California OKs ‘baby bonds’ to help combat child poverty

Parenthood – that long chain of decisions that we hope will lead to a full adult – has always been a little less stressful for Laura Guerra because her husband, Rigo, was “100% involved” by their daughter, Emilia.

But Rigo died of COVID-19 on Christmas Eve 2020, alone in a hospital room as Guerra helplessly watched from the other side of a window. Since then, left to raise her 2-year-old daughter mostly on her own, Guerra’s mind hasn’t stopped racing.

“I’m constantly thinking,” she said. “Every decision I make, if I make the wrong decision, she’s going to suffer for it. And that scares me a lot.”

Now, California is using some of its record budget surplus to help soothe the minds of Guerra and others like her. Last month, California became the first state to commit to creating trust funds for children who have lost a parent or guardian to the pandemic.

The money — $100 million in total — will go toward interest-bearing accounts for children from low-income families who have lost a parent to COVID and for children who are in the state’s welfare system. State lawmakers have not decided how much money each child will receive, but an initial proposal would give younger children $4,000 and older children $8,000. That would be enough to provide funding for around 16,000 children, who could spend the money when they become adults.

“As a mother, it gives me back some of that security,” said Guerra, who advocates for trust funds as a member of the advocacy group COVID Survivors for Change. “I don’t want her to remain a victim of this virus forever.”

The first US savings bonds were introduced in the 1930s to raise money for the government and give ordinary Americans an opportunity to invest. These bonds were nicknamed “baby bonds” because parents used to buy them for their children.

These modern baby bonds are different because, instead of being bought by parents, the government gives the money away for free to children from low-income families. Advocates have championed the idea as a way to help close the racial wealth gap between white and minority families, who were largely excluded from federal wealth-building programs during the Great Depression.

Hillary Clinton briefly included a baby titles proposal in her 2008 presidential campaign platform, and US Senator Cory Booker has introduced a national baby titles bill in Congress that has yet to pass.

The Washington D.C. City Council passed a bail program for babies in 2021, pledging to give low-income children $500 plus another $1,000 each year their parents remain below a certain income level. Last year, Connecticut was the first state to pass a statewide baby titles program — though it has yet to be funded.

The idea is similar to guaranteed income programs that give money to low-income people every month with no restrictions on how they can use it. California has several such programs at the local level, modeled on the high-profile demonstration project in Stockton, launched three years ago.

While guaranteed income programs aim to help people with short-term expenses, baby bonds are about the future. Children could not touch the money until they reached adulthood. During that time, money would grow by collecting interest payments from a bank.

How much money the children will receive depends on how long the account grows. For younger children, advocates expect them to have between $20,000 and $40,000 when they become adults.

“Income and wealth are different things,” said Michael Tubbs, a former mayor of Stockton who is now an adviser to Governor Gavin Newsom and founder of the advocacy group End Poverty in California. “People should have the means to pay their bills today… but the next generation shouldn’t have to live paycheck to paycheck.”

California’s baby bond program is the latest in a wave of new spending aimed at fighting poverty. Since 2018, California has spent $13 billion on a series of new laws and policy changes that have lifted some 300,000 children out of poverty, according to a report released earlier this year by Grace, a California-based nonprofit. .

These expenses include a $1,000 tax credit for low-income families with young children, a universal school lunch program, college savings accounts for low-income children, and a commitment to send all 4-year-olds to kindergarten free of charge. of childhood.

The group hopes California’s baby bond program is just a first step. His goal is to eventually get the state to give trust funds to all children in the state born into a low-income family.

“The goal has always been, ‘How can we better help prepare low-income children for their future?’ said Shimica Gaskins, president and CEO of Grace. “We really trust educational pathways, but we also know that money and assistance in money and opportunities are equally important.”

It is unclear whether the Legislature would expand the program to include all children from low-income families. State Senator Nancy Skinner, a Democrat from Berkeley and chair of the Senate Budget Committee, said lawmakers will closely monitor the COVID survivor bond program to see how it works.

“The great irony of California, especially, but the nation as a whole, is that we have so much wealth, but it’s so concentrated,” Skinner said. “Anything we can do to address this income inequality is essential.”

The state treasurer’s office will manage the money in interest-earning accounts. Once the recipients become adults, they can spend the money however they want. But advocates hope they’ll use it for things like a down payment on a house, college tuition or a car.

Guerra said he doesn’t know how his daughter would use the money when she’s old enough to spend it.

“I do what I can to steer her in the right direction and make her a good human being, right?” she said.

For now, she’s focused on making sure her daughter, Emilia, remembers her father. So far, her efforts seem to be working.

Emilia Guerra sees her father everywhere. It’s in the framed pictures on the walls of her room. He’s on her mother’s phone screen. And he’s in the recesses of her 2-year-old mind, showing his face to her at scattered moments in her hectic life.

“Randomly, we’ll be sitting somewhere and she says, ‘Hi, Dad!’” Guerra said. “I tell her Mom can’t see Dad. But maybe she can.”

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