City to explore issuing ‘baby bonds’

Evanston’s City Council this week voted to set up a task force to study creating a “baby bond” program.

The “baby bond” term was undefined in the resolution and the measure’s sponsor, Ald. Devon Reid (8th) declined to respond to an email inquiry from Evanston Now seeking clarification.

But it is believed to be a spinoff of a proposal introduced in the U.S. Congress to counteract racial disparities in family wealth.

As proposed by U.S. Rep. Ayanna Pressley (D-Massachusetts) and Sen. Cory Booker (D-New Jersey) the “baby bond” measure would create a federally-funded savings account for every American child.

The initial $1,000 deposit would be boosted each year until the child reached 18 by an amount that would vary based on family income.

For a family of four, the extra government money each year would start at $2,000 if the family’s income was under $25,100 and drop to nothing if the family income was greater than $125,751.

The program would give the lowest-income 18-year-olds $46,215 and those at the highest income level just $1,681.

U.S. Rep. Jan Schakowsky (D-Evanston) is among the cosponsors of the bill.

Under the plan, recipients would only be allowed to use the funds for uses like higher education or buying a home — what the sponsors describe as “the kind of human and financial capital investments that change life trajectories.”

The measure was introduced in February as SB441 and referred to the Finance Committee, which has taken no action on it so far.

Apparently the only municipality to create such a program is Washington, D.C., which in 2021 agreed to provide some children born in the city up to $25,000 when they turn 18.

The D.C. program is limited to families on Medicaid who make less than 300% of the federal poverty line, or up to about $83,250 for a family of four.

An early news report on the D.C. program said it was expected to cost $32 million for the first four years, although a more recent report pegs the initial four year cost at $54 million.

Evanston has about 10.5% as many residents under the age of 18 as the nation’s capital. Assuming a similar share of eligible participants, a program like D.C.’s created in Evanston might cost $1 million a year or more.

An Evanston version of the more generous federal “baby bond” proposal could cost several times as much.

Under the resolution passed this week, Mayor Daniel Biss is directed to appoint seven members to the task force by Aug. 14.

That panel is then directed to provide a “comprehensive report” on the proposal on or before Oct. 9 — just in time to potentially include funding for the project in the 2024 city budget.

The task force is also directed to research two other concepts — expanding the city’s childcare service offerings and providing a check cashing service in the city clerk’s office.