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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