A state audit found that New Mexico’s Children, Youth and Families Department misspent more than $4.2 million of a $20 million appropriation intended for behavioral health services, with additional funds remaining unspent due to delays.
Audit Findings
State Auditor Joseph Maestas found that CYFD improperly spent more than 20% of the appropriation on group homes and other shelter-related services (congregate care), which are ineligible for federal Medicaid reimbursement. The Legislature had specifically stipulated that the 2022 appropriation be directed toward “behavioral health and community child welfare services” eligible for federal Medicaid spending. Additionally, $6 million of the initial $20 million remained unspent due to procurement delays. The audit also identified lax internal controls and insufficient documentation. According to Maestas, “Invoices and supporting documentation frequently lacked sufficient detail to demonstrate compliance with federal eligibility requirements or to substantiate that costs represented start-up activities rather than ongoing operational expenses.”
Agency Response
CYFD spokesman Jake Thompson stated the agency did not believe it acted improperly, saying “expenditures were made in good faith to expand behavioral health services and strengthen community child welfare capacity.” He noted the department sought and relied on legal and fiscal counsel before spending. CYFD, under new leadership following Governor Michelle Lujan Grisham’s appointment of Valerie Sandoval as acting secretary in September, is implementing new internal controls and updating processes.
Legislative Oversight
The Legislative Finance Committee had requested the audit after the 2022 appropriation went largely unspent. Rep. Meredith Dixon, chairwoman of the LFC’s child welfare subcommittee, stated the findings confirm “the need for continued robust legislative oversight at CYFD.” CYFD has struggled with high staff turnover among social workers and a repeat maltreatment rate of nearly 16% in the first quarter of the current budget year—nearly double the national average. The number of children in foster care in New Mexico exceeded 2,000 monthly as of July 2025.
This article is an AI-assisted summary. All facts and figures are drawn from the original report: https://www.abqjournal.com/news/audit-finds-cyfd-misspent-funding-intended-to-expand-behavioral-health-services-for-children/2990023