The state of Connecticut will soon be giving what amounts to nearly $11,000 to each child born in poverty.
The goal of this “baby bond” program is to invest in kids who, through no fault of their own, are forced to play catch-up from day one of life.
Connecticut has the highest per capita income, but also one of the worst wealth gaps in the nation.
The state will set aside $50 million every year to invest $3,200 for each child born who’s enrolled in Medicaid. When these kids turn 18, that money will have grown to that nearly $11,000 amount that they could then claim and invest back into themselves.
“It’s about fighting poverty. It’s also about racial equity because a disproportionately high number of black and brown children are born into poverty in our state,” said State Treasurer (D) Shawn Wooden.
“All of this is being recycled into our state’s economy and that’s why it’s an economic growth bill as well,” he continued.
But there’s a small catch. When these kids turn 18, they can’t just go out and buy whatever they want. There are certain things they can use that $11,000 for including education, investing in a home in Connecticut, and/or starting a business in the state.
Kids eligible for the bond program have to be born in Connecticut and they have to be a state resident when they receive the money.
They also have to take a financial literacy course before any funds are given out, according to officials.
Wooden told NBC Connecticut that these “baby bonds” can be the key to breaking the generational cycle of poverty.
“We must do things that help people right now and keep people afloat, but we also, if we’re going to look for long term, structural change and really shifting the trajectory of our state, we have to look longer term,” Wooden said.
Wooden said there wasn’t much opposition to the plan, but there were a lot of questions about how it would be paid for.
In short answer, the $50 million per year is funded through state “general obligation bonds,” not through an increase in taxes.
The initiative is the first of its kind to become law anywhere in the United States.