Efforts to close the wealth gap in Vermont are on hold for now after lawmakers decided not to fund a program that would have created investment accounts for babies born into low-income families.
Legislation introduced in both the House and Senate that seeks to disrupt generational poverty by giving young Vermonters a financial lift as they head into adulthood.
The state would have deposited $3,200 into individual accounts for the estimated 2,000 babies born annually into Medicaid-eligible households. Analysts estimate the bonds would be worth $11,500 when a child turns 18. The program would have allowed them to use the money to purchase a home in Vermont, start or invest in a local business, or transfer the funds into a retirement account.
Addison County Sen. Ruth Hardy, one of the bill鈥檚 sponsors, said financial constraints prevented lawmakers from moving forward with the plan.
鈥淲e sort of had to make some pretty difficult decisions about what our priorities were, and creating and funding a new program was just not, at the end of the day, something we could do this year,鈥� Hardy said.
State Treasurer to lawmakers earlier this year, said he鈥檚 still hopeful the program will materialize. Legislation that鈥檚 expected to win final approval in the Senate when lawmakers return for their veto session next month would authorize his office to begin a pilot program with private funding.
鈥淚t would not be the full implementation of the baby bonds program, which we do think would be transformational for kids born into poverty,鈥� Pieciak told 开云体育. 鈥淏ut the pilot program, we think, can lay the groundwork and show how it would work operationally 鈥� how it would work in terms of changing the way that parents feel about the future of their children.鈥�
Pieciak said he鈥檒l present proposals and requests for funding to national organizations that are trying to build support for publicly funded baby-bond programs in state and federal governments.
鈥淭hat鈥檚 going to be something we spend a good deal of time this summer on and we hope to have something more concrete in the fall,鈥� he said.
The baby bond concept has wide support from anti-poverty advocates such as Liz Scharf, director of community economic development at Capstone Community Action in Washington County.
Scharf told lawmakers earlier this year that the program would 鈥渁ddress the existing systemic inequities and provide a financial foundation otherwise unavailable to many low-income children.鈥�
鈥淎t its best, the program can disrupt the generational cycle of poverty and result in better health outcomes, because we know that physical and mental health and well-being are tied to financial stability,鈥� .
A widely cited at closing the racial wealth gap. The study determined that 15.8-to-1 median wealth ratio between white and Black young adults would shrink to 1.4-to-1 under some baby bond structures.
鈥淚t is a long-term investment in our youth to try to break generational poverty. It鈥檚 not an easy fix, and so the only way it鈥檚 going to happen is if we play the long game on it.鈥�Rep. Dan Noyes
Wolcott Rep. Dan Noyes, who sponsored the House version of the bill, said the program could also boost rural economic development, since it provides an incentive for young Vermonters to remain in the state when they turn 18.
鈥淵ou have to be a resident of Vermont in order to claim the bond,鈥� Noyes said.
Noyes said he was disappointed the Legislature didn鈥檛 have the capacity to allocate state funding for the program this year. But he said he hopes the pilot program will provide a proof-of-concept needed to build political will for future legislation.
鈥淚t is a long-term investment in our youth to try to break generational poverty,鈥� Noyes said. 鈥淚t鈥檚 not an easy fix, and so the only way it鈥檚 going to happen is if we play the long game on it.鈥�
Pieciak said he hopes to solicit seed funding sufficient to provide money to at least a couple hundred Vermont children. He said it鈥檚 possible the program would, instead of starting an investment account at birth, give kids a lump sum when they turn 18.
鈥淚t would make the most sense, in my opinion, to have a pilot focused on the Northeast Kingdom, because that鈥檚 where we see the greatest rates of childhood poverty,鈥� Pieciak said.
Hardy said she thinks the pilot program 鈥渋s probably better than nothing.鈥� But she said she鈥檚 worried that it could take a generation for the program to yield data lawmakers might use to decide whether to expand the initiative.
鈥淩elying on private funds and a pilot program seems pretty shaky to me,鈥� Hardy said. 鈥淚t may be better to start over and try to do it again for real at a time when we can fully fund it.鈥�
Have questions, comments or tips? .
