISTANCE PROGRAM; PROVIDING
ELIGIBILITY AND REGULATORY REQUIREMENTS; PROVIDING FOR
ADDITIONAL APPROPRIATIONS TO THE EARLY CHILDHOOD EDUCATION
AND CARE PROGRAM FUND.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 9-29A-1 NMSA 1978 (being Laws 2020,
Chapter 3, Section 1, as amended) is amended to read:
"9-29A-1. EARLY CHILDHOOD EDUCATION AND CARE FUND.--
A. The "early childhood education and care fund"
is created within the state treasury. The fund shall consist
of distributions, appropriations, gifts, grants and
donations. Income from investment of the fund shall be
credited to the fund. Money in the fund shall be expended
only as provided in this section.
B. The state investment officer, subject to the
approval of the state investment council, shall invest money
in the early childhood education and care fund:
(1) in accordance with the prudent investor
rule set forth in the Uniform Prudent Investor Act; and
(2) in consultation with the state
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treasurer.
C. The state investment officer shall report
quarterly to the legislative finance committee and the state
investment council on the investments made pursuant to this
section. Annually, a report shall be submitted no later than
October 1 each year to the legislative finance committee, the
revenue stabilization and tax policy committee and any other
appropriate interim committees.
D. On July 1 of each year, a distribution shall be
made from the early childhood education and care fund to the
early childhood education and care program fund in an amount
equal to the greater of five percent of the average of the
year-end market values of the fund for the immediately
preceding three calendar years or five hundred million
dollars ($500,000,000).
E. In fiscal years 2026 through 2031, the
legislature may appropriate up to a total of seven hundred
million dollars ($700,000,000) from the early childhood
education and care fund to the early childhood education and
care program fund, which shall be in addition to any other
appropriations or distributions made pursuant to this
section; provided that an appropriation made pursuant to this
subsection shall not exceed an amount that would decrease the
total balance in the early childhood education and care fund
to below ten billion dollars ($10,000,000,000).
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F. In addition to the distribution pursuant to
Subsection D of this section, money in the early childhood
education and care fund may be expended in the event that
general fund balances, including all authorized revenues and
transfers to the general fund and balances in the general
fund operating reserve, the appropriation contingency fund,
the tobacco settlement permanent fund, the state-support
reserve fund and the tax stabilization reserve, will not meet
the level of appropriations authorized from the general fund
for a fiscal year. In that event, to avoid an
unconstitutional deficit, the legislature may appropriate
from the early childhood education and care fund to the
general fund only in the amount necessary to meet general
fund appropriations for that fiscal year and only if the
legislature has authorized transfers from the appropriation
contingency fund, the general fund operating reserve, the tax
stabilization reserve and the tobacco settlement permanent
fund that exhaust those fund balances."
SECTION 2. A new section of the Children's Code is
enacted to read:
"SHORT TITLE.--Sections 2 through 8 of this act may be
cited as the "Child Care Assistance Program Act"."
