Budget Agreement Also Added Future Cohorts of Low?Income First Graders

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By Samyr Ahmad

Budget Agreement Also Added Future Cohorts of Low?Income First Graders

The 2021?22 budget agreement also included $170 million ongoing General Fund beginning in 2022?23 to provide deposits for each incoming cohort of first graders. The Governor’s 2022?23 budget includes these funds. The eligibility criteria and award amounts will be the same as for public school students in 2021? 22-meaning each low?income first grader will receive a deposit of $500, and first graders who are foster youth or homeless will receive additional $500 deposits. The state will add these deposits to the existing CalKIDS accounts of any first graders who had an account created as a newborn, and it will create new accounts for any first graders who do not already have one. Approximately 320,000 first graders annually are expected to receive these deposits.

State Has Provided Some Resources for Program Administration. In addition to the funding provided for the college savings accounts, the 2021?22 budget included an ongoing augmentation of $700,000 to SIB for CalKIDS administrative costs. Based on data from the administration, SIB is planning to use these funds for various expenses, including staffing and contract services. (Most notably, SIB intends to contract for the IT platform it will use to administer the program.) SIB has had one staff position partially dedicated to CalKIDS since the program was first created in 2019?20. The 2021?22 budget did not add any positions.

Proposals

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Governor Proposes Two Positions for Program Administration. The Governor’s budget provides $238,000 ongoing General Fund and two positions (associate governmental program analysts) to administer the CalKIDS program. The positions would have various responsibilities, including but not limited to compiling and analyzing participant data, conducting marketing and outreach, assisting with regulations, and communicating with stakeholders.

Governor Proposes Multiple Outreach Initiatives. As Figure 5 shows, the Governor also has three proposals related to CalKIDS outreach. First, the Governor proposes $5 million ongoing General Fund for financial literacy outreach to inform CalKIDS participants and their families of the long?term benefits of saving for college. Second, the Governor proposes $4 million one?time General Fund in 2022?23 to notify participants in grades 1 through 12 of their CalKIDS accounts, as well as $400,000 ongoing General Fund beginning in 2023?24 to notify each incoming cohort of first graders. Third, the Governor proposes $1 million one?time General Fund in 2022?23 for a short?term paign to increase awareness of the CalKIDS program upon its launch.

Assessment

Proposed Positions Are Linked to New Workload. While the CalKIDS program was originally intended to serve newborns, the 2021?22 Budget Act significantly expanded the size and complexity of the program by adding a new component serving 3.5 million public school students, as well as an estimated 320,000 first graders annually in future years. In addition to opening accounts and providing deposits, SIB needs to oversee the accounts until each cohort reaches college age, as well as make payments from the accounts at that time. (Under state law, any unspent funds in a participant’s account are to revert to the CalKIDS program when the participant reaches age 26, unless an appeal is submitted.) Given the ongoing workload associated with these changes, we think it is reasonable to increase staffing at SIB. The administration has provided a workload analysis justifying both proposed positions.

Some Outreach Is Needed if Program Is to Meet Its Objectives. The CalKIDS program is intended to expand college access, particularly for low?income students. In order for the program to have the intended effect, participants and their families need to know about their CalKIDS account and any deposits from the state, as well as how they can contribute their own funds toward saving for college. Statute already requires SIB to provide notifications containing this information to the parents of newborns. At a minimum, the state would likely want SIB also to provide such notifications to the families of participants in grades 1 through 12 and to each new cohort of participating first graders. Additional outreach efforts, if designed well, could also have potential benefits. For example, SIB intends to use a portion of the proposed funds for a paign, potentially including television announcements, online advertisements, and social media. These channels could payday loans Crowley no bank account potentially reach some families who do not receive (or disregard) the participant notifications.

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