New $50 Bright Future Booster, in addition to $100 starter deposits, benefits babies born to mothers enrolled in WIC program. Program still does not use any taxpayer dollars.
Harrisburg, PA - Pennsylvania Treasurer Joe Torsella today announced the new Bright Future Booster for the Keystone Scholars program. The additional automatic $50 deposit will benefit all Pennsylvania babies born to mothers enrolled in the Special Supplemental Nutrition Program for Women, Infants and Children (WIC) from January 2021 through June of 2021. This $50 for WIC families is in addition to the $100 Keystone Scholars starter deposit available to every baby born to or adopted by a Pennsylvania family to jumpstart savings for postsecondary career or college education.
“Every child in Pennsylvania deserves a bright future, and every child deserves the same chances to get ahead. This new Bright Future Booster helps get a little further in working to address inequities and to promote wealth-building for financially disadvantaged families. Research shows having an account in a child’s name greatly increases their chances of postsecondary education attainment. Keystone Scholars starter deposits let every child know the Commonwealth believes in them and has their back. I’m so proud that, with bipartisan support, Pennsylvania became the first state to legislate this groundbreaking program. And so proud that today, we’ve become the first state to automatically target deposits to help lift low-income families.”
Pennsylvania State Treasurer, Joe Torsella
The Keystone Scholars legislation was sponsored by Senators John Gordner and Vincent Hughes along with former Representative Duane Milne and signed into law in 2018, establishing Pennsylvania as the first state to legislate a universal opt-out savings program for children at birth — making $100 starter deposits into PA 529 College and Career Savings Program plans available to every baby born to Pennsylvania families starting in 2019. While targeted deposit programs have been experimented with at the local level, this expansion of Keystone Scholars would make Pennsylvania the first state to do so. The targeted deposits are being funded by philanthropic contributions, and Torsella has proposed legislation to the General Assembly that would enable their continuation past the six-month pilot period, also at no cost to the Commonwealth’s General Fund.
The goal of this new targeted deposit pilot is to demonstrate Treasury’s ability to offer these additional targeted deposits, to monitor their impact, and to increase outreach and build awareness of the Keystone Scholars program among low-income families. This new element of Keystone Scholars is designed to help narrow the gap between advantaged and disadvantaged children and to increase equality in the ability to pursue postsecondary education.
Keystone Scholars is a Child Development Account or CDA. Experts in CDA design recommend ten key elements be part of a successful program including: universal eligibility, automatic enrollment, at-birth start, automatic initial deposit, automatic progressive subsidy, centralized savings plan, investment growth potential, targeted investment options, restricted withdrawals, and means-tested public benefit exclusions. Keystone Scholars legislation authorizes all ten elements, and the automatic progressive subsidy is the only piece not yet in operation, until now.
The estimated total cost of the 6 month pilot is approximately $700,000 and will be funded by philanthropic donations and a monetary award from a settlement in which Treasury was the lead plaintiff. It will use no taxpayer dollars. Eligible babies will be identified through birth record data already provided to Treasury by the Pennsylvania Department of Health for the Keystone Scholars program.
“I am very grateful to the legislative leaders who helped make Keystone Scholars a reality, and to the generous philanthropists – The Heinz Endowments, Henry L. Hillman Foundation, Neubauer Family Foundation, and the Richard King Mellon Foundation – who have continued our innovations in this important program.”
Pennsylvania State Treasurer, Joe Torsella
In 2018, Treasury administered a pilot version of Keystone Scholars that was available to babies born in six counties. An external evaluation of the year-long pilot revealed families in all demographics in participating counties were twice as likely to open a PA 529 account for their child in the first year of life than those in other counties. Families can open and contribute to a PA 529 for children of any age at any time with just $10.
Treasury’s PA Savings Pledge is a partnership with Fund My Future and offers prize-based incentives to promote savings for children from birth to 18 years of age. Families can save as little as $1 in a qualifying account to be eligible for monthly prizes.