The State of Wisconsin would create a savings account for every child born or adopted in Wisconsin under a new bipartisan bill circulating through the Legislature.
The goal is to jumpstart savings and leverage compound interest from an initial $25 deposit from the state to assist with future educational costs or retirement plans.
During a press conference Wednesday, State Rep. John Macco, R-Ledgeview, and State Rep. Evan Goyke, D-Milwaukee, said their legislation would create a ‘WisKids’ savings account program.
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It would expand on what are known as 529 college savings plans, which allow parents to invest money to help pay for a child’s future college expenses like tuition, room and board, textbooks and computers.
Macco said there are already around 400,000 of those accounts in Wisconsin “with about $6.6 billion in assets.”
“However, when we look at the demographics of those accounts, it seems that it’s an impressive number, but it’s not,” Macco said. “We don’t have nearly enough participants. It’s apparent that only a minority of families are leveraging the 529 programs for their children’s future.”
WisKids program would have ‘zero fiscal impact’ on state budget
Macco said the WisKids legislation would tap around $22 million in fees accumulated in the state’s pre-existing Edvest college savings program. That money would fund the $25 investment for around 60,000 kids each year.
“So this this proposal has a zero fiscal effect to the state budget because that money is already accruing there,” Macco said.
Goyke, who appeared at the press conference with his son, Miguel, in tow, said automatically creating the WisKids savings program using state birth and adoption records, along with the $25 state contribution, will help with “the chaos that is being a new parent.”
Goyke said when his son was born, he and his wife were planning to create a 529 college savings plan, but it didn’t happen.
“It took dad 20 months to finally sit down at the computer and enroll,” Goyke said. “So, we lost nearly two years of earning compound interest. And really, the power of saving is starting early.”
The lawmakers said the savings accounts don’t have to pay for college expenses. They can also fund apprenticeship costs, or even be rolled into future 401K retirement programs. Parents, relatives and philanthropic organizations would also be able to make additional contributions to a WisKids account.
Goyke and Macco introduced similar bipartisan legislation in 2021, which failed to pass by the end of the Legislature’s last session.
WisKids similar to Oklahoma savings plans that have average balances of more than $4K
Macco said the two are working on getting support from leaders in the State Assembly and State Senate for the newest iteration of their plan.
They pointed to the results of an automatic savings account program created by Oklahoma state lawmakers in 2007. In that case, the state opened accounts for kids with an initial investment of $1,000. A study conducted by researchers with Washington University found those accounts have grown to an average of $4,373 in total savings as of 2022.
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