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Treasurer proposes $500K baby‑bonds pilot admin funding, Vermont Saves and medical‑debt measures
Summary
The Treasurer asked for $500,000 to administer a baby‑bonds pilot, proposed changes to Vermont Saves (including allowing traditional IRAs alongside Roths and raising auto‑escalation to 10%), updated ABLE program statistics and proposed a $1 million one‑time appropriation to eliminate $100 million in medical debt under a proposed legislative plan.
The State Treasurer outlined several financial inclusion and consumer finance initiatives in testimony to the Senate Appropriations Committee on Feb. 21, including a $500,000 request to cover administrative expenses for a legislatively authorized baby‑bonds pilot, changes to the Vermont Saves retirement program, an update on ABLE accounts for people with disabilities, and a proposed medical‑debt relief plan.
On baby bonds, the Treasurer said the legislature authorized a pilot last year and the office is seeking $500,000 to cover administration, independent evaluation and related startup costs (the Treasurer said philanthropic dollars would fund the individual grants). The pilot is intended to test outcomes for a cohort of young adults—starting adult eligibility around age 18—so policymakers can evaluate whether a broader baby‑bonds program would improve outcomes for homeownership, higher education, business formation or retirement savings. The Treasurer said the office would seek an independent evaluator and expects to track outcomes over multiple years.
On Vermont Saves (the state’s auto‑IRA payroll‑based program), the Treasurer requested statutory language to allow account holders to choose a traditional IRA in addition to the current Roth structure so lower‑income savers can qualify for an upcoming federal saver match program; the Treasurer also proposed increasing the automatic escalation cap from 8% to 10% of pay for default enrollment (the program already allows people to opt out or change contribution rates). The Treasurer said changing the program name consistently to “Vermont Saves” from earlier shorthand would improve branding.
The Treasurer provided an update on ABLE accounts for Vermonters with disabilities: about 1,200 active Vermont ABLE accounts with an average balance near $10,000 and roughly $12 million in assets under management. The Treasurer said ABLE accounts allow people with disabilities to save without jeopardizing means‑tested benefits and are similar to 529‑style arrangements for disability‑related expenses.
On medical debt, the Treasurer described a legislative proposal to eliminate about $100 million of medical debt for moderate‑ and low‑income Vermonters with a one‑time appropriation of $1 million to purchase and extinguish qualifying medical debt; the Treasurer also said the proposal would prohibit reporting medical debt on individual credit reports going forward, noting the Consumer Financial Protection Bureau’s guidance that medical debt is an imperfect indicator of creditworthiness.
The Treasurer said the office is seeking clarifying language and initial funding authorities in the budget packet for these proposals and offered to provide more detail to the committee and follow‑up materials and memos.
