Child care providers would face limits on state contract spending

Licensed providers would face limits on spending money received through state child care contracts. The limits would cover licensed child care and early childhood care programs receiving contract money from New Mexico's Early Childhood Education and Care Department. Contract money could not pay monitoring, franchise, or management fees to the provider's top parent company, or executive pay or bonuses to an investment firm or fund. An investment firm primarily invests money for ownership, control, or other assets. A covered fund is managed by such a firm and primarily invests money for those purposes. A covered fund accepts investments only from accredited investors under federal law or federally recognized Indian nations, tribes, and pueblos with at least $5 million in investment assets. Contract money could not fund operations outside New Mexico.

Contracted providers could not distribute capital to owners or investors or use the listed property-sale arrangement. These restrictions would cover licensed child care and early childhood care programs contracted with New Mexico's Early Childhood Education and Care Department. The payout ban includes dividend recapitalizations, which involve borrowing to pay dividends, and other distributions of capital. The property ban covers selling program-owned real estate, taking the sale proceeds, and entering a lease or other arrangement that makes the program pay rent to another business.

New Mexico's Early Childhood Education and Care Department would send business and financial reports to the legislative health and human services committee. Reports would cover the listed information about licensed child care and early childhood care programs and their related companies. Reports would list controlling companies and related businesses, parent-company executive pay, each program's debt compared with earnings, and debt totals for programs and New Mexico operations. Reports would cover parent-company acquisitions and closures of New Mexico child care programs and related services during the past year, plus fees or dividends paid to investors. Reports would list program property leases and purchases, rent and maintenance costs, property taxes, and leasing companies. The department could include other information. The first report would be due by December 1, 2026, with another due every December 1 thereafter. Business structures would be reported as of each report's submission.