Posted by:
Steve Dubb
1200 kindergartners to get $50 savings accounts in 3 years
On October 5th, San Francisco Mayor Gavin Newsom announced a major new development in individual wealth building in the United States with the official launch of Kindergarten to College (K2C), the nation’s first universal children’s savings account program. The K2C program will automatically open a savings account for parents when their child starts kindergarten, with an initial $50 deposit from the City of San Francisco. Lower-income children will be eligible for an additional $50. “One in three San Francisco children is born into a family with no savings or assets of any kind. That number is one in two for African American and Latino families,” said City Treasurer Jose Cisneros. “By helping every family open an account and demonstrating the power of savings, we will do much to reduce financial exclusion and increase the chances that more of our children will go to college.” The New America Foundation notes that public funding in year 1 is $257,000. Families will be provided with an account in their child’s name and an account number so they can begin making deposits towards savings goals. Earned Assets Resource Network (EARN), a San Francisco-based nonprofit group has committed to match the first $100 of additional savings that every participating family adds to their account. The San Francisco Foundation has also committed to fund additional savings matches and incentives as the program rolls out.
City officials and their local and national partners are optimistic that a successful savings program in San Francisco could pave the way for a larger state or federal policy to promote asset-building strategies for children and youth. For example, for years, legislation has existed in Congress to create a program labeled the American Savings for Personal Investment, Retirement & Education Act (ASPIRE), which calls for each child to receive a one-time $500 contribution at birth, with hildren living in households with incomes below national median income will be eligible for both a supplemental contribution of up to $500 at birth as well as the opportunity to earn up to $500 per year in matching funds for amounts saved in the account. Financial education would be offered in conjunction with the accounts. The cost of the program the New America Foundation estimates would be $37.5 billion over 10 years.
Financial education is also part of the San Francisco K2C program. Financial education will be introduced to the classroom, using the accounts as a powerful teaching tool to teach financial management skills. With the launch of K2C, San Francisco will be the first city in the nation to integrate financial education into the K-12 math curriculum. “These accounts will be ‘hope in concrete form’ for students,” said Bob Friedman, founder and Board chair of the Corporation for Enterprise Development (CFED), a K2C partner. “At CFED we know that as savings grow, so do aspirations. Emerging research shows that people will save more if it’s made easy and automatic, and that children with savings set aside for college are many times more likely to attend than children who have none.” K2C launches in 18 schools this year with numbers expected to double next year. K2C will reach full enrollment by 2012.