California Leading the Way in Child Development Accounts

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By Julio Martinez

Leading academics in social work first proposed and then refined the ideas behind California’s massive new child development accounts program. Such programs, they have demonstrated, are an effective method of investing in children because they help build assets in a way that opens future opportunities. 

The California Kids Investment and Development Savings program (CalKIDS) aims to improve equity by providing low-income students with funds for college and career training.  

CalKIDS operates with two components – one targeting low-income students and the other providing universal access for newborns. The goal is to inspire families to think about and prepare for college and career training early. 

This equitable program gives all low-income public school students $500. Foster youth and those who are homeless will each receive an additional $500. The program started by serving 3.4 million public school students and will approximately 270,000 low-income first graders each year. 

The universal aspect provides up to $175 to all babies born in the state on or after July 1, 2022, serving approximately 400,000 babies born in California each year. 

With a $2 billion investment, California provides a significant percentage of all child development savings accounts in the country.   

The idea for child development accounts was first proposed as part of an innovative way of reducing inequality in a 1991 book “Assets and the Poor: A New American Welfare Policy“ written by Michael Sherraden and Neil Gilbert. Since then, in addition to Michael Sherraden and Neil Gilbert, several social work scholars have researched various aspects of child development accounts. These include Margaret Clancy, College Savings Director at the Center for Social Development at the Brown School at Washington University in St. Louis, and William Elliott, professor at the University of Michigan School of Social Work. 

Here are key research findings from Washington University’s Center for Social Development: 

• Besides giving families a start in college savings, the accounts increase their awareness of higher education, making them more likely to consider and prepare for college and career training than those without accounts. This research was published in April, 2021. 
• Children from low-income families who receive accounts had better social-emotional development scores than those who did not. In addition, their mothers suffered less depression, according to research published in October 2019. 
• Parents of children with child development accounts are more than five times more likely to open their own 529 college savings accounts than those without.  

With CalKIDS accounts, funds can be used to pay expenses involving college and career training, such as computers, tuition, books, and fees. Payments go from CalKIDS directly to an institution of higher education or career training. 

CalKIDS accounts are set up automatically, but to gain access, each parent must claim their child’s account by registering. It’s free and easy to do on the CalKIDS website. 

At CalKIDS, there continues to be an important challenge to tackle – making parents aware of the program. We publicize it, through our advertisements, our website, our partnerships with educators and non-profits, and our hard-working outreach specialists. But our resources are limited, and our state has 40 million residents. 

That’s where you come in. We urge school-based and low-income supporting social workers to help us spread the word. Please tell all of your clients and anyone else you know about this program and how it can make a difference in children’s lives. There is lots of information to share here.  

No single program can eliminate poverty, but as leading social work scholars have shown, child development accounts can make a big difference. They help prepare low-income students, both financially and mentally, for the education and career training that can propel them to a brighter future. 

Julio Martinez is executive director of the ScholarShare Investment Board, which oversees CalKIDS and ScholarShare 529, California’s college savings program. The board is operated out of the California State Treasurer’s Office under the leadership of Treasurer Fiona Ma.