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Children’s Savings Accounts

Children’s Savings Accounts. States & Asset Building November 11, 2003 Dr. Caroline E.W. Glackin Co-Chair, Governor’s Task Force for Financial Independence (DE) cglackin@desu.edu 302-857-6943. Topics. State Asset Building Policy – Delaware Governor’s Task Force for Financial Independence

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Children’s Savings Accounts

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  1. Children’s Savings Accounts States & Asset Building November 11, 2003 Dr. Caroline E.W. Glackin Co-Chair, Governor’s Task Force for Financial Independence (DE) cglackin@desu.edu 302-857-6943

  2. Topics • State Asset Building Policy – Delaware Governor’s Task Force for Financial Independence • Children’s Savings Accounts – SEED Collaborative

  3. State Asset Policy • Delaware Governor’s Task Force for Financial Independence • First statewide task force to address the broad topic of asset building • Co-chaired by State Treasurer Jack Markell & Caroline Glackin of the First State Community Loan Fund & Center for Community Research & Service at the University of Delaware • Deliberate mix of public, private & nonprofit leaders • Assisted by the Corporation for Enterprise Development with Citigroup financial support

  4. Delaware Task Force for Financial Independence • Categories of Exploration • Asset Facilitation • Asset Incentives • Asset Protection • Removal of Barriers to Asset Accumulation

  5. Recommendations • Given fiscal constraints, all were either low or no cost to the State of Delaware • Support for the exploration of children’s savings accounts through a demonstration program was one recommendation

  6. Children’s Savings Accounts in Delaware • Interest generated during Governor’s Task Force work • Collaborative a subset of Task Force • Application for Savings for Education, Entrepreneurship & Downpayment (SEED) Policy & Practice Initiative by Delaware collaborative through FSCLF • Final application by the Boys and Girls Clubs of Delaware

  7. SEEDBoys & Girls Clubs of DE • Only statewide Boys & Girls Club in the United States • Serves 1 out of 7 school-aged youth in Delaware • 15 club facilities, 9 school sites, & 5 extension programs • Administering club has 1,500 members

  8. SEED Target Population • 75 children & their families • Youth participants in the BGCD after school programs • Middle school children (11-13 years old) • African American, Latino & Caucasian • Most households are low-income & low-wealth

  9. SEEDUnique Aspects • Only SEED site with middle school students as target population • Trust accounts held at Smith Barney • Accounts held until age 18 (limited exceptions) • Ages 18 – 21: use restricted to homeownership, small business, automobile, education, job skills • Age 21+: age of majority, remaining funds are unrestricted • Statewide collaborative developed this from Task Force & recruited the lead agency

  10. SEED Key Partners • Boys & Girls Clubs of Delaware (BGCD) • Citicorp Trust Bank, fsb & Smith Barney • Office of the State Treasurer • Delaware Financial Literacy Institute • First State Community Loan Fund • Nehemiah Gateway Community Development Corporation • Center for Economic Education & Entrepreneurship – University of Delaware • Center for Entrepreneurship – Delaware State University

  11. SEED Account Structure • Investment account (co-owned as trust account) • $375 initial deposit - after 10 week child training • $1,000 in savings matches ($250/year for 4 years) • $625 in benchmark incentives, including parent incentives

  12. SEEDTimeline I • BGCD orientation – September 2003 • Information sessions/recruitment – beginning in September • Enrollment – October – January • Financial fitness classes for kids – December/January • Financial fitness classes for parents & IDA options – January 2004

  13. SEEDTimeline II • Open accounts – February – June 2004 • Add funds for incentives – February 2004 through May 2008 • Maintain monthly contact – through June 2005 • Maintain quarterly contact – through May 2008 • Matched withdrawals – after age 18

  14. SEEDCurrent Status • 31 children pre-enrolled with signed parent agreements • Funding from CFED & Citigroup Foundation with other funding in final rounds • Accounts to be opened in December • Children enrolling from low-income areas served by 2 BGCD clubs

  15. Delaware SEEDContact Information • Boys & Girls Clubs of Delaware • 669 South Union Street • Wilmington, DE 19805 • Phone: 302.658.1870 • Fax: 302.658.3907 • Website: www.bgclubs.org

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