October 30, 2025
The Honorable Paul Feeney, Chair The Honorable James Murphy, Chair
Joint Committee on Financial Services Joint Committee on Financial Services
State House, Room 112 State House, Room 254
Boston, MA 02133 Boston, MA 02133
RE: Testimony in support of An Act establishing a Massachusetts Baby Bonds Program (H.48)
Chair Feeney, Chair Murphy and distinguished members of the Joint Committee on Financial Services
Thank you for the opportunity to submit written testimony in support of H.48, An Act Establishing a Massachusetts Baby Bonds Program. Baby Bonds programs are an effective way to close the racial wealth gap and expand economic opportunity for all Massachusetts residents. We also support H.1158/S.737, An Act to promote economic mobility through matched savings, which would help families to improve their financial stability.
MassBudget is a non-partisan, non-profit research and advocacy organization. We provide rigorous research and policy analysis, along with strategic advocacy in partnership with grassroots organizations. MassBudget has developed critical expertise in early childhood policy investing years researching the impact of racial and economic disparities across the Commonwealth. We believe all Massachusetts residents should have access to the same economic opportunities so they can thrive.
The bill before you would create publicly funded savings accounts for low-income children. This policy tool would help children whose families lack the financial resources and opportunities to build generational wealth. The program would automatically enroll children under the age of one who receive cash assistance through Transitional Aid to Families with Dependent Children (TAFDC) or are in the care or custody of Massachusetts Department of Children and Families (DCF). Each account would receive an initial state investment that would accrue interest over time and become available for participants when they reach adulthood. Baby Bonds funds would be eligible for spending on wealth-generating assets such as tuition, buying a home or starting a business.
Baby Bonds are a proven long-term wealth-building strategy to break the cycle of poverty. Unlike income, which covers day-to-day expenses, wealth consists of the assets people have accumulated or inherited from their families that they can draw on to manage crises and invest in their future. Access to wealth determines how a family weathers unemployment, medical expenses, or disability. Having wealth can also impact a person’s ability to access wealth-building opportunities through education, real estate, or business.1
Although access to steady, ample income makes it easier to build wealth, a lack of wealth can often be the most important factor determining a family’s life chances. The Commonwealth offers several vital income support programs to help families meet their basic needs, however, these programs are not designed to build long-term wealth.2 Baby Bonds will provide low-income children with a subsidized savings mechanism to invest in their future and deliver on the state’s commitment to closing the racial wealth gap.
The Commonwealth consistently ranks among the richest states in the nation, yet it has some of the highest levels of inequality. According to 2023 Census data, just over 20 percent of households in Massachusetts earn over $200,000. However, 27 percent survive on less than $50,000 per year.3 This income disparity is compounded by an unequal distribution of wealth. A Boston Federal Reserve Bank study of households in the Boston area in 2015 reported that white households held a median net worth of $247,000, while U.S.-born Black households had a median net worth of just $8.4
Massachusetts has already taken the lead in addressing the racial wealth gap through innovative programs. Notably, the BabySteps Savings Plan enacted in 2022 provided all families with the opportunity to open a college savings account for their children. Backed by rigorous research from the Baby Bonds Task Force,5 the proposed Baby Bonds legislation will build on the momentum within the Commonwealth to create a more equitable economy.
By investing directly in a child’s future, Baby Bonds can help close the racial wealth gap and promote economic participation. It is estimated that state revenue would increase by about $25 billion over five years if the Commonwealth were to eliminate the racial disparities of wages, housing, investments, and wealth.6 In a study on wealth in Boston, the Urban Institute predicts that Baby Bonds would increase retirement savings for the lowest income families, improve home equity, and significantly reduce student loans.7 Without bold, targeted action from Baby Bonds, families will remain reliant on income supports for generations and wealth gaps will persist, posing a serious threat to the state’s economy.
Other states and localities have successfully adopted a Baby Bonds program. In 2023, Connecticut became the first state to enact a Baby Bonds program. Through the program, the state invests $3,200 into a savings account for qualifying children. Since the program’s launch, 33,000 children have been automatically enrolled and the state anticipates that each savings account will grow to between $11,000 and $24,000 by the time each child is eligible to withdraw funds.8 These funds will play a substantial role in creating economic security and opportunity for all Connecticut residents, regardless of their starting point. A Baby Bonds program in Massachusetts has the potential to do the same. Our modeling shows that a $5,000 baby bond would yield nearly $17,000 for each child after 18 years and over $53,000 after 35 years.9
We urge the Committee to report this bill out favorably. Baby Bonds are a proven wealth-building strategy to invest in future generations and improve economic participation and opportunity for all.
Thank you for your time and consideration.
Respectfully submitted,
Adam Jones
Senior Policy Analyst
Massachusetts Budget and Policy Center
Endnotes
1 Baxandall, Phineas. (2024). MassBudget, “Testimony to the Massachusetts Poverty Commission,” accessed August 2025.
2 Borquez, Eva. (2023). MassBudget, “How Baby Bonds Could Reduce the Growing Wealth Gap,” accessed August 2025.
3 United States Census. (2023). “Income in the past 12 months (in 2023 Inflation-Adjusted Dollars),” accessed August 2025.
4 Muñoz, A. P., et al. (2015). Federal Reserve Bank of Boston, Duke University, and The New School, “The Color of Wealth in Boston,” accessed August 2025.
5 Formed in 2022 by Massachusetts Treasurer and Receiver General Deborah Goldberg Office of the State Treasurer and Receiver General Deborah B. Goldberg; Baby Bonds Task Force Findings Report. (2022). https://www.mass.gov/info-details/baby-bonds-task-force-findings-report
6 Massachusetts Taxpayers Foundation. (2021). Closing the Racial Divide in the U.S. and Massachusetts: A Baseline Analysis. https://www.masstaxpayers.org/sites/default/files/publications/202105/ClosingtheRacialDivide_FINAL_0514.pdf.
7 Torres Rodríguez, Sonia, et al. (2024). The Urban Institute, “The Potential Impact of Baby Bonds on Wealth Equity in Boston,” accessed August 2025.
8 The Office of Treasurer Erick Russell. (2025). “CT Baby Bonds Turns Two: Over 33,000 Children Now Eligible,” accessed August 2025. https://portal.ct.gov/ott/newsroom/news/news-releases/ct-baby-bonds-turns-two-over-33000-children-now-eligible
9 This value reflects the median return from 100,000 monte carlo simulations at the principal investment amount. We assume an annual return of 8.24% and a standard deviation of 16.42%, both in real dollars. These values are based on Milken Institute analysis of S&P 500 return averages from 2004-2023.
