“To put it simply, it costs way too much money to deal with the prolonged effects of generational poverty on our state,” said state Treasurer Zach Conine. (Photo: Richard Bednarski)
Citing costs inflicted on state program and Nevada households by generational poverty, state Treasurer Zach Conine asked lawmakers to fund a baby bond program designed to help children born into financially stressed households get a boost out of poverty.
Conine, who presented Assembly Bill 28 to lawmakers Tuesday morning, is proposing the state invest $80 million over the next two years to initially start a Baby Bonds Trust Fund to be administered by his office.
“When it comes to investments, the opportunity for us to take generations of folks and move them out of generational poverty is one of the best investments we can make as a state,” he said.
Based on similar programs in Connecticut and California, the state would make a $3,200 investment into a trust fund for each child whose birth was covered by Medicaid and the Children’s Health Insurance Program (CHIP).
While the treasurer’s office is still calculating how many children could be eligible, based on historical models and estimates from the state demographers it could be about 15,000 children each year.
The account, which gains interest each year, would reach an estimated $10,635 when the recipient turns 18, and then could be used toward higher education or trade programs, purchasing a home or starting a business. Recipients have until age 30 to take the money.
Conine said the money “can only be used on things that can move the needle on reducing generational poverty,” a move that could help reduce the number of recipients relying on other aspects of the social safety net.
Nevada ranks 19th in the country for worst childhood poverty rates and currently has 340,000 children covered by CHIPS, Conine said.
The Kaiser Family Foundation, he said, estimates that it costs $2,108 each year to cover children on Medicaid and increases to $4,097 per year when they reach adulthood.
“For each person that is unable to move out of the Medicaid program in their lifetime, we can expect to pay $192,559 on health care costs alone per person from the age of 18 to 65,” Conine said.
The state sees similar high rates of use in other social safety net programs such as Supplemental Nutrition Assistance Program, or SNAP, which has about 249,000 people in Nevada receiving benefits each month at a cost of $45 million a month.
Funding baby bonds over the biennium, Conine noted, is less than the $540 million annual cost of SNAP.
“It’s important to note that while vital programs like Medicaid, unemployment insurance and Temporary Assistance for Needy Families or TANF, SNAP, WIC and others help to provide a social safety net for people when they need help, these programs have a massive upfront and ongoing cost to our state budget,” Conine said. “To put it simply, it costs way too much money to deal with the prolonged effects of generational poverty on our state.”
Not all eligible people would take the funds, which would then be redistributed back into the program, he said.
The legislation also has safeguards to account for the state’s historically high transient population.
“To ensure people don’t relocate to another state and then move back to Nevada just to claim these funds, we put a requirement that an individual must be a Nevada resident for at least 12 months prior to being able to submit a claim for their bond,” Conine said.
Republican Assemblyman Brian Hibbetts asked whether $10,000 is enough, especially with rising interest rates.
Conine agreed it could be more – and is open for a larger allocation – but said $10,000 could go a long way to helping someone start a business and aid with an initial down payment toward owning a home.
“And $10,000 is a lot when stacked with additional dollars available for higher education,” he said. “If you have pell grants but you’re still having trouble taking into account the amount of time you have to spend on child care or the amount of money you’ll have to spend on transportation, it helps to bridge that gap.”
Democratic Assembly Government Affairs Committee Chair Selena Torres said she would like to see more assurances in the legislation that recipients aren’t exploited into using funds to invest in other businesses.
The legislation is supported by various unions including the AFL-CIO and progressive groups.
The libertarian Nevada Policy Research Institute, which describes itself as a “free-market and limited-government” organization, opposed the legislation calling it a “misguided new entitlement program.”
The committee took no action on the legislation.
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