(Sacramento, CA) Today, California’s State Assembly passed Assembly Bill 114, which includes a ground breaking effort to reduce wealth inequality for all California children. This effort complements Governor Newsom’s vision to expand child savings accounts similar to the program he started as Mayor of San Francisco.
Earlier this year, Assemblymember Nazarian advocated for the State budget to include $25 million for the creation of a statewide child savings account (CSA) program known as the California Kids Investment and Development Savings program. AB 114 adjusts the program to allow the ScholarShare Investment Board to open college savings accounts for all California children born on or after July 1, 2020, not only children from low-income backgrounds.
The budget tasks the ScholarShare Investment Board to operate a custodial 529 account that automatically enrolls each child born in California with an initial seed deposit of at least $25. This measure expands eligibility and allows ScholarShare to provide incentives targeting low-income households.
Savings from the account could be used for a number of different higher educational purposes such as tuition at a college, university, trade school or graduate program; room and board; books; computers; and other related qualified expenses.
“We must be bold and invest in the next generation of entrepreneurs, scientists, and leaders,” stated Assemblymember Nazarian. “Wealth inequality is keeping the door closed on middle- and lower-income advancement nationwide. By creating a savings account for each child, we can jumpstart our children’s financial independence.”
Unfortunately, 25 percent of California households live in asset poverty. Similarly, research shows that 55 percent of Californians are rent burdened and 15 percent experience severely delinquent student loan debt.
The intention of a statewide program is to ensure all California children have the financial assets they need to succeed, and level the playing field, by eliminating the administrative barriers to start saving. As California’s cost of living continues to rise, it is imperative for children to understand the importance of long-term savings.
Several California cities, including San Francisco and Oakland, have implemented their own CSA programs, with one in Los Angeles in development. While local programs do remarkable work to assist children in the communities they serve, California needs a statewide program to complement local initiatives and reach all children.
State Treasurer Fiona Ma and numerous organizations committed to fighting wealth inequality also supported Assemblymember Nazarian’s efforts to create a statewide CSA.
“Governor Newsom’s cradle-to-career education strategy signals to kids that college is in their future,” said Treasurer Ma, who chairs the ScholarShare Investment Board that sets investment policies and oversees all activities of ScholarShare, the state’s 529 college investment plan. “We are planting the seeds of hope with them.”
Glendale Unified School Board Member Nayiri Nahabedian added that “This is a meaningful policy that will change the trajectory of kids’ lives.”
Expanding this idea statewide will ensure each child, no matter where they live, have fair access to economic mobility.
“I applaud Governor Newsom’s investment in expanding CSA programs through this year’s budget,” stated Assemblymember Nazarian. “Creating an automatic CSA will ultimately turn the transformative role of postsecondary education into a reality for all children across the state.”
The next step for AB 114 is final approval by Governor Newsom. With nearly 500,000 children born each year, Assemblymember Nazarian and the ScholarShare Investment Board will work together on family outreach.
Adrin Nazarian represents the 46th Assembly District, serving the San Fernando Valley communities of Hollywood Hills, Lake Balboa, North Hills, North Hollywood, Panorama City, Sherman Oaks, Studio City, Toluca Lake, Valley Glen, Universal City, Van Nuys, and Valley Village.