Treasurer's office asks committee to create special fund and pilot language for baby bonds study

The Vermont treasurer's office asked the House Commerce and Economic Development Committee May 7 to add statutory language to S.122 that would create a short-term special fund and clarify parameters for a baby bonds pilot the office is designing.

"Our proposal is that we invest $3,200 for every baby in Vermont born on Medicaid," Ashlyn Doyle, director of policy in the treasurer's office, told the committee. She said the office estimates the account balance could grow to about $20,000 by age 18 under expected rates of return for the long-term program. The office also estimates a permanent, statewide baby bonds program would cost about $6,000,000 per year to sustain.

Doyle said the language change aims to separate pilot accounting from the trust account that a full program would use. "The trust account, when we one day hope to set up the statewide fully fledged baby bonds program, will be invested in a long-term way," she said. For the shorter, three-to-five-year pilot the treasurer envisions, philanthropic donations would likely fund cohort benefits and the pilot's short-term investments; the special fund would allow the treasury to accept and account for those donations without commingling them with the long-term trust.

The treasurer's office described several elements the added language would enumerate: creating partnerships with community organizations to provide wraparound services; identifying research and evaluation partners; outreach to potential participants; and reporting deadlines so the office can return to the committee with pilot results. Doyle said the office is considering a pilot cohort of older teens in the Northeast Kingdom who would be nearing high school graduation so outcomes can be studied within a three-to-five-year window; she said there is no firm cohort size and that the pilot's scale will depend on philanthropic fundraising.

Committee members asked operational questions — for example, whether participation would be automatic or require acceptance by a guardian or the participant. "Under the fully fledged program, they would be automatically enrolled," Doyle said; she added that administration details for the pilot (including enrollment and consent) are to be decided and will likely follow best practices used by other baby-bond pilots.

Doyle said the requested statutory language does not itself deposit funds into the special fund; rather it creates the accounting mechanism and pilot governance so philanthropic donors can contribute and the treasury can make expenditures in a way that meets government accounting standards. The treasurer's office signaled it may seek modest administrative support for the pilot (staff time and reporting), and indicated it had informed appropriations conferees about the need for administrative funding.