Israel’s parliament will consider a state budget this fall that includes funding for long-term savings accounts for all newborns, a proposal authored by Michal Grinstein-Weiss, PhD, the associate director of the Center for Social Development, and based on research efforts led by Michael Sherraden, PhD, the director of CSD.
Grinstein-Weiss wrote the plan for Child Development Accounts (CDAs) in 2010 with Israel’s then-Minister of Welfare and Social Services Isaac Herzog. The nation’s cabinet approved the budget with CDAS in it on Aug. 6, and the Knesset is expected to vote on it in November.
“This is an important step toward addressing the rising inequalities in Israel so more children will start with better opportunities early on,” Grinstein-Weiss said of the cabinet vote.
About a third of Israeli children live below the poverty line. Under the proposal, Israel’s child savings accounts, known as CDAs in the United States, would be established for all newborns, Jewish and Arab, in Israel. The policy would allow for recipients to access funds at age 18 for education, small business enterprise, marriage or homeownership. At age 21, the funds would be accessible with no restrictions. The government would match contributions to the accounts, Grinstein-Weiss said.
The new accounts would build on Israel’s existing child allowance, based on the number of children under age 18 in a household. In late July, the plan for the accounts was incorporated into Israel’s proposed budget. The United Torah Judaism party had sought to raise Israel’s monthly child allowance, and Israel’s Ministry of Finance proposed the long-term child savings accounts as a compromise.
The debate over and subsequent cabinet approval of the plan rapidly raised awareness in Israel of Child Development Accounts, said Grinstein-Weiss, a native of Israel and a professor at the Brown School of Social Work at Washington University in St. Louis. Now “in general there is a lot of enthusiasm for the idea,” she said.
CSD has a long history in Israel’s discussion of accounts for children. In 2004, Sherraden, working with Jewish and Arab colleagues in Israel, proposed a Middle East Development Account for all Israeli and Palestinian children. As a first step toward the goal, accounts for all impoverished Israelis were then under consideration by national policymakers. In 2008, the Israeli government again announced planning for child accounts.
The center has been instrumental in other CDA policies internationally, including national-level policies in the United Kingdom and South Korea.
“The larger vision is, someday, an account for every child on the planet,” said Sherraden, a leading international scholar on asset building.
“Technology is rapidly making this technically achievable and financially sustainable,” he said. “The hard work ahead is in policy design and political will. On these, we are making steady progress.”
CSD has conducted research on CDAs for years. Its SEED for Oklahoma Kids experiment is a crucial policy test in the United States, offering the first model of universal and progressive Child Development Accounts.
Grinstein-Weiss has served as a consultant to the Israeli government on various projects designed to promote social and economic development. Last September in New York City, she made a presentation to a delegation of Israeli officials about the importance of asset building as a strategy to address rising levels of income inequality and poverty, emphasizing her proposal for a national CDA program for Israel. Key Israeli officials attended the presentation, among them the director generals of the National Insurance Institute of Israel, the Welfare Ministry, the Ministry of Education and the Ministry of Health.