A plan to offer COVID-19 survivor benefits could pave the way for California ‘baby bonds’

California children who have lost a parent to COVID-19 could receive up to $5,000 in state-issued trust funds under a bill to be introduced in the Legislature next week, a proposal that suggests the state subsidy might later be expanded to a “baby bonds” program for children living in poverty.

The legislation authored by state Sen. Nancy Skinner (D-Berkeley) would give up to $3,000 to designated low-income children under 9 years old and up to $5,000 for children between the ages of 10 and 17 if a parent or guardian has died from COVID-19.

Skinner’s office estimates that 20,000 children would be eligible, based on preliminary data regarding coronavirus-related deaths among parents or guardians, with an initial cost to the state of up to $100 million in the first year. The interest-bearing accounts would grow over time, and eligible children would be able to access the money on their 18th birthday with no strings attached to how they spend it.

The bill, likely to be modified after lawmakers return to Sacramento next week, also proposes expanding the accounts to foster children or children otherwise impacted by “extreme poverty.” In an interview, Skinner said potential broader eligibility and other details are still under discussion.

“Whether it turns into that this year remains to be seen but I think the concept of ‘baby bonds’ is an important one,” she said. “I think it’s clearly a discussion that’s appropriate to have, especially in California, where we have massive wealth inequality.”

The program is modeled after an ambitious policy that Democrats have pushed at the federal level, aimed at curbing generational poverty and lessening the racial wealth gap. Earlier this year, Connecticut became the first state to implement a similar program.

Additionally, the Skinner bill proposes new state funding for children who do not qualify for federal COVID-19 survivor benefits because their parents did not meet certain work requirements, lacked legal immigration status or were incarcerated, preventing them from receiving Social Security funds.

Skinner’s plan comes days before Gov. Gavin Newsom reveals his state budget proposal. Analysts have projected a surplus that could top $31 billion, driven by California’s progressive tax structure that is weighted to rely on top earners who have felt little economic impact from the pandemic.

Skinner, who chairs the Senate Budget Committee, pointed to the surplus as a reason why the savings accounts should be created now.

“We have these higher-than-expected revenues because we have a portion of our population that has immense wealth, however, we have a proportion of our population that really is very poor. There’s still this huge gap in terms of income inequality,” she said. “Lots of data shows that if you can provide some direct resources to low-income children, you can help move them out of poverty faster or altogether.”

Nearly 2 million children in California lived in poverty as of 2019. Pandemic-related government relief programs have helped decrease the childhood poverty rate from about 18% in 2019 to about 12% in 2020, according to the nonpartisan Public Policy Institute of California.

People of color are disproportionately impacted. More than 21% of California’s Latino residents live in poverty, as do more than 17% of Black residents, according to institute researchers, compared with about 12% of white Californians.

Michael Tubbs, an advisor to Newsom who championed the idea of a “universal basic income” as the mayor of Stockton, is a supporter of the bill and said of California’s continued budget surplus, “That’s our money, that’s what everyone contributes to the state.”

“If California is going to remain the Golden State and continue to lead this nation, it has to do something about the pervasive income inequality. We have to ensure that poverty is not passed down so that children have the opportunity to break the cycle,” Tubbs said. “If Connecticut can do it, why can’t we?”