The Every Kid Counts Act Passes Key California Assembly Committee
(Sacramento, CA) The Every Kid Counts Act (AB 34) authored by Assemblymember Adrin Nazarian and Assembly Budget Chair Phil Ting and co-authored by Assemblymember Cristina Garcia passed the Assembly Higher Education Committee with a 9-3 vote on Tuesday, April 25th.
The Every Kid Counts Act, AB 34, expands California’s current 529 ScholarShare, into a universal, at-birth, opt-out children’s savings account, with an initial seed deposit made by the State. AB 34 directly invests in every child born in California to close the growing wealth inequality gap.
“Automatic child savings accounts create a college-going mindset and contribute to upward economic mobility,” stated Assemblymember Adrin Nazarian. “I want the next generation of Californians to have every opportunity to succeed.”
The intention of the bill is to ensure that all of California’s children have the financial assets they need to succeed, and level the playing field, by eliminating the administrative barriers to opening a savings account and contributing a seed investment to all newborns.
The Child Saving Account will consist of four types of contributions:
- Universal Seed: An initial State deposit to every child born in California.
- Progressive Seed: An additional deposit for a child whose family makes less than $75,000 in Adjusted Gross Income (AGI).
- Parent Contribution: Parents can make deposits into their child’s account. For families with an AGI less than $75,000, California will match contributions at a 1:1 ratio up to $100.
- Community Investment: Community groups, non-profits, or foundations can contribute to the child savings accounts.
The children’s savings account will be a 529 plan, which is a tax-advantaged savings plan designed to encourage setting aside funds for future college costs. 529 plans, legally known as “qualified tuition plans,” are sponsored by states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code.
“It’s not an overstatement to say that getting one person to college goes a long way toward lifting a family out of poverty in one generation,” stated Nayiri Nahabedian, Professor of Social Work at CSULA, Glendale Board of Education Member, and the initial source of AB 34. “If we implement an intervention like AB 34 we can really move toward getting our most vulnerable kids a head start, and elevating children and families out of poverty.”
Solana Rice, Director of State & Local Policy at the Corporation for Enterprise Development added, “Children’s savings accounts pave the way for higher education attainment by supporting a college-bound identity for children and their families. Studies have shown that low-income children are three times more likely to attend college and four times more likely to graduate when they have $1-$499 in savings in their name.”
Several states and cities throughout the country are testing similar programs. A report by the Urban Institute showed that Maine, Nevada, and Rhode Island automatically deposit funds in 529 plans for all young children in their states. Children in Maine are granted $500 through an investment by the Alfond Scholarship Foundation; the Nevada College Kick Start program provides an initial deposit of $50; and children born in Rhode Island receive a $100 Collegebound baby grant. Oregon and Illinois are also working to put children’s savings accounts into place.
“We must be bold and invest in the next generation of entrepreneurs, scientists, and leaders,” stated Assemblymember Adrin Nazarian. “Wealth inequality is closing the door on middle- and lower-income advancement nationwide. By creating an opt-out child savings account, we can jump start our children’s financial independence.”
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.
 Building Expectations, Delivering Results: Asset-based Financial Aid and the Future of Higher Education (2013). The University of Kansas School of Social Welfare, Assets and Education Initiative.