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OLR Bill Analysis
sSB 384
AN ACT IMPLEMENTING THE TREASURER'S
RECOMMENDATIONS CONCERNING THE CONNECTICUT BABY
BOND TRUST PROGRAM.
SUMMARY
This bill makes various changes to the Connecticut Baby Bond Trust
program. Administered by the state treasurer, the program authorizes
up to $600 million in bonds to provide designated beneficiaries (i.e.,
babies born on or after July 1, 2021, whose births were covered under
HUSKY) up to $3,200 in a state trust. Once they reach age 18, designated
beneficiaries that meet the program’s eligibility requirements may
receive the funds, including any investment earnings, to be used for an
eligible expenditure (e.g., education, buying a home or investing in a
business in Connecticut, and personal financial investments).
The bill makes the following changes:
1. increases, from $50 million to $100 million, the amount of bonds
authorized for the program in FY 23 and eliminates the $50
million authorization for FY 34;
2. allows the program’s implementation expenses to be added to
the capped amount of bonds authorized for each year of the
program;
3. subjects the bonds to standard statutory GO bond procedures
and repayment requirements;
4. exempts disbursements from the trust, rather than the trust’s
property and earnings, from all state and local taxes;
5. requires that the disbursements, rather than funds invested in the
trust, be disregarded as assets or income for state assistance
programs and need-based educational aid; 2022SB-00384-R000615-BA.DOCX
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6. eliminates the requirement that the state treasurer establish an
accounting for each designated beneficiary and makes
conforming changes;
7. exempts the trust’s property from the law for determining when
property held by a fiduciary is presumed abandoned;
8. explicitly subjects the treasurer’s trust investments to the same
oversight and requirements that the law establishes for other
treasurer-administered funds, such as the Teachers’ Pension
Fund, the State Employee Retirement Fund, and the Connecticut
Municipal Employees’ Retirement Fund (e.g., investment review
by the Investment Advisory Council); and
9. makes various minor, technical, and conforming changes and
corrections.
EFFECTIVE DATE: Upon passage
IMPACT ON ASSISTANCE PROGRAMS AND NEED -BASED AID
The bill prohibits disbursements from the trust from being
considered assets or income when determining an individual’s
eligibility for (1) state-administered assistance programs, to the extent
allowed by federal law, or (2) need-based, institutional aid grants
offered at the state’s public eligible educational institutions. In doing so,
it eliminates similar provisions in current law that applied to funds
invested in the trust.
AMOUNTS TRANSFERRED FOR DESIGNATED BENEFICIAR IES
Under current law, the state treasurer must establish an accounting
for each designated beneficiary and may transfer up to $3,200 from the
program’s bond proceeds to the trust to be credited to the beneficiary’s
accounting at birth. The bill eliminates the requirement that (1) each
designated beneficiary have an accounting and (2) the transferred funds
come from these bond proceeds (see Bond Authorization below). It also
allows the transfer to be made after the designated beneficiary’s birth,
rather than at birth.
Under current law, if a designated beneficiary fails to submit a valid
claim before his or her 30th birthday or dies before doing so, the amount 2022SB-00384-R000615-BA.DOCX
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of his or her accounting is credited back to the trust’s assets. The bill
instead requires that this amount be retained by the trust to credit to
designated beneficiaries born in subsequent years.
Existing law requires the treasurer to proportionately reduce the
transfer amount for any year in which the bond funds are insufficient to
provide the $3,200 transfer to each beneficiary. The bill additionally
requires, for any year in which these funds exceed the amount required
to provide the transfer, that any excess be retained by the trust to credit
to designated beneficiaries born in subsequent years. It also makes
technical and conforming changes.
BOND AUTHORIZATION
Current law authorizes the treasurer to issue up to $600 million in
state general obligation bonds for the program, in amounts of up to $50
million per year from FYs 23-34. The bill increases the FY 23
authorization to $100 million and eliminates the $50 million
authorization for FY 34. It also authorizes the program’s
implementation expenses to be added to the capped amount of bonds
authorized for each year of the program.
Current law requires the Baby Bonds program to be funded with
bonds from a specific bond issuance and incorporates certain provisions
relating to this issuance, including the treasurer’s powers in connection
with the bond sale and certain legal actions related to the bonds. The bill
instead subjects the bonds authorized under the program to standard
statutory bond procedures and repayment requirements.
BACKGROUND
Related Bill
sSB 12, favorably reported by the Finance, Revenue and Bonding
Committee, includes the same provisions.
COMMITTEE ACTION
Finance, Revenue and Bonding Committee
Joint Favorable
Yea 41 Nay 10 (04/06/2022)