New Mexico Whistleblower Claims She Was Fired for Flagging $83m Childcare Budget Shortfall

Ryan J. Farrick — July 30, 2026

Two lanes of school busses on road; image by Juan-Carlos Becerra, via Unsplash.com.

The lawsuit claims that, when Pacheco-Aragon told agency Secretary Elizabeth Groginsky that state law requires written authorization and legislative approval for budget adjustments, finding out later that the ECECD had only secured verbal permission for the reallocations through the New Mexico Department of Finance and Administration.

The former chief financial officer for the New Mexico Early Childhood Educ ation and Care Department has filed a lawsuit against the agency, claiming that its leaders retaliated against her after she raised concerns that the implementation of a universal childcare program had caused an apparent $83 million budget shortfall.

According to SourceNM, the lawsuit was filed earlier this week on behalf of whistleblower Carmel Pacheco-Aragon. In court filings, attorneys for Pacheco-Aragon say that the department’s upper-level management tried to disguise the deficit by moving funding between varied and unrelated programs.

The lawsuit claims that, when Pacheco-Aragon told agency Secretary Elizabeth Groginsky that state law requires written authorization and legislative approval for budget adjustments, finding out later that the ECECD had only secured verbal permission for the reallocations through the New Mexico 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,” said Jacob Candelaria, an attorney representing Pacheco-Aragon. “That’s what’s happening, from what we can tell.”

SourceNM notes that state Gov. Michelle Lujan Grisham first announced the program in September. Under its provisions, the state agreed to lift income restrictions on free childcare beginning in November. The framework for the universal childcare program was signed into law earlier this week; it requires co-pays from higher-earning families during times of economic uncertainty.

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Pacheco-Aragon, for her parts, claims that she was “abruptly put on administrative leave” in early July; her bosses did not cite any particular allegation or reason or her termination.

But, several days before her leave was scheduled to commence, Pacheco-Aragon says she was told by a department official that she had been suspended for BCC’ing a long-time personal friend on an email that reflected her “deep anxieties regarding the agency’s handling of its childcare assistance program budget shortfall.”

Pacheco-Aragon remains on leave and believes that her “termination from employment at ECED is imminent.”

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

In a statement to SourceNM, ECECD Deputy Secretary Kendal Chavez said that Pacheco-Aragon “is currently on administrative leave pending an active HR investigation. However, she was not placed on administrative leave for the reasons alleged in the complaint. We cannot make any additional comment on this personnel matter.”

Chavez also said that the allegations regarding the childcare budget are “false,” with ECECD having “worked closely with the Department of Finance and Administration and the Legislative Finance Committee to appropriately and lawfully meet our child care expenditures.”

“We will respond to these allegations in court,” she said, adding that ECED “does not and will not take retaliatory action against any employee for coming forward with information, questions, or concerns about the operations of our department.”