Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance
committees of the Legislature. LFC does not assume responsibility for the accuracy of these reports if they
are used for other purposes.
F I S C A L I M P A C T R E P O R T
SPONSOR Gallegos/Johnson
LAST UPDATED
ORIGINAL DATE 2/14/25
SHORT TITLE
Earl Childhood Education & Care Fund
Transfer
BILL
NUMBER House Bill 71
ANALYST Klundt
APPROPRIATION*
(dollars in thousands)
FY25 FY26
Recurring or
Nonrecurring
Fund
Affected
$210,000.0 Recurring
Early Childhood
Education and Care
Program Fund
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
Relates to Senate Bill 167
Senate Joint Resolution 6
Sources of Information
LFC Files
Agency Analysis Received From
Early Childhood Education and Care Department (ECECD)
State Investment Council (SIC)
SUMMARY
House Bill 71 (HB71) increases the distribution to the early childhood education and care
program fund to $500 million in FY26. Current legislation requires the trust fund to distribute to
the program fund each year on July 1 an amount equal to the greater of 5 percent of the fund’s
average year-end market value over the previous three years or $250 million. HB71 increases
this distribution to the greater of 5 percent of the fund’s average year-end market value over the
previous three years or $500 million.
FISCAL IMPLICATIONS
The LFC budget recommendation for House Bill 2 does not include an increased distribution of
revenues from this fund, however the executive recommendation does.
From SIC:
Based on current law, the ECECF annually distributes the greater of $250 million or 5
percent of the prior three-year average market value. Without any changes, the FY26
distribution from the trust fund would be $303.3 million. Using consensus revenue House Bill 71 – Page 2
estimate assumptions for inflows and returns, the ECECF would distribute an estimated
$410.9 million to the program fund in FY27, and distributions could begin to exceed
$500 million a year in FY28 or FY29.
This bill increases the minimum required annual distribution from $250 million to $500
million, which would effectively “speed up” the timing for the trust fund to begin making
distributions of this size or greater.
Source: SIC
The fiscal impact is an additional $196.7 million from the corpus of the trust fund to the program
fund in FY26 and an estimated additional $89.1 million from the corpus of the trust fund to the
program fund in FY27.
Source: LFC Files and ECECD
House Bill 71 – Page 3
SIGNIFICANT ISSUES
The SIC table below shows the long-term estimated impact of this “speed up” to the corpus of
trust fund and the size of the distributions to the program fund using a 5 percent long-term
annual return assumption, consistent with the assumptions of the Consensus Revenue Estimating
Group (CREG), which consists of economist from the Legislative Finance Committee and
executive branch.
Using a 5 percent return assumption results in a “flattening” of the long-term fiscal impact
because the interest earnings on the trust fund corpus is assumed to be equal to the 5 percent
distribution rate to the program fund.
5% Long Term Return Assumption (Consensus Revenue Estimate)
Trust Fund Market Value Distributions to Program Fund
Calendar
Year Current Proposed Difference