SECTION 3. A new section of the Children's Code is
enacted to read:
"DEFINITIONS.--As used in the Child Care Assistance
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Program Act:
A. "at-risk child" means a child who may be
vulnerable to or experiencing negative outcomes due to
factors such as poverty, domestic violence, substance abuse,
mental health issues, family involvement in the justice
system, housing instability or homelessness; who has or is at
risk of having a developmental delay or a disability; or whom
the children, youth and families department identifies as
experiencing or at risk for abuse or neglect;
B. "child care assistance" means funding
administered by the department to a child care facility to
provide child care for eligible children through the child
care assistance program;
C. "child care facility" means a public or private
entity, facility or premises that is licensed or registered
and regulated by the department at which children receive
child care services, including care, education and
supervision, for less than twenty-four hours per day;
D. "consensus revenue estimating group" means the
professional economists or revenue analysts from the
department of finance and administration, the taxation and
revenue department, the department of transportation and the
legislative finance committee;
E. "department" means the early childhood
education and care department;
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F. "developmental delay" means a discrepancy
between chronological age, after correction for prematurity,
and developmental age in one or more of the following areas
of development: cognition; communication; physical and motor
development, including vision and hearing; social and
emotional development; and adaptive development;
G. "disability" means a severe chronic disability
of a person that is attributable to a mental or physical
impairment;
H. "early intervention" means services provided
through the family, infant, toddler program of the department
that are designed to meet the developmental needs of children
from birth to age three who have or who are at risk of having
a developmental delay or disability;
I. "early intervention provider" means a person
who provides early intervention;
J. "early pre-kindergarten program" means an early
pre-kindergarten program as defined in the Pre-Kindergarten
Act;
K. "earned income" means income received as gross
wages from employment or as profit from self-employment;
L. "incapacitation" means a person is unable to
meet an eligibility requirement due to an inability to care
for a child because of a disability, health-related illness,
rehabilitation treatment or other reason as determined by the
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department;
M. "legal guardian" includes both a temporary and
permanent legal guardian or custodian;
N. "pre-kindergarten program" means a
pre-kindergarten program as defined in the Pre-Kindergarten
Act;
O. "resident" means a person who is domiciled in
New Mexico, including a person who is homeless or who is
temporarily residing in a domestic violence or homeless
shelter; provided that for the purposes of the Child Care
Assistance Program Act, a person may have only one domicile;
and provided further that for a federally eligible applicant,
the applicant's residency determination shall be aligned with
applicable federal regulations;
P. "tiered quality rating system" means the system
developed by the department to rate the level of quality of a
licensed child care facility; and
Q. "unearned income" means income in the form of
benefits, such as benefits received pursuant to state and
federal programs, child support, pensions, gifts, loans,
grants and other income that is not income received as gross
wages from employment or as profit from self-employment."
SECTION 4. A new section of the Children's Code is
enacted to read:
"CHILD CARE ASSISTANCE PROGRAM--ELIGIBILITY
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REQUIREMENTS.--
A. The "child care assistance program" is created
in the department to provide child care assistance for
eligible children, subject to appropriation. The department
shall promulgate rules necessary to carry out the provisions
of the program.
B. To participate in the child care assistance
program, an application shall be submitted to the department
in the manner and form prescribed by the department and shall
align with applicable federal regulations. Subject to the
provisions of Subsection C of this section, a person is
eligible for child care assistance if an application is
submitted on behalf of a resident child receiving child care
assistance who is under the age of thirteen years at the time
of application, or under the age of nineteen years if the
child is physically or mentally incapable of caring for the
child's self or is under court supervision. The department
shall redetermine eligibility for child care assistance at a
frequency level aligned with federal regulation.
C. To be eligible to participate in the child care
assistance program, each parent or legal guardian of a child
receiving child care assistance who lives in the household
with the child shall be:
(1) employed;
(2) a full-time student and enrolled in at
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least twelve credit hours at an accredited educational
institution;
(3) a part-time student and enrolled in at
least six credit hours at an accredited educational
institution;
(4) enrolled in a state-approved job
training program, registered apprenticeship program or
pre-apprenticeship program;
(5) receiving aid from the federal temporary
assistance for needy families program;
(6) experiencing homelessness;
(7) under the age of twenty-one and
attending primary or secondary school;
(8) participating in services pursuant to
the federal Comprehensive Addiction and Recovery Act of 2016
provided by the children, youth and families department;
(9) a grandparent raising the grandparent's
grandchild;
(10) a foster parent; or
(11) engaged in an eligible activity or
exempted from the eligible activity for a reason, including
incapacitation, as determined by department rule and in
accordance with federal regulations.
D. If a parent or legal guardian who applies for
child care assistance has an annual household income greater
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than six hundred percent of the federal poverty level, the
eligibility for child care assistance shall be limited to the
hours of care supported by the parent's or legal guardian's
qualifying activity schedule.
