A new pilot program is starting 15 New Mexico children off on a possible road to greater financial security, and a local state legislator is willing to a listen to talk of using state money to expand it.
The program is called Baby Bonds. It’s a private initiative aimed at giving the kids a shot to build wealth and a head start on home ownership, entrepreneurship, paying for college or saving for retirement.
State Treasurer Laura Montoya and New Mexico Speaker of the House Javíer Martínez plan to introduce a publicly funded variation during next year’s Legislative Session.
“Standing alone,it sounds like a fine idea,” Rep. Matthew McQueen of Eldorado said Aug. 12. “But I’ll reserve judgment until I see how this is gonna work.”
How it works
Each of the chosen children will start with a $6,000 trust fund, which will be set aside and gather interest. As the account holders turn 18, they will have indirect access to most of the accumulated money to help improve their finances, such as paying college costs or making down payments on homes.
One-third of the value of each account will remain there, as the beginnings of a retirement savings, plus any other portion that isn’t withdrawn.
The Partnership for Community Action, Abriendo Puertas/Opening Doors, MoneyByrd and Prosperity Works announced the pilot program Aug. 8
The pilot program was started with money from private donors. The first participating families have completed Abriendo Puertas’ curriculum.
Peter Wailes, a baby bond program administrator with MoneyByrd, said the initial $6,000 could more than triple by the time a child turns 18 or get close to $500,000 by the time the beneficiary turns 65.
Leslie Moreno-Roacho didn’t go to college. She wanted to study nursing, but her family’s finances meant that goal stayed out of reach.
Her 1-year-old son, Zaiden, is one of the first 15 chosen for Baby Bonds..
Will the state follow?
Montoya said a public baby bonds program will be proposed during in 2025. She said supporters will ask lawmakers to commit state money to the establishment of a trust fund for every child born in New Mexico after July 1, 2025.
Montoya said New Mexico’s permanent funds could be a source of money needed for a state-funded program and she envisions a requirement that money from publicly funded Baby Bond accounts be spent in New Mexico.
The state program would have a required financial education component, Montoya said.
Martinez said this is the only state with a right to early childhood education enshrined in its constitution. He said New Mexico also offers generous tax credits for working families, and baby bonds legislation is a logical extension of the state’s priorities in that regard.
“It’s not enough for us just to survive,” he said. “What about thriving? What about building assets? This economy in this state and across this country is built on the backs of working families. It is time that we get to build that wealth as well, just like the guys who own the corporations.”
Building wealth
Nichelle Gilbert, executive director of the Partnership for Community Action, said one of the program’s goals is to narrow the racial divide in building wealth. She noted that the children in the pilot program represent communities of color.
“One of the best ways to make money is to have money,” Gilbert said.
She said while many programs address incomes, Baby Bonds aims to go a step further by providing tools for future citizens to secure financial security,
Darrick Hamilton, a professor of economics and urban policy at The New School for Social Research, added that having access to capital can be the difference between a renter and a homeowner or permit someone to earn a college degree without going into debt.
As for Moreno-Roacho, she said she’s excited to see what Zaiden does with his life-changing investment. She said she hopes he can go to college and avoid the debt many students face.
“This isn’t just money,” Moreno-Roacho said of the Baby Bond. “It’s a ticket to opportunity.”
McQueen said the legislation wouldn’t go before any of his committees, but he’s keeping an open mind.
“I don’t know the details, but I don’t see any reason to be opposed,” he said.
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