Treasurer Erick Russell, Gov. Ned Lamont and Democratic lawmakers unveiled a plan Tuesday to finally launch the state’s Baby Bonds program.
After finding $381 million in funding, Russell said the state can start setting aside $3,200 for each child born after July 1 who is covered by Husky, the state’s Medicaid program.
“This is an example of how we can invest in people, and think about the long term future for lifting up all of our residents,” Russell said during Capitol press conference.
In reaching a deal with Lamont, Russell was able to finally start a program that had been in limbo since lawmakers passed the program in 2021.
The state will utilize $381 million that had been set aside in a reserve account when the state borrowed money to help fund the pension program for retired teachers. The reserve fund was meant to cover any missed payments.
Russell says the state is now in a better financial position and can afford insurance to cover that risk. The $381 million otherwise would have gone back into the state’s budget reserve in 2032, but he suggested to Lamont the state use it for Baby Bonds instead.
“I pushed Erick pretty hard,” Lamont said. Initially, lawmakers wanted to use bonding to fund the program, but Lamont said he didn’t want to do something ”that’s going to saddle taxpayers” with roughly $165 million in interest.
The program approved by lawmakers is slated to last for 12 years. For each eligible child born during that time period, the state will deposit $3,200 into a trust.
Those children can withdraw the money between the ages of 18 and 30 and can use the funds for certain approved expenses, like attending college, buying a home or starting a business.
Sen. Patricia Billie Miller, D-Stamford and chairwoman of the Black and Puerto Rican Caucus, said this program was important to her caucus. Many members raised their hands when she asked how many experienced poverty growing up.
“The children today that are in poverty — these children are struggling and I don’t want them to go through what I went through,” Miller said.
The agreement does require legislative approval. Democratic leaders voice their support for the compromise.
“We were looking to do something that could be transformative for people who often don’t come into any kind of inheritance at any time in their lives,” Senate President Martin Looney, D-New Haven said.
House Minority Leader Vincent Candelora, R-North Branford, said he still wanted to see the details Tuesday afternoon, but he was concerned about using money put aside to protect bond payments.
“We are really, I guess, squeezing out every penny that we can possibly squeeze out and spending it,” he said.
Russell said the $381 million fully funds the programs. He estimated each child would receive $11,000 and $24,000, depending on how long they wait before withdrawing.
Members of the Black and Puerto Rican Caucus said Baby Bonds will give a boost to people growing up in poverty, allowing them to be a bigger part of the state’s overall economy.
“We keep talking about the kids graduating and leaving,” said Rep. Geraldo Reyes, D-Waterbury. “This could be one of the reasons they stay.”