E. Eligibility may be granted for up to ninety
days for applicants seeking employment.
F. An application to the department shall include
documentation evidencing that the applicant meets the
requirements to be eligible to participate in the child care
assistance program and shall include documentation of earned
and unearned income. To determine residency in New Mexico,
the applicant shall provide a current New Mexico driver's
license or other documentation proving residence in
New Mexico as determined by department rule; provided that
for a federally eligible applicant, the applicant's residency
determination shall align with applicable federal
regulations.
G. Unless determined necessary by the department,
a child shall not be eligible for child care assistance for
the hours of care in which the child is enrolled in a head
start program, an early head start program, an early
pre-kindergarten program or a pre-kindergarten program.
H. The department may make a presumption of
eligibility for the child care assistance program based on
proof of the child's residency and proof of parentage or
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guardianship before the documentation required pursuant to
Subsection C of this section is received. Presumption of
eligibility shall not exceed the allowable duration permitted
by the federal government upon initial application."
SECTION 5. A new section of the Children's Code is
enacted to read:
"FISCAL CONTROLS.--
A. A parent or legal guardian may be required to
pay a child care facility a copayment for child care
services; provided, however, that the department shall
provide a parent or legal guardian with ninety days' notice
prior to the implementation of a copayment.
B. Beginning after one of the conditions pursuant
to Subsection C of this section is met, and continuing
through the remainder of the applicable fiscal year, the
department shall develop and implement one or more of the
following:
(1) a sliding scale payment schedule
applicable to monthly copayments as provided in Subsection D
of this section;
(2) a waitlist as provided in Subsection E
of this section if demand for child care assistance exceeds
the availability of funds within the fiscal year; or
(3) a combination of both Paragraphs (1) and
(2) of this subsection.
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C. The department shall develop and implement one
or more of Paragraphs (1) through (3) of Subsection B of this
section if, in a given year, any of the following conditions
is met:
(1) the number of children receiving child
care assistance services exceeds that year's projected
enrollment by three percent as determined by the department
and reported to the legislative finance committee on August 1
of each calendar year;
(2) the state recurring general fund revenue
growth percentage is projected to be lower than the
percentage change in the annual consumer price index for all
urban consumers for the prior calendar year as determined by
the consensus revenue estimating group;
(3) the twelve-month average percentage
change in the annual consumer price index for all urban
consumers exceeds three percent;
(4) the average price for west Texas
intermediate crude oil during the applicable fiscal year is
less than fifty dollars ($50.00) per barrel as determined by
the consensus revenue estimating group; or
(5) the department identifies a different or
additional condition.
D. For a sliding scale payment schedule applicable
to monthly copayments pursuant to Paragraph (1) of
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Subsection B of this section, the payment schedule shall be
implemented to ensure that the amount appropriated for the
child care assistance program is sufficient to meet the costs
of the program and that a monthly copayment shall not exceed
one-twelfth of the percentages provided in Paragraphs (1)
through (3) of this subsection as applied to an applicant's
annual household income. The payment schedule shall be as
follows:
(1) copayments for an applicant with an
annual household income of six hundred percent or less of the
federal poverty level shall be waived;
(2) copayments shall be three percent or
less of the annual household income for a household with
income greater than six hundred percent but not exceeding
nine hundred percent of the federal poverty level for all
children in care; provided that the amount shall not exceed
twenty-five percent of the average rate paid for the
applicable age group to the child care facility; and
(3) copayments shall be seven percent or
less of the annual household income for a household with
income greater than nine hundred percent of the federal
poverty level for all children in care; provided that the
amount shall not exceed fifty percent of the average rate
paid for the applicable age group to the child care facility.
