- Emma Taylor
- (818) 376-4246
(Sacramento, CA) Today California’s State Assembly passed AB 132 and expanded funding for the largest child savings account (CSA) program in the country, the California Kids Investment and Development Savings (CalKIDS) by investing $1.8 billion in one-time funding and $186 million every year moving forward.
"I am thrilled that today, California is making history by investing $1.8 billion this year and $186 million every year moving forward in our children, their education, and their futures. Wealth inequality and the high cost of education have slammed the door shut on lower- and middle-income advancement across our state,” said Assemblymember Adrin Nazarian, “This funding for CalKIDS will create for savings accounts for 3.7 million low-income k-12th graders initially, and then 450,000 newborns, and hundreds of thousand low-income first-graders and make way for the next generation of entrepreneurs, scientists, educators, and community leaders.”
The CalKIDS program was created by Assemblymember Adrin Nazarian (D-Sherman Oaks) in 2019 through a $25 million dollar budget allocation and allows the ScholarShare Investment Board to open college savings accounts for all California children born on or after July 1, 2020, regardless of income. The ScholarShare Investment Board operates a custodial 529 account that automatically enrolls each child born in California with an initial seed deposit of $25. Additionally, to make college more accessible to low-income California kids, a $500 deposit will be made for low-income first graders across the state, with a $500 supplemental deposit for foster and homeless youth.
“This investment isn’t just transformative for these programs, but for the millions of lives that these programs will change, and futures it will subsequently catapult. A child savings account provides more than just a financial asset and a more level playing field, but a sense of optimism and promise for the future for decades to come," reflected Assemblymember Nazarian.
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.
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.
Academics have found that children with $500 or less designated for college savings are three times more likely to enroll in college and nearly four times more likely to graduate than children with no savings. Studies have also found that children engaging with a savings account to improve their mathematical abilities and test scores.
Additionally, asset-building programs have been found to improve the social development of young children and support the mental health, parenting practices, and educational expectations of mothers. As economic volatility challenges the ability of many families to even think about affording a postsecondary education, the state must prioritize asset-building programs, which demonstrate long-term benefits.
Given the research and positive impact, the CSA movement has grown from a regionalized initiative in San Francisco—launched by then-Mayor Gavin Newsom—to similar programs in operation or development in at least six other states. With approximately 450,000 children born annually in California, CalKIDS is already the largest CSA program nationwide.
Following the Great Recession of 2008-2009, researchers found that mothers with children who participated in a CSA program were more focused on saving for college and maintained confidence that affording a postsecondary education was reachable. As California recovers from the pandemic, CalKIDS too will become a lifeline for many families to navigate economic recovery options.
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. He is Chair of the Assembly Committee on Aging & Long Term Care Learn more at: https://a46.asmdc.org/