State Launches Ambitious 'Baby Bonds' Program Targeted At Closing Racial Wealth Gap
July marks the first month of Connecticut’s newly-enacted “baby bonds” program, which will annually invest $50 million for the benefit of children born into poverty.
Speaking on July 1, the first official day of the program, State Treasurer Shawn Wooden said the baby bonds legislation is a racial equity bill and an economic growth bill all in one.
“For far too long, we’ve seen the most vulnerable in all communities throughout our state grapple with the realities of economic inequality,” Wooden said. “We must do something about economic inequality in our state now.”
The program works like this.
For each child whose birth is covered by the state’s medicaid program, $3,200 will be allocated to that child, put into a trust, and invested by the state treasurer’s office until the child reaches the age of 18.
When a beneficiary is between the ages of 18 and 30, and they have completed a financial education requirement, they will be allowed to access the funds, which state officials said could grow to around $11,000 per child by the time they reach the age of 18.
Once disbursed, the money would have limited uses. It can only be put toward education, a down payment on a home in Connecticut, investment in an entrepreneurial pursuit or Connecticut business, or as a contribution toward retirement savings.
“Connecticut is ground zero for wealth and income disparities,” Wooden said. “Starting [July 1] the first babies born on HUSKY will become eligible for this program and be able to reap these transformational benefits when they turn 18 in 2039.”
“I know that sounds like a long time,” Wooden said. “But we must think long-term if we’re going to be serious about structural change -- deep change reform -- that’s real and lasting.”
Expectant mother Talisha Tirado said she feels relief right now that the state has passed this program. She said it will benefit her daughter when she’s born in the coming months.
“When I heard about this I felt like a lot of weight was lifted off my shoulders,” Tirado said. “I don’t have to stress so much about putting a savings aside or worry so much about where this money is going to go when she turns 18. I’m grateful for the fact that it can only go to these four things.”
According to the public act, money in the trust cannot be considered an asset for the purposes of calculating financial aid at public educational institutions in the state.
CT Baby Bonds will be funded annually through state general obligation bonds for the next 12 years.