Fiscal
year Current Proposed Difference
2020 $ 306.1 $ 306.1 $ - FY20 $ -
2021 $ 314.1 $ 314.1 $ - FY21 $ -
2022 $ 3,462.0 $ 3,462.0 $ - FY22 $ 20.0 $ 20.0 $ -
2023 $ 5,721.2 $ 5,721.2 $ - FY23 $ 30.0 $ 30.0 $ -
2024 $ 9,015.8 $ 9,015.8 $ - FY24 $ 150.0 $ 150.0 $ -
2025 $ 9,918.0 $ 9,721.3 $ (196.7) FY25 $ 250.0 $ 250.0 $ -
2026 $ 10,893.8 $ 10,598.2 $ (295.6) FY26 $ 303.3 $ 500.0 $ 196.7
2027 $ 11,529.0 $ 11,215.8 $ (313.3) FY27 $ 410.9 $ 500.0 $ 89.1
2028 $ 12,022.9 $ 11,707.4 $ (315.5) FY28 $ 497.1 $ 500.0 $ 2.9
2029 $ 12,603.0 $ 12,287.1 $ (315.9) FY29 $ 539.0 $ 525.6 $ (13.4)
2030 $ 12,920.4 $ 12,604.5 $ (315.9) FY30 $ 574.1 $ 558.7 $ (15.4)
2031 $ 13,199.2 $ 12,883.3 $ (315.9) FY31 $ 602.6 $ 586.8 $ (15.7)
2032 $ 13,432.7 $ 13,116.8 $ (315.9) FY32 $ 625.8 $ 610.0 $ (15.8)
2033 $ 13,580.5 $ 13,264.6 $ (315.9) FY33 $ 645.4 $ 629.6 $ (15.8)
2034 $ 13,648.2 $ 13,332.2 $ (315.9) FY34 $ 659.2 $ 643.4 $ (15.8)
2035 $ 13,668.5 $ 13,352.5 $ (315.9) FY35 $ 670.2 $ 654.4 $ (15.8)
2036 $ 13,670.3 $ 13,354.4 $ (315.9) FY36 $ 677.7 $ 661.9 $ (15.8)
2037 $ 13,670.7 $ 13,354.8 $ (315.9) FY37 $ 681.6 $ 665.8 $ (15.8)
2038 $ 13,670.7 $ 13,354.8 $ (315.9) FY38 $ 683.1 $ 667.3 $ (15.8)
2039 $ 13,670.7 $ 13,354.8 $ (315.9) FY39 $ 683.5 $ 667.7 $ (15.8)
2040 $ 13,670.7 $ 13,354.8 $ (315.9) FY40 $ 683.5 $ 667.7 $ (15.8)
2041 $ 13,670.7 $ 13,354.8 $ (315.9) FY41 $ 683.5 $ 667.7 $ (15.8)
2042 $ 13,670.7 $ 13,354.8 $ (315.9) FY42 $ 683.5 $ 667.7 $ (15.8)
2043 $ 13,670.7 $ 13,354.8 $ (315.9) FY43 $ 683.5 $ 667.7 $ (15.8)
2044 $ 13,670.7 $ 13,354.8 $ (315.9) FY44 $ 683.5 $ 667.7 $ (15.8)
2045 $ 13,670.7 $ 13,354.8 $ (315.9) FY45 $ 683.5 $ 667.7 $ (15.8)
2046 $ 13,670.7 $ 13,354.8 $ (315.9) FY46 $ 683.5 $ 667.7 $ (15.8)
2047 $ 13,670.7 $ 13,354.8 $ (315.9) FY47 $ 683.5 $ 667.7 $ (15.8)
2048 $ 13,670.7 $ 13,354.8 $ (315.9) FY48 $ 683.5 $ 667.7 $ (15.8)
2049 $ 13,670.7 $ 13,354.8 $ (315.9) FY49 $ 683.5 $ 667.7 $ (15.8)
2050 $ 13,670.7 $ 13,354.8 $ (315.9) FY50 $ 683.5 $ 667.7 $ (15.8)
House Bill 71 – Page 4
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
This bill relates to SJR6, which proposes constitutional amendment to New Mexico voters that, if
passed, would amend Article 20 of the New Mexico Constitution by adding a new section that
will make the early childhood trust fund a permanent fund in the state treasury that may be used
only for prenatal programs and services and programs and services that serve children until they
are eligible for kindergarten.
Senate Bill 167 (SB167) proposes updates to the statutes governing the early childhood
education and care fund on the ratification of the constitutional amendment introduced by Senate
Joint Resolution 6 (SJR6). The proposed changes include:
Increasing the annual distribution from the fund from $250 million to $500 million,
Renaming the fund to the early childhood trust fund,
Requiring consultation with the Early Childhood Education and Care Department
(ECECD) for investments into the fund,
Clarifying that, under the constitutional amendment proposed by Senate Joint Resolution
6 (SJR6), the fund may only be used for “prenatal programs and services and for early
childhood programs and services for children until they are eligible for kindergarten.”
KK/hj/hg