by Christian Wade
Connecticut leaders are moving ahead with plans to establish a “baby bond” program to provide every child born into poverty in the state with a $3,200 savings account to help close a racial wealth gap.
A tentative agreement reached this week between Gov. Ned Lamont, Treasurer Erick Russell and legislative leaders calls for spending $381 million to create the “first in the nation” Baby Bonds Trust, which would provide eligible newborns with a bond that would grow in value to upwards of $24,000 over time.
The deal, which requires legislative approval, would fund the new program by repurposing state reserves set aside during a restructuring of a teachers’ retirement fund in 2019, and replace those funds with what state officials described as a “relatively inexpensive” insurance policy.
Lamont said the compromise plan will save taxpayers more than $200 million from the initial proposal which called for borrowing money to start the program.
“This is a win for Connecticut,” he said in a statement. “This plan will save taxpayers’ dollars, avoid excessive bonding costs, respect our financial guardrails and ensure that we are not sacrificing programs that help people today.”
The new bonds would be deposited for babies born after July 1, who would qualify if they are enrolled at birth in Husky Health, the state’s Medicaid program for low-income residents, according to the Lamont administration.
Beneficiaries would be able to claim the bond funds between 18 and 30 years old, which could rise to an estimated $24,000 from the initial deposit. The funds must be used for buying a home in the state, investing in a business, paying for higher education, job training or savings for retirement, according to the Lamont administration.
It’s unclear how many new babies would participate in the new program, but Connecticut says about 15,000 children are covered by the state’s Medicaid program annually.
Russell, a longtime advocate for the baby bonds proposal, said the program “has the potential to transform the future of our state by providing opportunity and economic resources to the next generation of young Connecticut residents, regardless of the financial circumstances of their families.”
But Republicans criticized the plan to fund the new program by repurposing teachers’ pension debt when the state is concerned about maintaining its fiscal guardrails, providing tax relief and investing in public education.
“This seems to undermine the message of fiscal responsibility the governor has promoted throughout the session, and the vague mechanics of how they’ll simply take $380 million for this program certainly deserves more scrutiny,” House Minority Leader Vincent Candelora, R-North Branford, said in a statement.
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Christian Wade is a contributor to The Center Square.