Creative Commons
California’s economy is built on ideas, technology, and a well-educated workforce. The state has been at the forefront of the global economy because Californians put aside some of their wealth in the past decades to give an ever-rising number of their children a higher education.
California is now in danger of losing that higher-education edge. Because of budget cuts and rising fees, California is caught in a double bind: Californians cannot afford to pay for college, and the state cannot afford to be without educated Californians. In order for California to stay competitive with the best-performing countries, it will need an additional 2.6 million people with college degrees in the next 16 years.
To incentivize college savings, we work to support the following proposals:
Rise and Shine Accounts (Kindergarten to College Accounts)
Tax Refunds to College Savings Accounts
Life-long Learning Accounts (LiLAs)
California Rise and Shine Accounts
To help California working families save for college, the California legislature should build on the state’s Scholarshare program, and provide a college savings account to every child at birth or when they enroll in kindergarten. These accounts can create a solid platform to integrate financial education in our k-12 curriculum. At age 18, account holders could use accumulated funds to pay for college or other skills training and education. The account would be administered by California’s ScholarShare program, which is a tax-advantaged 529 college savings vehicle.
In the 2007-2008 legislative session, we supported Assembly Bill 752, which would have established a Kids Investment and Development Savings (KIDS) Account for every child born in California, starting in 2009. In the bill, every newborn would have received a starter deposit of $500 from the state and family and friends were encouraged to deposit into the account. The money saved could be withdrawn for college or technical job training, homeownership, rolled into a retirement savings account, when the account holder turned 18.
Tax Refunds to College Savings Accounts
To create an easy way for California families to save for college, California should amend the state income tax form to allow filers to directly deposit their refund into an existing state-administered tax-advantaged 529 college savings account designed to help children and their families save for postsecondary education. In 2009 we supported SB 323, the Tax Time College Savings bill.
Our program has sponsored several pieces of legislation making tax time saving easier- The Refunds to Savings Act in 2008, and the Split Refunds Bill in 2006. Merely adding space on tax returns for filers to direct a portion of their refund to a savings account can encourage and simplify saving.
Life-long Learning Accounts (LiLAs)
To allow California workers to save for career-directed workforce training, the California legislature should create a Life Long Learning Account. Employers who match their employees’ savings would be eligible for tax credits. The accounts would be held under the state’s 529 ScholarShare program. Such an account would empower employees to save for their own skills training as well as encourage them to save for the future educational needs of their children. In 2010, we are supporting AB 1320, the Life Long Learning Account Initiative, that will provide grants and employers and employees who create such accounts starting January 1, 2012.
To learn more about this issue area, please see Recommended Reading.
"Nearly one-quarter of U.S. adults today have a legacy of asset ownership directly traceable to the Homestead Act and the GI Bill — once dubbed 'the magic carpet to the middle class'— that have returned to the nation seven dollars for every one invested." - The Assets Agenda
