What would it take to ensure that every child in every state has an account accumulating assets for education beyond high school? How would those assets shape the children and their families?
State officials, researchers, nonprofit leaders, program managers, and funders gathered virtually on July 16 to take up these questions in “All Children Can Reach Their Potential: A CDA Conference.”
“When we gathered in St. Louis two years ago, Pennsylvania had just become the first state to pass automatic, at-birth, statewide CDA legislation. Great progress has been made since that time, but there is more work to be done,” said Margaret Clancy, Policy Director with the Center for Social Development, who was the lead organizer of the event. Panelists exchanged insights into legislative enactment, implementation, and management of Child Development Account (CDA) policies, as well as strategies for cultivating local public-private partnerships, engaging disadvantaged communities, and identifying opportunities for CDAs in the COVID era.
Missouri State Treasurer Scott Fitzpatrick, who also chairs the board of MOST, Missouri’s 529 Education Plan, cohosted the event with CSD. Fitzpatrick said, “The more I learned about CDAs and the impact that they could have on the folks that they benefit – which are the kids who are born in the state – the more I realized that it was a good idea.”
“We’re together here to build a new kind of policy,” said Michael Sherraden in opening remarks. “It is a policy that invests in our people and builds a stronger future.” Sherraden is founding director of CSD in the Brown School and George Warren Brown Distinguished University Professor at Washington University in St. Louis. He added, “We’re investing in all of our children so they can be educated and become more productive and engaged citizens.”
The seventh in a series of annual gatherings organized by the Center and the Missouri State Treasurer’s office, the conference drew over 160 participants from 29 states and the District of Columbia. The conference focused on CDA initiatives built upon the financial platform of state 529 college savings plans. Seven states have statewide CDAs that use this model, including four states with legislation enacted.
In Missouri, the pandemic’s arrival postponed a push for similar CDA legislation. A bill in the state’s House of Representatives passed unanimously out of committee in March 2020, but the chamber adjourned before taking up the measure. The Senate adjourned before a similar bill came to a vote in committee. Fitzpatrick has championed the proposed legislation and affirmed his commitment going forward. “It will be one of my top priorities next year, when we reconvene the legislature, to get something done on CDAs,” he said during the conference.
State treasurers on creating, implementing CDA policy
The opening panel featured Fitzpatrick leading a discussion with other treasurers from states that have enacted statewide CDA policies. Nebraska State Treasurer John Murante, Illinois State Treasurer Michael Frerichs, and Pennsylvania State Treasurer Joe Torsella shared their experiences in identifying the guiding policy principles, crafting a statewide CDA policy, working with state legislators, and moving a proposal through the legislative process to secure passage. They also discussed funding mechanisms, policy elements that facilitate effective implementation, and strategies for raising awareness of the enacted policies.
Frerichs indicated that sustainability and predictability were primary goals in formulating the Illinois policy. Another priority, he noted, was developing the “ability to adapt to local programs and conditions and to leverage local connections and resources.”
The discussion revealed parallels between the processes in Nebraska and Illinois. Frerichs and Murante served in the state senate prior to their elections as treasurer. “We had pretty strong relationships to advance big causes,” Murante said. Each of the state treasurers emphasized the bipartisan appeal of the concept.
Torsella said, “We worked with sponsors from both sides of the aisle,” patiently constructing “a bicameral, bipartisan consensus around” the policy. “And in making the case for it,” he added, “We relied very much on the research that CSD and Margaret and Michael promulgated.”
“We wanted to take all of the good ideas that other states were doing and package them all together in a bipartisan way,” Murante said. “And that resulted in one big package that was introduced by five different state senators of different political persuasions and from different parts of the state.”
New findings from CDA research
In the second panel, Jin Huang, Trina R. Shanks, and William Elliott III shared findings from their research on CDAs. (Presentations can be accessed here.) Jin Huang presented new results from SEED for Oklahoma Kids experiment (SEED OK), CSD’s long-running test of an automatic, at-birth CDA policy in the Sooner State. The experiment, now in its 13th year, automatically opened CDAs for newborns, seeding each account with $1,000 and offering additional incentives.
Huang said that, in about 12 years, the initial deposit in the CDA nearly doubled in value for youth in the treatment group, who are now in middle school. He also noted improvements in parenting, social-emotional development of children, and parental access to mainstream financial services. “It’s very important to know that these effects do not vary by race and ethnicity … rural or urban areas, or whether the family opened its own 529 account for the child,” Huang said.
He added that some of the positive effects were even larger for financially vulnerable families. “The implementation of SEED OK, to include all children automatically and to maintain a program without intensive outreach and communication, suggests that the CDA policy model in SEED OK is effective, scalable, and sustainable.” Huang is a professor at Saint Louis University, a faculty director at CSD, and a research associate professor in the Brown School at Washington University.
The day’s third panel featured a discussion of partnerships in asset-building initiatives. State leaders in California, Illinois, Maine, and Pennsylvania who operate or are implementing a statewide CDA policy described collaborations that enabled them to advance CDA policy goals.
