Children born, adopted in Wisconsin would have education savings accounts under new legislation

 

MILWAUKEE (CBS 58) -- As the father of a toddler, Rep. Evan Goyke, (D-Milwaukee), knows the chaos that comes with being a parent.

"My son, Miguel, is 2-and-a-half," Goyke told CBS 58's Ellie Nakamoto-White. "When we brought him home from the hospital, it was hard."

He and his wife had made plans to open a 529 savings account for Miguel -- but then according to the representative, "life happened, and sleepless nights."

"It took us months and months and months before we actually sat down, got some sleep, and then opened an account on our son's behalf," Goyke said. 

That's why he, among other state lawmakers, have begun working to make other new parents' lives easier with Senate Bill 950.

The bipartisan bill, which is currently circulating through legislation, proposes a 529 college savings program called "WisKids."

In it, every child either born or adopted in Wisconsin would have a head start on higher education. Twenty-five dollars would be deposited into each account after receiving information from the state Department of Health Services. That would ultimately continue to grow with them and then used when they turn 18.

"Our goal with this is to really inspire families to start right away, by having the state go first," Goyke said. "The sooner you get your money growing, the larger it grows over time."

When they are of age, the WisKid funds would be directly transferred to their education program of choice via the Department of Financial Institutions, (DFI) rather than a check made out to the child.

"It's not just college, it's not just four years, a technical college, vocational school, an apprenticeship in a skilled trade," Goyke said. 

Recipients would have until they were 28 to use the funds for schooling -- or they could choose to instead roll the savings into a long-term retirement account. 

"So, every child will benefit regardless of whether or not they decide to attend higher education or not," Goyke said. 

If a child passes away or doesn't use their funds in time, the initial investments from the state would be returned into the pool for other kids.

And while it isn't required for parents, it is encouraged. Guardians would have the option to opt out of the account before it was created, thanks to a notification from DFI.

"I understand the argument about what the government's role is, but we all benefit when people are making sound financial choices and saving for their future," Goyke said. 

But where does the $25 come from? Lawmakers said the program would have zero fiscal impact on the state's budget because it would tap into the near $20 million accumulated by fees in Wisconsin's pre-existing college savings program, "Edvest."

Goyke said their estimations calculate between 60,000 to 65,000 children could have accounts with that money.

He added that with this legislation, officials are also trying to provide opportunities for everyone on an equal playing field. 

"Not all households are participating evenly. We see this in very rural communities and very urban communities where participation falls off, and we want to really make sure that all families have this opportunity, and all families are putting aside the funds," Goyke said. "That's why we've made this program universal. Doesn't matter where you live, doesn't matter how much money your parents make, every child will have an account opened in their name under the program," Goyke said.

Plus, the program would be self-funding moving forward, according to Goyke.

"Our goal is to grow investment and invest in the 529 programs that we have. The more assets that we have under management, the more those kinds of fees can be generated," Goyke said.

While there isn't an official timeline, officials recently spoke in a public hearing and are now hoping to have a vote in the Assembly committee to get the bill to the floor in this current session. 

Bill co-sponsor, Rep. John Macco, (R) Ledgeview, sent CBS 58 this statement: 

“As a father and grandfather, I know how chaotic having a newborn can be. By opening a starter 529, families will have financial planning be a part of their conversations from the onset. 529 accounts are one of the most powerful tools available for parents to prepare their kids to be career and community ready. ‘Wiskids’ ensures the benefits of this tool are available to those who need it most.”