Future fund would help close income gap, supporters say
Last updated 3/11/2022 at 12:10pm
Young adults will be able to access a fund years from now to give them a boost if lawmakers pass a bill aimed at narrowing the gap between the rich and poor.
Rep. Monica Stonier, D-Vancouver, sponsor of HB 1861, said the Washington Future Fund Trust would act as a savings and investment account for babies born under the state’s Medicaid program, Apple Health. Beginning in 2024, a minimum of $3,200 will be set aside for each eligible child to access between their 18th and 31st birthdays.
“I think it’s an exciting way to deal with a lot of the challenges that we’re seeing and that we will see, if we don’t move ahead in setting up these reserve funds and investment accounts to meet a lot of future needs of the state,” said State Treasurer Mike Pellicciotti.
Recipients can use the funds to pay for higher education, to buy a home, or start a business if they complete a financial education course and prove financial hardship.
Stonier said the committee is looking into expanding how the funds can be used, including applying for licensure in occupational fields.
Lianna Kressin, representing the Statewide Poverty Action Network, said: “A state fund will start a capital so young Washingtonians may help alleviate the economic burden that so many are saddled with and finally interrupt intergenerational poverty in a meaningful way.”
In 2020, nearly 2 million Washington residents were enrolled in the Apple Health program, which serves low-income clients. Approximately 40,000 births were covered by the program.
Pellicciotti explained in over 20 rural counties, two out of three births are Apple Health funded.
Stonier said the trust will give lower-income individuals footing, with the $3,200 acting as a boost for money families have already saved to buy homes, open businesses or go to college.
Approximately $64 million would be invested into the program annually, with the initial installment stemming from the General Fund. Unclaimed funds would be re-invested into the pool, creating a long-term, sustainable revolving fund to be managed by the State Treasurer’s office which would have the power to invest the money through the Washington State Investment Board.
Stonier said the award would be a level amount, with recipients receiving equal payouts.
Misha Werschkul, executive director of the Washington State Budget and Policy Center, said the bill would be stronger if awards increased as incomes declined.
“We know from national data that the wealth gap is sharp and rising, and due to centuries of institutional and systemic racism, that has channeled wealth and opportunity to white households,” she said.
The companion bill, SB 5752, had an initial public hearing during the Senate Human Services, Reentry and Rehabilitation Committee meeting on Jan. 13.
Prime sponsor of the bill, Sen. Yasmin Trudeau, D-Tacoma, argued her family would have greatly benefited from such a program, stressing the importance of financial support for low-income households.
“Too many of our community members are born into financial instability that in turn leads to cyclical financial instability that is passed generationally,” she said. “It’s time we rely on more than luck.”
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