California became the first state to commit to setting up trust funds for children who lost a parent or caregiver to the pandemic.
The money — $100 million in total — will go to into interest-bearing accounts for children from low-income families who have lost a parent to COVID and to kids who are in the state’s foster care system. State lawmakers haven’t decided how much money each child will get, but one early proposal would give younger kids $4,000 and older kids $8,000. That would be enough to provide funding for about 16,000 kids, who could spend the money once they become adults.
These modern-day baby bonds are different in that, instead of being purchased by parents, the government gives the money to children from low-income families for free. Advocates have held up the idea as a way to help close the racial wealth gap between white and minority families, who were largely excluded from the federal wealth-building programs during the Great Depression.
The idea is similar to guaranteed income programs that give cash to low-income people each month with no restrictions on how they can use it. California has several such programs at the local level, modeled after high-profile demonstration project in Stockton that launched three years ago. "Income and wealth are different things," said Michael Tubbs, the former mayor of Stockton who is now an advisor toand founder of the advocacy group End Poverty in California. "People should have the wherewithal to pay their bills today … but the next generation shouldn’t have to live paycheck to paycheck."
The group hopes California’s baby bonds program is just a first step. Its goal is to eventually have the state give trust funds to every child in the state born into a low income family. "The great irony of California especially, but the nation as a whole, is we have such wealth but it’s so concentrated," Skinner said. "Whatever we can do that can address that income inequality is essential to do."
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