New Mexico will become the first state to offer free universal childcare, the governor Michelle Lujan Grisham announced this week, an expansion of an existing program that has helped lift tens of thousands of people out of poverty.

Beginning 1 November, the state will guarantee no-cost childcare to all residents, regardless of their income level in what the governor’s office described as a “groundbreaking new initiative”.

“Child care is essential to family stability, workforce participation, and New Mexico’s future prosperity,” Lujan Grisham said in a statement. “By investing in universal child care, we are giving families financial relief, supporting our economy, and ensuring that every child has the opportunity to grow and thrive.”

In 2022, the state became the first to offer childcare at no cost to most families, making it free for those who earned up to 400% of the federal poverty level, which amounts to about $124,000 for a family of four. About half of the children in the state qualified.

The development yielded significant results in the state, one of the poorest in the US, and its poverty rate began to fall. Early childhood educators saw reduced poverty rates as New Mexico raised wages for childcare workers and changed its subsidy reimbursement rates to reflect the actual cost of providing care. One researcher described it as a “generational change”.

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Residents who received assistance said they experienced greater financial stability and had more time to spend with their children, the governor’s office said. One resident told the Guardian earlier this year that the support from the state had allowed her to finish college, enroll in nursing school and buy groceries for her family.

The expanded program will amount to an annual average savings of $12,000 per child for families, according to the governor’s office. The state will also establish a $12.7m loan fund to build and renovate childcare facilities, and launch a campaign to recruit home providers.

Neal Halfon, a professor of pediatrics and public health at the University of California, Los Angeles, was quoted in the statement as saying that the state’s data-focused and community-driven approach made it a “model for the nation”.

“New Mexico is creating the conditions for better outcomes in health, learning, and well-being,” said Halfon, who is also a professor of public policy and the director of UCLA’s Center for Healthier Children, Families and Communities.