Former NM state agency budget director alleges shortfall, retaliation related to universal childcare

The New Mexico Early Childhood Education and Care Department’s former budget director sued the state agency Tuesday, alleging she was fired last month after alerting senior leadership to an internal budget shortfall.

Kimberly Gonzales’ lawsuit, filed in the state’s First Judicial District Court, alleges that ECECD leaders began investigating her after she claimed the department was facing a $258 million shortfall, partially due to the state’s new universal childcare program, which began in November.

In court filings, Gonzales says she began reporting irregularities in mid-November. In particular, she alleges that she flagged issues with universal childcare payments, an $83 million budget shortfall facing the universal childcare program and a $155 million shortfall of State Investment Council funds that had not yet been transferred to the agency. The lawsuit claims she also identified a funding shortfall for personnel and recommended a hiring freeze.

She consistently voiced these concerns through late 2025 and early 2026, the lawsuit alleges, until she received a notice that she was under investigation in late June. The department subsequently put her on administrative leave and fired her, the lawsuit says.

“Our client correctly — doing her job — stepped in to set the record straight and correct material misrepresentations,” Jacob Candelaria, an attorney and former state lawmaker who’s representing Gonzales, told Source NM. “She lost her job for doing her job.”

This marks Candelaria’s second lawsuit against the department in a week. He filed one on behalf of its chief financial officer on July 30. That suit alleged that department leaders put CFO Carmel Pacheco-Aragon on leave after she alerted them to an $83 million budget shortfall related to the universal childcare program.

ECECD officials have denied the allegations in both lawsuits, which were filed under the New Mexico Whistleblower Protection Act.

Candelaria also represented three Republicans who argued that Gov. Michelle Lujan Grisham unlawfully implemented the universal childcare program late last year. The trio lost their case in District Court in June and the New Mexico Supreme Court subsequently shot down their appeal.

In an email to Source NM, ECECD Deputy Secretary Kendal Chavez called Gonzales’ lawsuit “another manufactured and unfounded allegation by Jacob Candelaria who has shown dedication to taking down Universal Child Care and taking vital benefits from New Mexico’s families and children at all costs.”

“These allegations are false,” she wrote. “ECECD has never and will never take retaliatory action against employees for coming forward with information, questions, or concerns about the operations of our department. We cannot comment on the specifics of this litigation, but we will bring the facts to court, and we are confident we will prevail once again.”