Little Corral Day School serves Albuquerque’s eastside.

“So this is our threes class,” said director Natalie Aragon as she gives me a tour. There, kids are having a snack of cheese and crackers.

The next stop is the infant room, where I meet veteran teacher Miss Daisy, who’s been here long enough to remember Aragon’s Little Corral days.

“Look, that used to be one of my babies. When she was a baby girl, Miss Natalie was one of my little friends,” she said.

ABQ Child Care, the nonprofit that runs this and three other daycares around the city, is a family operation started by Aragon’s grandparents.

“We've been in business for over 50 years, serving the community,” she said.

Over the years, Aragon’s family has seen a lot of changes to New Mexico’s child care market, but none as seismic or as sudden as the recent announcement that the state would become the first to make all families eligible for its childcare subsidy, regardless of income. The change is having a major impact on families there, but it’s having an effect on businesses too — like ABQ Child Care.

“I was, of course, excited for our families,” Aragon said.

The state reimbursement is more than what she charged for private pay tuition, which Aragon said should help stabilize her very low margin operation. But she has some reservations.

“In the past, we kept our rates low, and a lot of families came to us because we were a lot cheaper,” she said.

ABQ Child Care’s pitch was affordability; it attracted families with military and teacher discounts.

“So we're trying to figure out, like, where do we market to now? I believe in our quality and care that that will keep our families, but now people have a lot more options,” she said.

ABQ Child Care has a highly trained staff and low kid-to-teacher ratios. What it doesn’t have is a big marketing budget.

“Parents aren't very good at judging the quality of care, unfortunately, and so that does make it harder for the providers to compete on actual quality,” said Jessica Brown, an economist who studies child care markets at the University of South Carolina.

She said it’s possible this new system could initially favor centers that attract parents with glossy websites promising organic snacks, stimulating STEM activities, and backyard chicken coops. Meanwhile, other centers may have to recalibrate their business models.

“I think there’s going to be a lot of adjustment costs to the policy,” Brown said. “It does take some time to iron out the details and figure out the best way to respond.”

If the change spurs more demand for childcare, Brown said that would smooth things out.

Natalie Aragon was ready for a surge in applications come Nov. 1, but at least so far, she’s only seen a trickle. “I think a lot of people were like, ‘Oh, did you guys get a ton of new kids today?’ We're like, ‘No, but we hope we do soon.’”

To match that possible boost in enrollment, Aragon is also doubling down on hiring efforts. ABQ Child Care just raised its starting wage to $16 an hour, in response to an incentive from the state — a move that Aragon hopes will pencil out and pay off.