Massachusetts is considering the idea of launching trust funds for the state's poorest newborns, which they could access when they turn 18.
The “baby bonds” are designed to reduce income inequality in the state and can be used for things like paying for college, buying a home or starting a business.
Connecticut was the first state to launch the groundbreaking policy in 2021, and California later adopted a similar program. Several other states, including Vermont, New York and New Jersey, have also considered proposals.
The Massachusetts bill, introduced by Democrat Sen. Paul Feeley, says the amount given to each eligible newborn will depend on family income, and does not specify a maximum amount.
However, a national version of the bill, which has been stalled in Congress since February, proposes giving each child a $1,000 seed deposit at birth, followed by annual deposits of up to $2,000, depending on the parents' income.
Children from the lowest income families could accumulate $46,215 by their 18th birthday, under the proposed American Opportunity Accounts Act, and eligible families in the highest income bracket could earn about $1,681.
Massachusetts is considering the idea of launching trust funds for the state's poorest newborns, which they can access when they turn 18 and use to buy their first home
The “baby bonds” are designed to reduce income inequality in the state and can be used for pursuits such as paying for college, buying a home or starting a business
About 32.9 percent of children currently enrolled in Massachusetts' financial aid program are Latino, while 28.1 percent are white and 26.7 percent are black
With an estimated 8,000 babies qualifying each year in Massachusetts, the program could cost about $52 million annually, according to the Boston Globe.
The legislation does not specify who qualifies for the money, but the Baby Bonds Task Force recommends automatic enrollment for infants under one year old participating in the state's Transitional Aid to Families with Dependent Children program.
The Baby Bonds Taskforce, launched in 2022, also recommends including foster babies under the age of one in the care of the Department and Children and Families.
About 32.9 percent of children currently enrolled in the aid program are Latino, while 28.1 percent are white and 26.7 percent are black.
The baby bonds have also been presented as a way to ease racial inequality in the East Coast state, where Black people are disproportionately most likely to be born into low-income families.
According to the Federal Reserve Bank of Boston's 2015 Color of Wealth report, black families in Boston had an average net worth of $8, compared to $247,500 for white families, as reported by the Globe.
Senator Feeley, who introduced the bill in Massachusetts, said the program will make middle-class life and the American dream attainable for people born into poverty.
He said the baby bonds will “build wealth from the bottom up and from the middle” to put poorer people “on a path to real opportunity from day one.”
“By investing early in a child's life, we give individuals an advantage who would otherwise be at a disadvantage, narrowing the racial wealth gap and giving our most vulnerable residents a fighting chance against the middle class and the American Dream. Feeley said.
The Massachusetts bill, introduced by Democrat Sen. Paul Feeley (pictured), says the amount given to each eligible newborn will depend on family income, and does not specify a maximum amount.
Treasurer Deborah B. Goldberg (pictured), whose office would oversee the program, said it would help alleviate “generational poverty” in the state
Recipients of baby bonds can use the money to start a business
Treasurer Deborah B. Goldberg, whose office would oversee the program, said it would help alleviate “generational poverty” in the state.
She told me Boston sphere that officials have not yet identified a funding source for the program — but the proposed bill would allow private donations in addition to state money.
“Hopefully it becomes a priority and gets the funding it needs,” Goldberg said.
The idea has not been prioritized in D.C., so Democratic state lawmakers have tackled the issue at the regional level.
In Connecticut, low-income babies received $3,200 from the state at birth, which will be held in the bonds and earn interest until they are 18 years old.
Last year, California approved a trust fund of up to $8,000 each for children who lost a parent or guardian to COVID-19.