CA governor, Trump administration challenge businesses to fund child savings accounts
Top Takeaways
- Gov. Gavin Newsom urged California families to claim Trump Accounts and funds in the state’s child savings accounts.
- California will be partnering with the federal government to solicit donations for funds to be split between both accounts.
- California is also building a navigator tool to help families access free money available at the federal, state and local levels.
Governor Gavin Newsom on Friday threw his support behind Trump Accounts, encouraging California families to claim the federally created child savings account even as questions remain about the program. So far, about 600,000 accounts have reportedly been created for California kids.
He also announced the Golden State Challenge, a public-private partnership with Invest America, the initiative formed alongside Trump Accounts, that will designate business and philanthropic donations to both the Trump Accounts and California’s child savings account program.
For the first time, perhaps setting politics aside, Newsom is backing — and encouraging — families to claim the Trump Accounts.
“We’re here to encourage people to take advantage of this, to not fall prey to the politics or the cynicism, or maybe even the fear that ‘if I download a Trump Account, somehow that means something,’” he said. “It doesn’t. It just means something for your kid. It’s not Trump’s money; it’s your child’s money.”
His call to action even promotes funding the federal accounts.
The federal government launched Trump Accounts this year; it’s a savings program meant to be a long-term retirement and wealth building tool that allows companies and government entities to contribute.
California started its Kids Investment and Development Savings program, or CalKIDS, in 2022. It provides children from low income families and English learners between $500 and $1,500 for college or a career as well as seed deposits for the state’s newborns.
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More than 6 million California school-aged children and newborns qualify for the state-funded savings accounts, a number that grows each year. The money is automatically deposited under a student or a newborn’s name, but families must claim the accounts by registering online. Though steadily increasing, 1 million, nearly 17%, of eligible accounts have been claimed.
The Golden State Challenge implores businesses and philanthropic organizations to donate to the initiative with contributions to be split between eligible CalKIDS accounts and Trump Accounts.
Up until now, CalKIDS had been solely funded by the state and others could not invest money.
Trump Accounts, by contrast, can receive an initial federal deposit as well as contributions from family, philanthropists, nonprofit organizations, government agencies and businesses. The United States Treasury, for example, will deposit $1,000 into the accounts of children with social security numbers who are born between 2025 and 2028. In California, more than 350,000 of the state’s 400,000 babies born each year could be eligible.
Besides the seed deposit for newborns, other organizations can contribute to Trump accounts of all children in a state or specific geographic area. And companies can make contributions to the accounts for its employees.
“It’s direct. It’s tangible. It’s results oriented,” Newsom said Friday. “You can see it, taste it, feel it. You’re making a difference directly to the next generation. You’re giving them hope.”
Michael and Susan Dell, founders of Dell Technologies, donated more than $800 million to provide $250 deposits for 3.3 million California children, 10 and younger, who live in communities where the median family income is below $150,000.
Micron, the semiconductor manufacturer, is contributing $250 for children living in Sacramento and Santa Clara counties, which reportedly has the potential to reach 80,000 kids. The company will also match up to $1,000 in employee contributions to their kids’ accounts.
Other companies have announced contributions or matching programs for employees’ children as well. Companies are also promising to “adopt” schools or put money in the accounts of the kids in the communities they serve, according to Brad Gerstner, founder and chairman of Invest America.
Gerstner announced Friday that an anonymous philanthropist has adopted the city of Oakland and another plans to adopt every child in East Palo Alto, about 6,000 kids.
Already, an anonymous $3.5 million donation to San Francisco will give $500 for every child born in 2026.
Five hundred eligible newborns in Kern County will receive $1,000 each, thanks to a donation from a foundation.
Still, questions and concerns remain about Trump Accounts, as federal guidance on some aspects of the program is still being developed.
California’s experience with CalKIDS offers a lesson: even when money is available to help children, families may not take advantage of it if there’s a lack of awareness, lingering questions or a new process to navigate.
To help families, California is building a pilot tool, the Early Investment Accounts Navigator coming later this year, that will identify every account their child may be eligible for, including the newly created Trump Accounts; CalKIDS for over 6 million children; California’s HOPE Trust Accounts for 82,000 foster and pandemic-bereaved youth; and locally-operated child savings programs in more than a dozen counties and cities across the state.
For example, a newborn in a low-income family in Oakland already has $500 in an Oakland Promise Brilliant Baby account, $100 from CalKIDS and $1,000 in a Trump Account — one at the local, state and federal level.
Other states will be able to adapt the navigator tool for their local and state programs.
This story was originally published by EdSource.