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 Muñoz
LAST UPDATED
ORIGINAL DATE 3/6/2025
SHORT TITLE Pathway Act for Foster Children
BILL
NUMBER Senate Bill 509
ANALYST Garcia
APPROPRIATION*
(dollars in thousands)
FY25 FY26
Recurring or
Nonrecurring
Fund
Affected
$4,000 Nonrecurring
Early Childhood
Education and Care
Fund
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT*
(dollars in thousands)
Agency/Program
FY25 FY26 FY27
3 Year
Total Cost
Recurring or
Nonrecurring
Fund
Affected DFA
(Pathway
Program)
No fiscal impact At least $340 At least $340 At least $680 Recurring
Other state
funds
TRD No fiscal impact Up to $14.6 No fiscal impact Up to $14.6 Nonrecurring General Fund
Total No fiscal impact At least $354.6 At least $340
At least
$694.6
Recurring
Other state
funds and
General Fund
Parentheses ( ) indicate expenditure decreases. *Amounts reflect most recent analysis of this legislation.
Relates to House Bill 404
Sources of Information
LFC Files
Children’s Bureau, Administration for Children and Families
Agency Analysis Received From
Administrative Office of the Courts (AOC) Office of Family Representation and Advocacy (OFRA) Tax and Revenue Department (TRD) Agency Analysis was Solicited but Not Received From
Children, Youth and Families Department (CYFD) Department of Finance and Administration (DFA)
State Treasurer
Senate Bill 509 – Page 2
Because of the short timeframe between the introduction of this bill and its first hearing, LFC has
yet to receive analysis from state, education, or judicial agencies. This analysis could be updated
if that analysis is received.
SUMMARY
Synopsis of Senate Bill 509
Senate Bill 509 (SB509) establishes the New Mexico Pathway Act and Pathway Program, which
would provide a one-time $2,000 payment which shall be transferred to the bank accounts of
eligible adults who were previously in foster care.
The bill outlines the following eligibility criteria:
A beneficiary must have spent a cumulative 18 months in foster care,
A beneficiary must have reached the age of 18 on or after January 1, 2026, and
A beneficiary must have successfully completed a financial literacy course.
SB509 establishes the Pathway Program Fund as a non-reverting fund within the State Treasury
to accept appropriations, transfers, donations and gifts related to the Pathway Program and from
which to distribute funds for beneficiaries. The bill requires money in the fund be invested by the
state treasurer.
SB509 would require the Department of Finance and Administration (DFA) to administer the
Pathway Program, in consultation with Children, Youth and Families Department (CYFD), who
must periodically share information with DFA necessary for the department to identify and
enroll children in foster care in the program and requires DFA confirm beneficiary eligibility.
SB509 clarifies benefits shall not be guaranteed and notes money distributed to beneficiaries is
not subject to state income tax.
SB509 appropriates $4,000,000 from the Early Childhood Education and Care Fund to Pathway
Program fund for expenditure in fiscal year 2026 for the purpose of administering the Act
established in the bill.
The effective date of this bill is January 1, 2026.
FISCAL IMPLICATIONS
Roughly 2,100 children are in foster care currently in New Mexico, and the median length of
stay is 18 months. However, because foster care data is reported in monthly snapshots, it is
difficult to determine the total number of children who have ever been in foster care for 18
months or more and who may be eligible for the benefit proposed in the bill.
According to New Mexico data reported through the federal Administration of Children and
Families, roughly 0.46 percent of the state’s total child population under age 18, is in foster care.
Children may experience more than one incidence of foster care, and the state’s rate of repeat
maltreatment within the 12 months of an incidence of maltreatment was 15 percent in FY24. For
the purpose of this analysis, LFC estimates between 120 and 150 young people could turn 18 and Senate Bill 509 – Page 3
could become eligible for the benefit each year, at an annual cost estimated between $240
thousand and $300 thousand. If the number of young people eligible for the benefit is higher,
annual benefit distributions could be higher, and the appropriation to the fund will be spent down
more quickly.
Neither DFA nor LFC provided analysis for the bill. LFC estimates at least one FTE at least one
entity might be needed to administer the program, at a cost of roughly $100 thousand annually.
The Office of Family Representation and Advocacy (OFRA) notes the bill will have no fiscal
impact to OFRA but notes program costs could exceed the appropriation if all children who were
in foster care at any time throughout their lifetime for 18 months are eligible, beginning with
children who were in foster care and turn 18 on or after January 1, 2026.
The appropriation of $4,000,000 contained in this bill is a nonrecurring expense to Early
Childhood Education and Care Fund. Any unexpended or unencumbered balance remaining at
the end of FY26 shall revert to the Early Childhood Education and Care Fund. This appropriation
is not included in the HAFC substitute for the General Appropriations Act.
Taxation and Revenue Department (TRD) notes:
Under federal law, the disbursements of $2,000 to beneficiaries from the Pathway
Program Fund would not be taxable income. Because New Mexico conforms with federal
taxation in this regard, these disbursements to beneficiaries would not be taxable income
for State of New Mexico purposes. Therefore, there is no state revenue impact.
TRD reports the bill would require the agency to update forms, instructions, publications, and
information systems, at a one-time cost of roughly 220 staff hours or $14,661. It is possible the
agency could absorb some of these costs in their operating budget.
