Proposed Law Would Create Trust Funds For Lowincome Babies To Address States Wealth Gap

About half of the babies in Washington are born to poor families.

At this legislative session, several members of the DPR and the state treasurer once again tried to submit proposals to the DPR that they thought could break the cycle of poverty.

“People are sent in two different economic directions within days of being born,” said state Treasurer Mike Pelliciotti. Wealthy families who can afford to save for these children – by opening savings accounts, buying stocks – and 47% of Washingtonians who do not have the necessary financial resources.

Future Fund Washington established a trust fund program for nearly 40,000 children born each year through the state's Apple Health Medicaid program. From ages 18 to 35, these children receive trust funds that can be used to buy a home, start a small business, or pursue higher education.

In addition to four-year colleges, Future Fund recipients can use their money to support community colleges and apprenticeship programs. Young adults often do not have enough money to obtain a business license or training.

“Term funds are critical to the initial ability to participate in the economy as a whole, because capital constraints limit the person's ability to make money,” Pelliciotti said.

Under the proposal, they would provide at least $4,000 for every eligible 18 to 35 year old. The program costs the state about $125 million annually. The state treasurer estimates the $4,000 trust fund will grow to about $15,000 when the beneficiary turns 18. And recipients can leave up to $35,000 in the bank if they wait longer to get the money.

Pellicciotti said it may be difficult to pass the bill in the next legislative session because the state won't pass a new budget until 2025. But he said the treasurer's office has raised $1.8 billion over the past four years and has achieved better results. return on investment in supporting the program.

The Future Funds Bill – also known as the Child Bond Bill – received bipartisan support during the last legislative session and passed both the House and Senate policy committees. It awaits review by the House and Senate Finance Committees.

The idea of ​​youth bonding gained traction among state lawmakers when Black Lives Matter protests erupted across the country in 2020 after Minneapolis police officer Derek Chauvin killed an innocent Black man and unarmed George Floyd.

This model aims to eliminate centuries-old racial and economic disparities in the United States.

Connecticut and Washington, DC, recently passed laws establishing their own child care programs. In addition to Washington, other states are considering this model, including California, Massachusetts, and Nevada.

David Radcliffe is an economist and director of state and local initiatives at the New School Institute on Racial Power and Political Economy. She previously served as policy director in the Connecticut Treasurer's Office when the state adopted its own baby bond program in 2021. The first baby eligible for the program in Connecticut was born on July 1. Since then, about 1,000 eligible babies have been born each month in the state.

Despite supporting measures focused on income support and housing, Radcliffe said economists and lawmakers need to do more to address the country's deep economic disparities.

“Many existing policies do not necessarily change household income or the trajectory of wealth,” Radcliffe said. “This is one of the reasons why we are forced to invest huge amounts of resources in these areas every year. But it's an important question when we invest in the future, such as baby bonds, which are part of a suite of policies that support families. Today. Not one of them."

In Spokane County, 53% of births will be covered by Medicaid in 2020. More than 70% of births in Adams, Grant, Ferry, Okanogan and Yakima counties are covered by Medicaid. Regionally, ethnic minorities and rural residents are more likely to be born into poverty than white residents and metropolitan residents.

Ritzville Republican Sen. Mark Schoessler does not support the child bond proposal because family income often increases over time.

“For example, they might be born into a family – let's say they went to WSU,” Schoesler said. “As a child, you are of course eligible for this program. But when you are 16, your family can have a very good income, because society's income generally increases over time.”

According to Pellichiotti, the state constitution prohibits the government from giving state money to citizens unless they are poor. Therefore, program rules require that anyone receiving future payments from the fund have a minimum income. The proposal would create a committee to oversee the program and help determine how poverty is defined in the state constitution, Pelliciotti said.

Schoessler, the former Senate minority leader, also worries the program will reduce the state's investment in education.

I represent two universities and probably know students and their parents better than anyone. They are tired,” Schözler said. “Ask the average hard-working taxpayer how much tax they pay. They say they already pay too much tax to open a new claim.

Rep. Marcus Ricelli, a Spokane Democrat, sponsored the bill in the House last year. Medical bills are the leading cause of bankruptcy in the United States. Therefore, financial security and medical health go hand in hand.

“Stress or stress caused by financial problems is a proven cause of mental health problems,” said Ricelli, who chairs the House Health and Wellness Committee. "

We see all the consequences of poverty, whether you can afford a place to live, whether you can put food on the table. This creates a huge financial burden and causes huge psychological problems.

The Washington Legislature meets for its first day on January 8. This year, the session will last 60 days.

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