New Mexico’s historic move to give universal child care to parents in the state is paid for by an oil and gas windfall

An ambitious universal child care program aimed at fully footing the bill for working families across New Mexico is being enshrined into law, with state legislators making good on promises by Democratic Gov. Michelle Lujan Grisham to make the state the first in the nation to offer such a program to families of all income levels.

As parents across the nation grapple with crippling daycare bills that threaten to keep them at home and out of the workforce, political leaders from New York to San Francisco have been angling to expand access to free and subsidized care. The political stakes are high as the potential for budget uncertainties and fraud looms large.

California has opted to eliminate copayments for some families, while Washington and Oregon cap what families pay. In Vermont, a payroll tax on employers funds child care subsidies.

In New Mexico, the plan relies heavily on the financial windfall from oil and gas production — including earnings from a recently minted $10 billion trust fund for early childhood education. It’s a delicate balance for a progressive governor who initially set out to rein in the industry.

“I think you’re going to see more states look for ways to do it,” the governor said Thursday. “It’s really a workforce engine, while paying real respect to the affordability affordability crisis that families have.”

Lujan Grisham wraps up her tenure next year, and state lawmakers wary of unchecked spending opted during the legislative session that ended Thursday to take a cautious approach. They’re leaving the door open to copayments if public finances deteriorate. That’s a compromise Lujan Grisham had to make.

Putting up guardrails

As much as $700 million more will be funneled over the next five years to New Mexico’s child care assistance program, state officials said. Copayments are unlikely and would require 90-days notice to families.

Decisions on possible cost-sharing will be tied to new annual reporting requirements. The early education agency has new authority to monitor how much child care providers pay employees, manage debt and structure their businesses.

State Sen. George Muñoz, cosponsor of the bill, said the Legislature seized an opportunity to put guardrails in place.

“We didn’t want to end up like Minnesota, where all of the sudden there was rampant fraud,” he said, referring to allegations by U.S. prosecutors that billions in federal funds were stolen from Minnesota-run programs for children with autism, addiction services and more.

Taking the weight off families

Families stand to benefit enormously, Muñoz said, explaining free care will put money back in their pockets.

Marianna Eanone of Las Cruces said her income combined with her husband’s Army salary was just above the previous cutoff for child care assistance. They used to pay $1,000 a month to send their 3-year-old to a licensed home daycare provider, along with afterschool care for their kindergartener.

“It’s been a weight off to not have to worry about that,” said Eanone, who works for a program that connects families with child development services.

There’s now wiggle room to afford things like occasional takeout from local restaurants, martial arts classes for her 6-year-old, bigger payments toward student loan debt and savings for the future, she said.

And those benefits resonate with voters.

“They are sending a really strong signal about the importance of child care to the well-being of the families in the state, the well being of the economy, of businesses,” said Karen Schulman, senior director of child care policy for the National Women’s Law Center.

New Mexico gradually raised income limits on assistance for child care — until stepping into universal care on Nov. 1, making 25,000 more children eligible. It saves families on average $14,000 a year per child.

Prioritizing vulnerable children

The New Mexico legislation allows the state to create a waitlist when demand for assistance outpaces available slots. It’s an effort to prioritize access for children in vulnerable circumstances — ranging from extreme poverty to disabilities and those at risk of developmental delays.

It’s also a response to concerns that the rapid expansion of child care subsidies to all income brackets may squeeze out slots for low-income families. Attendance from low-income families declined as assistance expanded to higher income brackets, according to a review by legislative analysts.

Elizabeth Groginsky, secretary of New Mexico’s early childhood education department, said lawmakers also left financial breathing room for recently adopted incentives to improve child care quality, raise base wages and expand operating hours through enhanced rates paid by the state.

Still, child care slots remain in short supply across wide swaths of New Mexico, even as the state extends assistance beyond working parents to grandparent guardians, foster parents and people experiencing homelessness.

Legislators have sent a separate bill to the governor to scale up more home-based daycare and child care centers in residential areas by overriding some local zoning and permitting requirements, including homeowner association restrictions on child care.

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AP reporter Moriah Balingit contributed from Washington.

This story was originally featured on Fortune.com