Legislative Leaders Announce New Funding Source For CT Baby Bonds

CONNECTICUT — After a legislative derailment, CT State Baby Bonds are back on track.

Gov. Ned Lamont, Treasurer Erick Russell, Senate President Pro Tempore Martin Looney, House Speaker Matt Ritter, and State Sen. Pat Billie Miller announced Tuesday that funding has been identified for the program, passed by the legislature in 2021.

CT Baby Bonds is a first-in-the-nation initiative that would set aside a bond for each child born to a low-income household. As the law is currently written, $3,200 would be invested on behalf of each child born into poverty, as determined by their birth being covered by HUSKY, the state’s Medicaid program. Those investments would grow over time and become available to participants between the ages of 18-30 for specific uses intended to build individual wealth and spur statewide economic growth.

Funds can be used to buy a home in Connecticut, start or invest in a Connecticut business, pay for education or job training, or save for retirement. To be eligible for the funds, participants must be a Connecticut resident at the time and complete a required financial literacy training.

As originally constructed, the program would require $600 million in state bonding spread over 12 years. The inability of legislators to locate a source for that $600 million has stalled the rollout for years.

The new plan announced Tuesday instead begins investing $381 million immediately, capitalizing on more time for returns to grow to reduce the overall funding required.

The agreement, which will require legislative action, repurposes available reserves set aside during the restructuring of the Teachers’ Retirement Fund in 2019 and replaces them with a relatively inexpensive insurance policy, according to a statement from the Governor's Office. As a result, $381 million will be available for deposit into the CT Baby Bonds Trust.

Sen. Miller, who serves as chair of the legislature’s Black and Puerto Rican Caucus, said, “CT Baby Bonds was created to help combat Connecticut’s wealth gap and level the playing field for children in our state that would otherwise be locked out of full economic participation. Passing this program into law was a top priority of the Black and Puerto Rican Caucus and helped position Connecticut as a national leader in combatting systemic poverty. I’m heartened and relieved that CT Baby Bonds will now finally be funded so that we can begin our obligation of investing directly in the next generation of Connecticut children.”

An estimated 15,000 Connecticut births are covered by HUSKY each year, including residents in all 169 towns. Eligible babies born on or after July 1, will be automatically allocated a share of the CT Baby Bonds Trust.

House Republican Leader Vincent Candelora on Tuesday released the following statement regarding funding for the Baby Bonds program:

"I appreciate Treasurer Russell's dedication to finding away to fund the Baby Bonds initiative, but at a time when we're talking about fiscal guardrails, the dire need for tax relief, and the importance of investing in local education, I have to question a solution that involves repurposing surplus taxpayer dollars that had been used as a contractual makeweight to refinance teacher pension debt. This seems to undermine the message of fiscal responsibility the Governor has promoted throughout the session, and the vague mechanics of how they’ll simply take $380 million for this program certainly deserves more scrutiny.”