New Mexico Readies Push For Baby Bonds Proposal

New Mexico is the latest state to explore passage of a proposal to set up a baby bonds benefit for residents—a lump sum given to families upon birth or adoption of a child that creates a savings account that can be drawn on for specific purposes at age 18 or later in life. Connecticut, Washington, D.C. and California have passed laws and about a quarter of the other states are showing interest. Nichelle Gilbert, executive director of New Mexico’s Partnership for Community Action, spoke with Spotlight recently about the emerging debate. The transcript of the conversation has been lightly edited for length and clarity.

Why don’t you tell us a bit about the Partnership to start?

Absolutely. I actually started with the Partnership in 2018, though the organization itself started in 1990, and so we’re getting ready to celebrate 35 years of organizing. And our work is really dedicated to dismantling systems of inequity by investing in people and families to build power working locally, but then spreading across New Mexico. We’ve worked alongside community and many cross-sector partnerships to ensure that all children and families have the resources that they need to thrive. We’ve done work in things like zoning, but we’ve also done really big, expansive policies like the constitutional amendment to tap our land grant permanent fund to adequately and robustly fund early childhood education in our state. We’re not there yet, but we’ve made significant strides and progress to support children and all New Mexicans and so that’s been really positive.

At PCA, we really envision and are building power toward engaged healthy and vibrant communities where everyone has access to education, wellness, and economic opportunity. And like I said, we’re getting ready to move into our 35th year and just feel really excited about and energized by some of the economic mobility proposals that we’ll be presenting in the legislative session, including baby bonds, this upcoming January.

Tell me where the momentum behind baby bonds has come from, and just a little bit of the history there.

We started talking about this concept probably about two and a half years ago as we were thinking about where we sit as a state in terms of poverty. We just had some numbers come out from a partner organization called New Mexico Voices for Children and we learned that through their Kids Count Data Book, we are sitting at about 17% of New Mexicans living in poverty, and that percentage increases to closer to 24% when we’re talking about New Mexico’s children. Access to capital and economic mobility has always been rooted in policies, starting with the Social Security Act and moving forward to red lines and all of the things that we know to be detrimental—policy choices that have placed barriers for communities to achieve the prosperity and the revitalization that they’re looking for.

One of the particular things that that came up for us was access to capital and wealth building and we were in partnership with a national organization called Prosperity Now, who was starting to workshop and talk about this idea that was generated by Dr. Darrick Hamilton from the New School called baby bonds. And we thought to ourselves, New Mexico has made these incredible investments in early childhood education. We’ve also done a number of initiatives that center economic stability through income measures like guaranteed income, like the Child Tax Credit. And so, we really wanted to think about what does it look like for our state to look beyond the income question and start to consider what does generational wealth mean for New Mexico children and families? That’s how that conversation started.

And is there a proposal at this point?

A couple of things have taken shape. We as an organization, in partnership with other tremendous ecosystem leaders Abriendo Puertas and Prosperity Works and a new partner in MoneyByrd, actually launched a private pilot of baby bonds. We have a cohort of about 15 individuals right now who have children ages zero to five and who received a $6,000 investment that they’ll be able to tap into at age 18 to engage in economic mobility initiatives like purchasing a home, post-secondary education, starting a business or investments like retirement. This is an incredible way for us to have impact now and start to show the impact on families from a multi-generational lens on what it means to have this fund available for families.

We also placed an economic or financial capability course as a requirement that really gets at that two-gen approach. Not only can families watch this resource and fund grow for their child, but they can also engage in education and learning around financial capabilities. This is a nascent concept, and we’re hoping that we’re going to see impacts in mental health and financial security in financial decision making.

Has that financial education piece been part of any of the previous laws that are on the books?

I think that Connecticut is trying to put into place a financial capabilities course that would be required for families to be able to tap those funds. And it’s what Darrick Hamilton has outlined as a part of his vision for the baby bonds concept.

Darrick has been a great friend to Spotlight over the years

He was just here in New Mexico in October when our state treasurer, Laura Montoya, who’s also an incredible advocate for baby bonds, hosted a symposium to help generate momentum for introducing a bill in 2025.

We saw a light launch of baby bonds in the last legislative session to really start to build public will around the concept and explain what it could mean for New Mexico. This year it’s actually on the priority list of Speaker of the House Javier Martinez, who wants to set up a funding mechanism that will put into place the dollars necessary to fund a baby bonds program at the state level.

And is there agreement at this point about the basic numbers of that proposal?

There is some. I can tell you from an advocate’s perspective that we’re looking at the program being universal. And the reason that we’re doing that is because here in New Mexico, of the 21,000 to 22,000 births we have each year, a significant number more than the majority happen with Medicaid. So, we’re looking at this being a universal proposal so that all New Mexico children have access.

And how much would the baby bond be? Or is that still under discussion?

That’s a great question. I think at the legislation level, it’s still a question and being decided. When you look at other programs, Connecticut is tremendous, and they’re estimating growth to about $12,000 per child. And so, we looked at that as sort of a baseline for us and then looked to if there is something additional, we can do. In the private pilot, we put forth $6,000 and we’re backfilling those accounts up to $13,000. But at the $6,000 level, in 18 years, these accounts are projected to be worth $20,000 each for each child. And then if a, a young person decides not to touch it and allow it to grow and continue on for retirement, at age 65, the projection tis $483,000.

So, we are thinking about that in a proposal with the view that somewhere between $6,000 and $10,000 represents a significant investment in the future of New Mexico families.

And was there a robust debate about making it universal?

There has not been because of who we are as a state and how we hold and cherish our children. I will say there have been questions because the concept as presented has income thresholds, so as to not widen the racial wealth divide. And I imagine there will be more conversations about that as we move forward. But we’re very clear that we have a middle class that may not qualify for certain social services or subsidies from our state government because of their income, but they still don’t have the funds available to set up a trust fund.

At the federal level, universality for programs like the expanded Child Tax Credit has emerged as a potential political compromise to draw bipartisan support.

Yes, some of that is playing into it. We still have a narrative that we’re shaping around the access to the social safety net and how we set that up sometimes as being about a handout and that’s not the case. Poverty is a policy choice and what we’re doing is undoing these intentional actions of the past. Universality has become something people can agree on, and it feels good across the aisle.

Do you find that this is generating bipartisan support? I know in other states it has.

I think that what New Mexico really has going for itself is that our legislature has already made tremendous progress to support children and families, and I applaud our lawmakers for doing that. We’re really starting to see this become a bipartisan conversation on baby bonds, around how can we use the dollars of today to shape the generations of the future. And more and more, I’m seeing politicians on both sides of the aisle being really excited to talk about this as something that they can offer to their constituents, but also offer up as a part of their own legacy.