Beginning next year, New Mexico families could gain access to a new stream of privately funded scholarships for tutoring, special-education services, books, computers, after-school programs and, in some cases, private-school tuition — all without creating a new state tax credit or drawing money from New Mexico’s general fund.
Gov. Michelle Lujan Grisham’s decision to opt New Mexico into the new Federal Scholarship Tax Credit has therefore produced an unusual political split in Santa Fe: Republicans are applauding the Democratic governor, while prominent Democrats and teachers unions are attacking her decision.
One of the sharpest criticisms came Saturday from House Education Committee Chairman G. Andrés Romero, D-Albuquerque, who used an Albuquerque Journal op-ed to accuse Lujan Grisham of “selling out” New Mexico public schools.
Romero called the program a “disastrous educational voucher” and argued that it would redirect public resources toward private and religious education.
But several details of the federal program complicate that description.
Unlike a traditional state voucher appropriation, New Mexico is not transferring money out of its public-school budget to finance the scholarships. The credit is taken against federal income taxes after individuals donate money to approved nonprofit scholarship-granting organizations.
The governor’s office explicitly said participation “will not cost New Mexico taxpayers or adversely affect state tax revenues or appropriations.”
And the scholarships are not limited to children attending private schools.
Under the federal law, qualified educational expenses can benefit eligible students in public, private and religious schools, while the governor says scholarships could pay for reading or math tutoring, special-education services, computers, educational software, internet access, books, supplies and supplemental public-school programming.
How the program works
Beginning Jan. 1, 2027, an individual taxpayer can receive a dollar-for-dollar federal income tax credit of up to $1,700 for cash donated to an approved scholarship-granting organization, commonly called an SGO.
Married couples filing jointly can potentially claim up to $3,400 because each spouse may qualify for the $1,700 credit.
The program was enacted as Section 25F of the Internal Revenue Code.
To qualify, an SGO must be a tax-exempt nonprofit, maintain scholarship contributions separately from other money and spend at least 90% of its income on scholarships for eligible students. It must serve at least 10 students who do not all attend the same school and cannot allow donors to earmark their contributions for a particular child.
Students qualify if their household income does not exceed 300% of the area median gross income and they are eligible to enroll in a public elementary or secondary school.
The governor’s office says the IRS estimates more than 90% of K-12 students will meet that income test in New Mexico.
That has become one of Romero’s main complaints.
Romero warns eligibility is too broad
Romero argued that the income ceiling could allow relatively affluent families to participate, writing that families earning “up to $600,000 per year” could qualify in some circumstances.
However, the federal statute does not establish a nationwide $600,000 income ceiling. Eligibility varies according to the local area median income and household size.
For perspective, Albuquerque’s official 2026 area median income for a four-person household is $100,400. Three times that amount would be about $301,200, not $600,000. Even for an eight-person Albuquerque household, three times the listed median would be approximately $397,800.
Romero’s broader point remains that the federal threshold extends well into the middle and upper-middle class rather than limiting scholarships only to families near the poverty line.
But supporters view that breadth as a feature rather than a flaw, arguing educational expenses such as tutoring and special-needs services can strain families well above traditional poverty thresholds.
Romero says New Mexico already has ‘school choice’
“We already have school choice in New Mexico,” Romero wrote, pointing to transfers between district schools, magnet programs and the state’s more than 100 charter schools.
That argument addresses the number of school options available to families, but not necessarily the cost of accessing services outside a school’s existing offerings.
The new federal scholarships could be used by a public-school family that has no intention of leaving the district system at all — for example, to obtain additional tutoring, special-education services or technology.
The governor highlighted precisely that possibility when she announced her decision.
“At a time of diminishing federal investment in education, New Mexico must take advantage of every dollar we can to bolster public education,” Lujan Grisham said.
“By participating in the FSTC, we will give New Mexico taxpayers the chance to keep some of their federal income taxes in New Mexico to support New Mexico students.”
Her decision represented a reversal from her earlier position. Lujan Grisham had initially indicated opposition to joining the federal program but spent much of 2026 reconsidering participation before formally opting in Nov. 4.
Ramos: ‘Common sense’
Republican Sen. Gabriel Ramos of Silver City, the ranking member of the Senate Education Committee, praised the Democratic governor for changing course.
“Opting into this program is common sense,” Ramos said. “It puts more opportunities in front of New Mexico students and lets parents choose the tutoring, services, or school that fits their child’s needs.”
Ramos emphasized that both public- and private-school students can benefit and that the program does not require a state appropriation.
“This program does not cost the state a dime, and public school students can benefit right alongside private school students,” Ramos said.
He also pointed to New Mexico’s persistent academic struggles, arguing the state should be reluctant to reject additional educational resources while student proficiency remains weak.
“Whatever we have been doing in New Mexico, education has been a cataclysmic failure for our kids,” Ramos said. “We cannot keep doing the same thing and expecting different results.”
Romero is right about one important limitation
One portion of Romero’s criticism is supported by the emerging federal rules.
He complained that New Mexico cannot opt into the program and then rewrite it to restrict scholarships only to particular categories favored by state policymakers — such as students covered by the landmark Martinez-Yazzie education case.
Proposed Treasury regulations specifically say participating states cannot impose additional SGO requirements more stringent than the federal rules or restrict the federally defined categories of qualified educational expenses.
In other words, New Mexico can choose whether to participate, but once it does, it cannot simply transform the federal credit into a state-designed scholarship program.
Romero argues that deprives local policymakers of the ability to concentrate assistance where they believe it is most needed.
Supporters counter that preventing states from narrowing the program is precisely what preserves parental choice and prevents a future administration from excluding otherwise eligible students or educational options.
Teachers unions cry bloody murder
Romero is hardly alone among Democrats in opposing the governor.
AFT New Mexico President Whitney Holland and NEA-New Mexico President Bethany Jarrell called the decision “nothing short of a betrayal,” while Democratic Senate Education Committee Chairman William Soules said the program feels like “backdoor vouchers.”
Holland has warned that expanding scholarship access could eventually reduce public-school enrollment and lead to school closures or educator job losses.
Those effects remain projections because the federal program has not yet begun.
Only about 7% of New Mexico’s approximately 310,500 K-12 students currently attend private schools, according to figures cited by the Journal, meaning most potential scholarship recipients currently attend public schools.
Support has also come from outside Republican politics. The National Catholic Educational Association praised Lujan Grisham’s decision while stressing that the scholarships can support children attending public, private and religious schools.
More than 30 states already aboard
New Mexico is also far from alone.
As of Nov. 13, the IRS lists 32 states, including politically diverse states such as Colorado, Virginia and New Mexico, as participating for 2027.
That puts Lujan Grisham in the unusual position of defending a signature education policy created under a Republican-controlled federal government against opposition from members of her own party.
Romero closed his op-ed by arguing that the governor is “undermining our public education system” by participating.
The governor has reached essentially the opposite conclusion: if federal tax policy is going to make this money available, refusing to participate would leave New Mexico students unable to access scholarships available to children across much of the country.
The first scholarships are scheduled to become available in 2027.
Before then, New Mexico’s Public Education Department must establish the process for qualifying SGOs, families will have to apply for assistance, and the political fight is almost certain to continue into the next administration.
Ramos has already warned that lawmakers may revisit the issue in January.
For families, however, the practical question is far simpler: beginning next year, New Mexico’s decision means eligible students will have access to an additional source of educational assistance — whether they attend a traditional public school, a private school or something in between.