Lawmakers consider awarding ‘baby bonds’ through lottery to reduce costs
A proposal to grant Nevada children born into low-income families a $3,200 bond that they could cash out at age 18 received its first serious vetting during a budget committee meeting last week.
The “baby bonds” program envisioned by AB28 could cost the state $80 million for the biennium, which Treasurer Zach Conine said would help the state save money in the long run on safety net programs such as food stamps, Temporary Assistance for Needy Families (TANF) and WIC, a nutrition program for women, infants and children, that together cost the state $45 million a month.
“Now we understand, that is a big ask and it's a big number,” Conine said during the May 17 Assembly Ways and Means Committee hearing. “But we think it's an ambitious program, and I look forward to working its way through the process.”
From age 18 to 30, participants could use the accumulated funds — an estimated $10,000 to $13,000 each — to start a business, buy a home, attend post-secondary school or make any purchase or investment in “financial assets that provide long-term gains to wages and or wealth.” With an amendment, the program would also require beneficiaries to successfully complete a financial literacy course approved by the state treasurer.
Conine said the first cohort of eligible babies would start in 2024 and that the policy requires the state to send updates about the financial status of the baby bond each year to the beneficiaries. Conine also suggested that if lawmakers wanted to shrink the overall budget for the program, but not the individual awards to keep the measure “fair and equitable,” they could opt for a lottery system for a limited portion of the eligible population.
“So we take the entire population list, whatever the appropriation was, and then pick at random individuals within that,” Conine said when asked how a lottery would work. “I think we would be more likely to want to decrease the population and make sure that we were impactful amongst the population, as opposed to … decreasing the amount and potentially not having the generational change we were hoping for.”
Lawmakers did not take immediate action on the bill, which is exempted from legislative deadlines.