Testimony of Rachel Metz, Data and Research Manager, to the Committee on Business and Economic Development

January 31, 2024
Testimony
Person Testifying: Rachel Metz
Title: Data and Research Manager, DC Action
Testimony Heard By: Committee on Business and Economic Development
Type of Hearing: Oversight Hearing

Hello Chairperson McDuffie, councilmembers, and staff of the Committee on Business and Economic Development. Thank you for the opportunity to address the committee today by providing testimony regarding the performance of the Office of the Chief Financial Officer. My name is Rachel Metz, and I am the Research and Data Manager at DC Action. DC Action uses research, data, coalition building, advocacy, and a racial equity lens to break down barriers that stand in the way of all kids reaching their full potential. We are also the home of DC KIDS COUNT, an online resource that tracks key indicators of child and youth well-being.

I’m here today to talk about Baby Bonds. First, thank you for your leadership to pass and fund legislation to create this program. We know that Baby Bonds were designed in the context of robust evidence showing positive impacts on wealth of early investments in children’s long-term savings accounts. As you noted in the legislation, white District households have 81 times the wealth of Black households and 22 times the wealth of Latine households. Baby Bonds—because they automatically enroll children, do not rely on family contributions, provide seed funding for the accounts, and expand for allowable uses beyond education—add to the wealth-building policy landscape in ways that show promise for reducing racial inequities. A 2020 simulation found that a national policy instituting Baby Bonds could reduce the wealth disparity between young white and Black Americans from 16 times the wealth to 1.4 times the wealth, a massive shift. 

We’re so glad that, thanks to your leadership, the District is implementing a Baby Bonds program. I’m here to help articulate areas where greater clarity around that program’s implementation could help it live up to its potential. While a number of hearings included discussion about this program last budget season and earlier, oversight is a great time to share information about how things have been going this past year. In broad terms, we have three questions, with lots of specifics under each one, that would help increase OCFO transparency in standing up the program.

First, where do things currently stand?

    • I understand that regulations are under development. What, if any, stakeholder feedback was involved prior to or during the OCFO’s drafting of regulations? What upcoming timelines should the public be aware of for regulatory development and public comment? How will the public comment period be publicized?
    • I understand that the OCFO is in the process of selecting vendors for managing the financial accounts. What criteria are they using? 
      • How will prospective vendors be assessed for user-friendliness, customer service quality, and transparency? These are important factors for families who are trusting the DC government to manage these valuable bonds with care. 
  • How will vendors be encouraged to adapt their policies and procedures based on feedback from program participants?
    • Do the criteria for prospective vendors address the Urban Institute’s recommendation that the underlying investment vehicle for baby bonds  protect the principal while earning a return on regular deposits? 

What should District families expect to see next?

  • What’s your implementation timeline? For example, what are your benchmarks for developing the tech and financial systems for accounts for DC families? When do you expect the first families to be enrolled in the program?
  • In terms of inclusion and reach, we’re so glad that the legislation calls for automatic enrollment for any child whose birth is covered by Medicaid or Healthy Families. In terms of impact, however, we highly encourage outreach to families so they know that they are in the program. After all, much of the benefits of the child development funds on which this program builds are because families know the money is there. Child development funds have been shown to help sustain high parental expectations about children’s education, as well as help children develop a college-bound mindset, increasing concrete communication about postsecondary plans between caregiver and child, and prompting greater hope for the future. If families don’t know they’re in the program, they, and the District overall, will lose out on some of its potential benefits. With that in mind, how is the OCFO planning to reach out to families? We hope there will be a particularly robust, in-person awareness campaign in wards 4, 5, 7, and 8, where we know the overwhelming majority of District children likely to be eligible for this program reside. Raising awareness of the Baby Bonds program is a way for the District to show its residents that it’s investing in their future and success. DC Action would be happy to provide a list of service providers and community organizations the OCFO would be wise to partner with in some of their outreach efforts. 

Can you provide a greater breakdown of funding?

  • What funds have been used so far towards the development of the Baby Bonds program, and what specifically were they used for? 
  • How much funding do you expect to use in the remainder of FY24 or beyond to further develop the Baby Bonds program, and in what ways? 
  • What is the District’s budget for program outreach and engagement? What are the current cost estimates for bond deposits in the first year of implementation? What about projections for out-years?

Answers to these questions will paint a clearer picture of how the Baby Bonds program will benefit District families. DC Action is excited to support the District in promoting, launching, and monitoring this essential program. Thank you for your time and consideration.