Those living in poverty don’t grow up with the expectation of getting a higher education or starting a business, and that’s something state Treasurer Shawn Wooden is asking lawmakers to help change.
Wooden has been on the move to discuss HB 6659, An Act Concerning the Establishment of the Connecticut Baby Bonds Trust, a proposal that would set up a savings account for every baby born on HUSKY, the state’s insurance program for low-income families.
Wooden appeared at the University of Bridgeport this week and, earlier this month, at the Neighborhood Housing Services of Waterbury to discuss the bill. Wooden, said the feedback he has received from legislators, students and experts in regional economic development has been positive.
“They know that CT Baby Bonds is the most direct way to narrow the wealth gap and address long-standing economic inequality by providing opportunities for homeownership, higher education, business ownership and retirement security to individuals who would otherwise not have access to them,” Wooden said via email. “When I talk about this program, people from a wide range of backgrounds, including representatives from various organizations who testified in support of the bill, agree that it’s time to lay the groundwork to create a stronger, fairer, and more resilient state by addressing the long-standing economic disparities that currently plague far too many communities across Connecticut and hurt our economy.”
Under the proposal, every Connecticut resident born on or after July 1, and enrolled in HUSKY, would receive a trust held by the state in which $5,000 is allocated at birth. Residents can access the funds from the age of 18 until the age of 30. The money can be used to pay for higher education, invest in a business, make a downpayment on a home or contribute to retirement funds. Assuming a 6.9% rate of return, the recipient would receive a total of $16,618 at age 18, officials said.
In addition to reaching age 18, participants would have to complete a financial literacy education requirement before claiming the funds. Lawmakers are still working out the exact details.
The Appropriations Committee voted last month to send the bill to the House for consideration.
“This is an attempt to level the playing field,” Wooden told a group gathered at the University of Bridgeport. He added that there are people in all the state’s 169 towns and cities that could access this program.
There is also a federal proposal for Baby Bonds, titled the American Opportunity Accounts Act, which is co-sponsored by U.S. Sen. Richard Blumenthal. This legislation would create and seed a national savings account of $1,000 at birth for children born into poverty, with additional deposits of up to $2,000 each year, depending on household income, officials said.
A 2019 report from Columbia University analyzed the federal proposal and found that it would nearly eliminate the racial wealth gap for young adults. Measures such as these would also ignite economic growth, they said.
Wooden points to his own background growing up in the North End of Hartford. He said he had supportive parents, a strong work ethic and an academic scholarship to help him achieve his goals.
“I was able to make it. But, when I think about so many of the people I grew up with who didn’t, I know it is not simply because they didn’t pull themselves up by their bootstraps. There were just too few bootstraps to pull,” Wooden said.
“More children who grow up without access to generational wealth need to have the opportunity to thrive. CT Baby Bonds would not only impact families in every town across Connecticut, but would also generate economic growth that will benefit Connecticut’s economy in the long-term.”