Julie Peachey, Deputy State Treasurer for Consumer Programs, Pennsylvania Treasury, discussed the importance of foundations and nonprofit organizations in the state’s Keystone Scholars CDA. “The primary focus of new partnership development is about additional assets into the accounts and awareness and engagement,” she said. Peachey noted collaborations with hospitals, local United Way chapters, volunteer income tax assistance sites, and Fund My Future, which has been “key to our outreach and engagement with low income families.”
In Maine, the statewide My Alfond Grant is a partnership between the Alfond Scholarship Foundation, which funds the CDA, and the Finance Authority of Maine, which manages the state’s 529 plan. Colleen Quint, president and CEO of the Foundation, acknowledged the importance of relationships with community partners like Head Start programs, libraries, and other family-serving nonprofits. “They’re trusted by families, they share information, and we do a lot of training for those, as well as the hospitals,” Quint said. “They build relationships with us so that when families come to them with questions, they have the information to give the right answer.”
Inclusion and intentional outreach to underserved communities
Discussion in the fourth panel of the conference centered on efforts to engage disadvantaged communities in asset-building policy. “The way we approach children’s development accounts is right – the universal and inclusive program design,” said Benita Melton, Program Director with the Charles Stewart Mott Foundation. “But we all know that simply establishing a CDA doesn’t necessarily lead to inclusion. We need to be very intentional about efforts to reach underserved communities and identify and remove barriers to participation.”
“As you think about how you’re going to do outreach to communities, ensure that … they not only have some connection to the community, but they can have a cultural understanding and baked-in knowledge of the communities that exist across your state,” said Angela Williams, Senior Institutional Relationship Manager with Ascensus Government Savings.
Asked about ongoing efforts to enact CDA legislation in Missouri, Williams noted that inclusion was a foundational component of that effort. The “groundswell” for a statewide CDA initially grew out of recommendations from the Ferguson Commission, Williams said. This began when CSD’s Sherraden was invited to speak to the Commission and recommended CDAs. Jason Purnell, Professor in Washington University’s Brown School and a CSD faculty director, later chaired a committee to move the policy forward.
COVID-19 and CDA policies
The event’s final panel drew upon lessons from the 2007-09 recession, and those emerging from the COVID era, to discuss challenges and opportunities for CDA policy. Margaret Clancy, who directs SEED OK, summarized a recent report from quantitative and qualitative research conducted during and just after the Great Recession. “Our findings indicate that positive financial and family effects of the CDA in SEED OK, which are sometimes greater for the most financially vulnerable families, occur long before postsecondary education,” said Clancy. “As such, the CDA is expected to have positive effects during and after the current pandemic.”
In discussing his work in leading the COVID-19 Regional Response Team, Jason Purnell observed that the pandemic has illustrated “The ways in which children and their families are not adequately cared for … What we have seen, and what is revealed, is a lack of supportive infrastructure for children,” he said. “CDA policies are part of building that infrastructure,” Purnell said. “And I know Michael and Margaret have talked about this becoming as common as indoor plumbing … just as, over 100 years ago, we made compulsory public education part of what we do as a country. We need to make similar investments in children and their families.”
Sherraden closed the conference by summarizing insights from the day’s discussion:
- State 529 plans are a flexible and sustainable platform for state CDA policies and can be leveraged for creative purposes. “It’s there, it’s being used, and we can build on it,” Sherraden said.
- Additional research is needed to inform CDA policies.
- Even “in a very partisan time,” Sherraden noted, “CDA policy has bipartisan appeal.”
- Progressive features should be incorporated into policy designs. “We have really good examples of CDA policies with progressive features, and we have more work to do,” he said.
- Investment growth is important for CDA policies. In contrast, he said, “Building a policy on a financial platform that yields near zero percent is not an acceptable strategy for growing long-term assets.”
- CDA policies should be “generative,” Sherraden asserted. “The accounts should generate assets for long-term developmental priorities,” and “The policy model should generate replications by other states and providers.”
- Affirming a point made by other speakers, Sherraden said that CDA policy should “tap into local energy.” He said, “America is known for the vibrant energy of its communities. Local energy, skills, and opportunities can be used to build these accounts as part of the broader common project to develop all of our children.”
- Sherraden acknowledged the importance of learning from the statewide CDA policies. “Some states do really interesting things really well, and some not as much,” he said. “It’s a little messy, but it’s the way we do things in the United States, and it has some advantages. One of them is that we can learn from states that are successful.”
- The federal government, Sherraden emphasized, has a role to play. “States should continue to pioneer such policy, but the federal government could establish guidelines that facilitate the growth of state CDAs and provide substantial funding for the accounts, especially for the poorest children.”
“We should be ambitious and a little bold in reaching for scale,” Sherraden said in closing. “I want us to be proud of the work that has happened – you should all be very proud –and we have a lot more work to do.”