SIGNIFICANT ISSUES
According to the Child Welfare Information Gateway of the federal Administration for Children
and Families, young people who transition out of foster care face many challenges as they
transition to adulthood and prepare to live on their own. A 2024 literature review published in
the Children and Youth Services Review notes in relation to peers in the general population,
children and youth with experiences in foster care generally have poorer educational, economic,
housing, health, substance, and criminality outcomes. In addition, this research finds significant
differences among children and youth who have experienced foster care, depending on their
permanency outcomes; comparing former foster children and youth who were adopted to those
with other permanency placements finds that those who are adopted experience more positive
life outcomes than their non-adopted peers. Similarly, research suggests children and youth who
experience stable foster care before aging out or who continue to receive child welfare services
after the age of 18 have similar life outcomes to children who are adopted. However, the research
is less clear for children and youth who are reunited with their families.
1
1
Lindner, A. R., & Hanlon, R. (2024). Outcomes of youth with foster care experiences based on permanency
outcome–Adoption, aging out, long-term foster care, and reunification: A systematic review. Children and Youth
Services Review, 156, 107366. Senate Bill 509 – Page 4
SB509 does not limit eligibility based on permanency outcome; beginning January 1, 2026 any
person over the age of 18 in New Mexico who was in foster care for 18 months of longer at any
age, regardless of permanency outcome, such as adoption or reunification, would be an eligible
beneficiary of the program. According to 2023 New Mexico foster care exit data reported by the
Children’s Bureau of the Administration of Children and Families, 24 percent of exits were to
adoption; 53 percent were to family reunification; 14 percent were to guardianship, and the
remainder exited to some other placement, such as emancipation.
Young people who age out of foster care without achieving permanency experience particular
challenges transitioning to adulthood. According to the federal Administration for Children and
Families, youth aging out of foster care experience considerable challenges. One in four adults
who age out will experience homelessness by age 19, one in five will be incarcerated by age 19,
and one in 10 will become parents by age 19. Additionally, just 57 percent of adults who age out
of foster care report being employed at age 21.
The federal Foster Care Independence Act of 1999 established the John H. Chafee Foster Care
Independence Program, also known as the Chafee Foster Care Program for Successful transition
to Adulthood (Chafee Program). Federal funding administered through the Chaffee Program are
intended to help youth transitioning out of foster care to achieve self-sufficiency. New Mexico’s
annual Chafee Program allocation is roughly $800 thousand annually. The federal Chafee statute
also includes a separate authorization for the Education and Training Voucher (ETV) program.
States may use ETV funding to provide a voucher—worth up to $5,000 each year or the cost of
attendance (whichever is less)—for a Chafee-eligible youth to attend an institution of higher
education, as these terms are defined by the Higher Education Act (HEA). New Mexico’s
allocation is roughly $250 thousand annually.
In 2019, the Legislature adopted the Fostering Connections Act, which created an extended
foster care program and extended the available age for support and services to young adults
involved with CYFD from age 18 to age 21. Extended support programs include supportive
housing, connections to community-based behavioral health services, job assistance, food access,
and financial assistance for higher education. Youth enrolled in Fostering Connections are
eligible to receive a $750 maintenance payment each month. The Fostering Connections
Program is voluntary, and young adults who age out of foster care are not required to receive
services. Fostering Connections is funded through Temporary Assistance for Needy Families
(TANF) and Chaffee Program revenues.
In FY23, CYFD reported that roughly 280 young adults received in-home services through the
Fostering Connections Program, roughly 58 young adults participated in extended foster care
behavioral health service coordination, and roughly 34 young adults received transitional living
supportive housing.
According to the federal National Youth in Transition Database data for New Mexico, which
tracks cohorts of youth who age out of foster care, among the 2020 to 2024 surveyed cohort of
youth who aged out of foster care, at age 19:
44 percent had obtained a high school credential or GED and 0 percent had achieved
post-secondary education,
56 percent reported receiving public food assistance, and
11 percent reported experiencing homelessness at the time of the survey.
Senate Bill 509 – Page 5
SB509 would provide a one-time payment of $2,000 to eligible adults to be used for housing,
education, or workforce training expenses.
ADMINISTRATIVE IMPLICATIONS
Agency analysis noted the bill is vague regarding how CYFD and DFA should collaborate to
administer the program. The bill would likely require the two agencies to work together to
confirm eligibility and make distributions to former foster youth.
The bill does not specify whether or not DFA may use any appropriations to the fund for the
purposes of program administration, though the bill DFA shall administer the fund.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
Relates to House Bill 404, which creates a 3-year pilot program to pay monetary cost-of-living
stipends not to exceed $2 thousand to former foster children or children adjudicated under the
Delinquency Act under the age of 26 who participated in or aged out of the Fostering
Connections Program.
If the allowable uses of the Early Childhood Care and Education Fund change, the proposed use
of the fund of the Pathway Program may not be allowable.
TECHNICAL ISSUES
TRD notes because the Pathway Act benefit will not be taxable income for either federal or state
purposes, the bill may be simplified by deleting Section 6 in the bill.
OTHER SUBSTANT IVE ISSUES
The Administrative Office of the Courts (AOC) reports while Section 5 of SB509 states the
provisions of the Pathway Act do not guarantee any benefits and shall not be construed to create
an interest in property that does not otherwise exist or is enforceable under state law, it is
possible that a person who has been denied beneficiary status might bring an action seeking to
challenge that denial. In addition, AOC notes the bill does not establish procedures for
challenging any denial of beneficiary status.
RMG/hj/sgs