Michigan legislature includes $2M for Children’s Savings Accounts in 2021-22 budget

Michigan legislature includes $2M for Children’s Savings Accounts in 2021-22 budget

On September 22, 2021, the Michigan legislature passed the almost $70 billion 2021-22 state budget with bipartisan support. Among community development resources for community revitalization, placemaking, and workforce development, CEDAM is especially excited for the State’s $2 million investment in Children’s Savings Accounts (CSAs). This first-of-its-kind investment into Michigan’s growing CSA field provides $1 million for new program development and $1 million for existing programs to improve student participation and program outcomes.

This funding comes at a critical time as Michigan is looking to make our state more competitive for inclusive economic growth through increasing the number of residents with postsecondary credentials. However, college and career training attainment rates vary statewide by race, geographical region, and household income. Many students, especially those living in low-income rural and urban areas, feel that postsecondary education and training are simply out of reach. As a result, many opt not to pursue a postsecondary pathway at an early age, limiting their economic opportunities in the long term and hampering Michigan’s future economic prosperity. 

While various postsecondary preparatory programs engage high school students, CSAs connect students and their families with pathways to postsecondary attainment early and often. The early intervention and regular touch points make CSAs uniquely impactful and enhance community resources and programs that come later in a student’s K-12 experience. Their universal design ensures that all children can participate regardless of socioeconomic status.

Research shows that savings play an essential role in motivating students to attend and graduate from college. When a child from a low- to moderate- income household has even $500 in savings, they are 5x more likely to graduate from college than their economic peers without savings. Moreover, CSA programs supplement the accounts with wrap-around services like financial literacy and other postsecondary resources (e.g., local college access networks (LCAN) and promise scholarships) for a more significant impact on enrollees and their communities. 

CEDAM and the MI CSA Network are encouraged that the State is embracing this important program. Though more than a dozen Michigan communities have launched a community-based program, statewide investment has the potential to help all present and potential CSA programs operate more efficiently. For example, current programs would benefit from optimized program design and standardized access to data, while emerging programs could learn lessons from their predecessors and wouldn’t have to recreate the wheel. We are hopeful the dollars will be leveraged to do the following:

  • Support the development of statewide infrastructure to reduce the administrative burden on communities by centralizing IT, program development support, and data access. 
  • Empower local programs to meet the local needs through a statewide network of autonomous community-based programs that identify and prioritize the needs of their students and families.
  • Optimize program design & implementation by advancing a standard set of policies, procedures, and templates for current and emerging programs to streamline inefficiencies, avoid common pitfalls, encourage regional programming opportunities, and facilitate smooth student account transfers between programs.

CEDAM and the MI CSA Network are thrilled to have the State as partners in this work. By removing barriers to pursuing college or career training after high school, CSAs make it possible for Michiganders to unlock their personal potential and, for the State, its unrealized economic prosperity.

For more information about Children’s Savings Accounts or if you are interested in joining the MI CSA Network, contact Brian Rakovitis or visit our website.