Every child born in Wisconsin would get an education savings account under new legislation

MADISON – A bipartisan group of Wisconsin lawmakers are seeking to create a savings account for every child born or adopted in the state.

Under a recently released bill, $25 would be deposited into each child's account under a 529 college savings program dubbed "WisKids" that would grow with the child and ultimately could be used for educational costs later in life.

Democratic Rep. Evan Goyke of Milwaukee said the idea sprung, in part, from his own experience as a father of a 2-year-old son.

"We were so ready for this kid and part of that plan included, on our list of things to do, was to open a 529 account in his name and start our contributions and then life hits us ... I didn't do it right away," Goyke said at a public hearing on the proposal last week. "Days became weeks, weeks became months ... it was 20 months later. So almost two years of missed opportunity."

"The earlier you start the bigger that principal grows," he added.

Republican Rep. John Macco of Ledgeview, a bill co-author, said the WisKids program would use around $22 million in revenue generated from fees associated with the state's Edvest college savings program. The money would be used to create accounts for around 60,000 children each year, he said.

"Families will have financial planning be part of their financial conversations from the get-go," Macco said at the Capitol hearing. Macco said the proposal has no fiscal effect to the state budget because the money being used is accruing within the Edvest program.

Goyke said the funds would be distributed by the state Department of Financial Institutions directly to educational programs or institutions rather than handing over cash to the child at a certain age.

Under the bill, the DFI must deposit at least $25 into an account after receiving information about each child born or adopted in Wisconsin from the state Department of Health Services. The DFI must first notify parents before creating the account and allow them to opt out of the program.

If a participant does not use the funds by age 28, or the child dies, the money will be distributed to others in the program. The bill allows DFI to accept contributions to the program from any person on behalf of the program's participants.

During the hearing, GOP Rep. Dave Murphy of Greenville raised the possibility of lowering the amount of money the state includes and rather use a matching formula.

The bill now awaits a public hearing in the state Senate or floor action.

Wisconsin does not have a statewide program with automatic enrollment and deposits, even though studies show residents, especially children, could benefit greatly.

Survey data and in-depth interviews with families showed the program had changed the aspirations and attitudes of the kids and their mothers, raising their educational expectations and lowering rates of maternal depression.

The findings are part of a broad series of studies from researchers at Washington University in St. Louis, who designed the SEED for Oklahoma Kids experiment, and other universities.

One study found that among children who expect to go to college, those with a savings account are six times more likely to attend than those without one. Having a savings account was a better predictor of whether a child with those expectations would attend college than race or parents’ net worth, the study showed.

The fact that children had an account mattered more than how much was in it. Another study found that low- and moderate-income children with college savings of less than $500 are three times more likely to pursue college and four times more likely to graduate.

Lawmakers and philanthropists have cited this research when creating programs with bipartisan support in other states, including Maine, Pennsylvania, Nebraska, California, Rhode Island, Nevada and Illinois.

Some states open the accounts, others also provide an initial deposit funded by philanthropists, foundations or unclaimed state property funds. A few offer incentives or extra payments to low-income families.

Ashley Luthern of the Milwaukee Journal Sentinel contributed to this report.

Molly Beck can be reached at molly.beck@jrn.com.

This article originally appeared on Milwaukee Journal Sentinel: Bill would give every child born in Wisconsin a savings account