New Mexico state agency CFO files lawsuit alleging $83M budget shortfall from universal childcare

The New Mexico Early Childhood Education and Care Department’s chief financial officer is suing the department and alleging that its leaders retaliated against her for raising concerns that the implementation of the universal childcare program late last year caused an $83 million budget shortfall.

Carmel Pacheco-Aragon filed the whistleblower protection lawsuit in the state’s First Judicial District Court late Wednesday evening. In the lawsuit, she alleges that ECECD leaders illegally shuffled funding between programs to cover the shortfall.

The lawsuit says she told ECECD Secretary Elizabeth Groginsky that state law requires written authorization and legislative approval for such budgetary adjustments — and alleges that ECECD leaders had only secured verbal authorization from the state Department of Finance and Administration.

“The law doesn’t take this position of, ‘Do whatever the hell you want. We’ll figure it out next session.’ That’s not how the appropriation statutes work,” Jacob Candelaria, an attorney and former state lawmaker who’s representing Pacheco-Aragon, told Source NM Thursday. “That’s what’s happening, from what we can tell.”

Candelaria previously represented a trio of Republicans who unsuccessfully challenged the legality of the state’s universal childcare program. After a Second District Court judge denied their claim in June, Candelaria appealed to the New Mexico Supreme Court, where he similarly lost.

The Early Childhood Education and Care Department did not respond to Source NM’s request for comment Thursday morning prior to publication.

Gov. Michelle Lujan Grisham first announced the program in September. The state lifted income restrictions on free childcare in November. Earlier this year, she signed a bill into law that provided a framework for the program, such as requiring co-pays from high-earning families during economic downturns.

Pacheco-Aragon’s lawsuit contends that she was “abruptly put on administrative leave” in early July and that department leaders did not provide her with specific allegations. Days after going on leave, the suit says a department official told Pacheco-Aragon she was suspended because she had BCC’d a longtime personal friend on an email that reflected her “deep anxieties regarding the agency’s handling of the childcare assistance program budget shortfall.”

As of the filing of the lawsuit, she is still on leave and “believes her termination from employment at ECED is imminent,” it says.

“That is textbook whistleblower protection retaliation,” Candelaria said.

Her lawsuit seeks reinstatement to her job and two times the amount of her backpay plus interest.