E. For a waitlist maintained pursuant to
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Paragraph (2) of Subsection B of this section, to avoid a
possible funding deficiency, the department shall prioritize
all available child care assistance for children with
developmental delays or disabilities, at-risk children and
children from birth to age three in households with annual
household incomes of less than four hundred percent of the
federal poverty level. The department shall report to the
legislative health and human services committee and the
legislative finance committee biannually regarding waitlist
implementation, including the number of children added to the
waitlist by month and the number of children moved off of the
waitlist by month. The reports shall include redacted
demographic information, including each family’s annual
income as a percentage of the federal poverty level, the
length of time each child has been on the waitlist, the age
of the child and the child’s at-risk factors, if applicable.
F. The department shall expend federal child care
assistance funds, including required state match and
maintenance of efforts amounts, for federally eligible
children prior to expending state funds for child care
assistance. The department shall reasonably ensure that
eligible federal and state child care tax benefits are
maximized.
G. The department shall provide child care
assistance to children aged six through twelve years who are
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eligible for federal child care assistance, and the
department shall not exceed thirteen thousand child care
assistance slots for children aged six through twelve years
who are not federally eligible, except as provided for a
child through age eighteen years if that child is under court
supervision or is physically or mentally incapable of
self-care. The department shall maintain a waitlist and
prioritize applicants based on whether an application is for
an at-risk child and on families' annual incomes from lowest
to highest percentage of the federal poverty level."
SECTION 6. A new section of the Children's Code is
enacted to read:
"PAYMENT RATES FOR CHILD CARE ASSISTANCE SERVICES.--
A. Payment rates for the child care assistance
program shall be subject to the availability of funds and
shall be set by rule of the department and updated as
required by federal law. Payment rates shall:
(1) be based on a cost estimation model in
accordance with the requirements of the federal child care
and development fund program authorized by the federal Child
Care and Development Block Grant Act of 1990, as amended;
(2) correspond to differences in quality
based on the tiered quality rating system of the department;
(3) be sufficient to meet the requirements
of each tier and ensure adequate wages for child care
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facility staff;
(4) include thresholds appropriate for each
facility type and age groups of children and full-time,
part-time or wrap-around care;
(5) include a differential rate for care
that is provided during nontraditional hours of operation;
and
(6) incorporate feedback and input from
early childhood education and development experts, a diverse
group of child care facilities of a variety of facility
types, families and organizations representing child care
directors, tribal representatives, advocacy organizations,
teachers and other relevant parties as determined by the
department.
B. The department may create an enhanced monthly
rate schedule with a monthly payment rate not to exceed an
average of ten percent above the rate provided in
Subsection A of this section for a child care facility.
C. The portion of the rates set pursuant to this
section that are used for salaries and benefits and toward
the wage scale and career ladder shall be determined by rule
of the department, with a report submitted to the legislature
within two weeks of making a determination pursuant to this
subsection."
SECTION 7. A new section of the Children's Code is
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enacted to read:
"REQUIREMENTS--CHILD CARE FACILITIES--EARLY INTERVENTION
PROVIDERS.--
A. A child care facility that participates in the
child care assistance program shall:
(1) not accept or receive child care
assistance for hours that a child is enrolled in a head start
program or an early head start program or an early
pre-kindergarten program or a pre-kindergarten program,
except when determined necessary by the department;
(2) not accept or require payment or
donations in any form from an eligible child's family who is
participating in the child care assistance program for an
eligible child to be admitted or enrolled beyond the rate
paid by the department for the hours paid for through the
child care assistance program;
(3) refer an at-risk child to appropriate
programs of the department and, when applicable, to an
appropriate tribal department for services;
(4) meet and maintain required training as
set by rule of the department to identify and refer at-risk
children to home visiting and the family, infant, toddler
programs of the department and of tribal departments, as
appropriate;
(5) meet and maintain required professional
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development and certification pathways, as set by rule of the
department;
(6) not unreasonably exclude early
intervention providers from accessing a child care setting to
provide early intervention services. If intervention
providers are excluded for any reason, a facility shall
notify the department within forty-eight hours;
(7) report to the department program
participation, daily hours of operation, days of care
provided annually, professional qualifications of staff
members, including staff members' roles and levels as
established in the department's wage scale and career ladder
framework, salaries and benefits for each employee and the
employee benefit structure;
(8) submit an annual report to the
department by July 1 of each year in a manner prescribed by
the department that contains the following child care
facility business information:
(a) the legal name and address of the
business;
(b) the legal name and address of any
management company, owner or entity with a direct or indirect
ownership interest in the business;
(c) the name and address, if
applicable, of any members of a board of directors of the
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business;
(d) the legal structure of the
business, including its form of organization;
(e) the legal structure of any owner or
ownership entity of the business;
(f) each investment in the business by
any person or entity comprising a ten percent equity stake or
greater;
(g) each debt or lien against the
business comprising at least ten percent of the annual
revenue of the business;
(h) all documentation of any changes in
ownership of the business in the past five years, including
sales, transfers, mergers or acquisitions; and
(i) all details of any out-of-state
sources of funding or investment for the business; and
(9) comply with department requirements
promulgated by rule.
