SPOKANE — Nearly half the babies in Washington are born into poor families.
This legislative session, some lawmakers and the state treasurer are once again trying to pass a proposal they say will break cycles of poverty.
“Within days of one’s birth, people are sent into two different economic trajectories,” State Treasurer Mike Pellicciotti said. “Those families of means who are able to set money aside — set up savings accounts, buy stocks — for that child, and then the 47 percent of Washingtonians who don’t have those financial means.”
The Washington Future Fund would create a trust fund program for the roughly 40,000 children born each year under the state’s Medicaid program, Apple Health. Those children would be granted access to a trust fund after turning 18 up until they reach age 35 to be used toward homeownership, launching a small business or higher education.
Along with four-year colleges, Future Fund recipients could use their money to pay for community college and apprenticeship programs. Frequently, young adults don’t have enough money to pay for licensing and trade education.
“The Future Fund is so critical in that initial ability to even engage in the larger economy because of the capital barriers that otherwise limit that person’s ability to even start earning money,” Pellicciotti said.
Under the proposal, a minimum of $4,000 would be set aside for each eligible child to access when they’re 18 to 35 years old. The program would cost the state roughly $125 million annually. The state treasurer estimated the $4,000 trust fund would grow to roughly $15,000 by the time recipients turn 18. And if the recipients wait longer to collect the cash, they could have as much as $35,000 waiting for them in the bank.
Pellicciotti said there might be challenges getting the bill passed this upcoming legislative session because the state won’t enact another budget until 2025. But he said the treasurer’s office pulled in $1.8 billion over the last four years through improved investment returns that could fund the program.
The Future Fund bill — also called the baby bonds bill — picked up bipartisan support in the last legislative session and passed through policy committees in the state House and Senate. It sits awaiting review in the fiscal committees of the House and Senate.
Across the country, the idea of baby bonds gained popularity among state lawmakers in 2020 as Black Lives Matter protests broke out after Minneapolis Police Officer Derek Chauvin murdered George Floyd, an unarmed Black man.
The model was intended to address centuries-old racial and economic inequalities in the United States.
Connecticut and Washington, D.C., recently passed legislation to launch their own baby bonds programs. Along with Washington, other states are currently considering the model, including California, Massachusetts and Nevada.
David Radcliffe is an economist and the director of state and local initiatives at the New School’s Institute on Race Power and Political Economy. He previously served as policy director for the Connecticut Office of the Treasurer when the state passed its own baby bonds program in 2021. The first eligible baby for Connecticut’s program was born July 1. Since then, about 1,000 eligible babies are born in the state each month.
While he supports policies that target income supplementation and housing, Radcliffe said economists and lawmakers need to do more to fix the country’s deep economic inequalities.
“A lot of existing policies don’t necessarily change the income or wealth trajectory for a family,” Radcliffe said. “That is a reason that we continue having to invest considerable resources, year after year, in those areas. But something like baby bonds as part of that larger basket of policies that support families today while investing in tomorrow is a really important consideration. It’s not an either or.”