B. If a child is referred for early intervention,
an early intervention provider shall not intervene without
express authorization by the parent, legal guardian or
custodian of the child.
C. The department shall create a reporting
mechanism for early intervention providers to report
suspected child abuse or neglect occurring in a child care
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facility and for a child care facility to report suspected
child abuse or neglect by early intervention providers.
D. A child care facility that participates in the
child care assistance program shall notify the department of
any ownership changes to the facility within sixty days of
the transaction closing.
E. Funds received by a child care facility for
services provided by the facility pursuant to the child care
assistance program shall not supplant funds pursuant to the
state equalization guarantee distribution or funds
appropriated for instructional or general funding.
F. Nothing in the Child Care Assistance Program
Act shall be construed to limit language- and culturally
appropriate child care or limit any educational regulations
adopted by Indian nations, tribes or pueblos related to
language- and culturally appropriate child care."
SECTION 8. A new section of the Children's Code is
enacted to read:
"DEPARTMENT DUTIES--SHARING OF INFORMATION.--
A. The department shall develop the child care
assistance program to enhance child care quality and improve
the development of participating children. Through the
administration of the child care assistance program, the
department shall promote parental choice, allowing parents to
choose the care that best suits the child's family through a
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mixed delivery system that may include public, private,
nonprofit, for-profit, faith-based and tribal child care
facilities. In carrying out its duties, the department
shall:
(1) implement internal controls that ensure
integrity of and accountability for the child care assistance
program while maintaining continuity of the program; and
(2) report any suspected intentional misuse
of funds to local law enforcement and the local district
attorney or the attorney general for prosecution; provided
that upon a report being made to law enforcement pursuant to
this paragraph, the department shall report the suspected
intentional misuse of funds by the child care facility to the
state auditor, who shall investigate the child care facility.
B. The department shall perform at least two
unannounced visits per year to each child care facility that
shall include a compliance review of the Child Care
Assistance Program Act requirements and compliance with the
rules set by the department.
C. Registered child care providers shall not be
eligible for capital improvement costs, maintenance costs or
repair costs funded by the state or through the child care
assistance program. The department shall provide by rule a
pathway for licensure of registered child care providers.
D. By September 1, 2026 and each September 1
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thereafter, the department shall provide to the legislative
health and human services committee and the legislative
finance committee a report on implementation of the Child
Care Assistance Program Act, including costs, a review of the
cost estimation model and payment rates set pursuant to
Section 5 of the Child Care Assistance Program Act, program
participation by child care facility type, children and
families served by that act, the distribution of child care
assistance based on an eligibility category, income and race
or ethnicity by the tiered quality rating system throughout
the state, participation in the child and adult care food
program by child care facility type and the information
reported pursuant to Paragraphs (7) and (8) of Subsection A
of Section 7 of that act.
E. All agencies that are part of the children's
cabinet pursuant to the Children's Cabinet Act shall share
data and other information necessary with the department in
order for the department to carry out the provisions of the
Child Care Assistance Program Act."