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2023 - 2024 LEGISLATURE
2023 ASSEMBLY BILL 1143
March 6, 2024 - Introduced by Representatives VINING, CLANCY, SUBECK, C.
ANDERSON, EMERSON, CONLEY, SINICKI, MOORE OMOKUNDE, HONG, J. ANDERSON,
BARE and OHNSTAD, cosponsored by Senators AGARD, ROYS and L. JOHNSON.
Referred to Committee on Health, Aging and Long-Term Care.
***AUTHORS SUBJECT TO CHANGE***
AN ACT to amend 20.144 (1) (g), 25.17 (3) (a), 69.14 (1) (a) and 69.22 (6); and to
create 20.144 (5) (title), 20.144 (5) (a), 20.144 (5) (c), 20.144 (5) (j), 20.144 (5)
(q), 25.14 (1) (a) 20., 25.17 (1) (aL), 25.18 (1) (q), 25.32, 69.20 (3) (b) 6., 69.20 (3)
(i), 71.05 (6) (b) 57., 71.78 (4) (w) and 224.58 of the statutes; relating to:
creating a baby bond program and baby bond fund, granting rule-making
authority, and making an appropriation.
Analysis by the Legislative Reference Bureau
This bill requires the Department of Financial Institutions to establish and
administer a baby bond program and creates a baby bond trust fund managed by the
State of Wisconsin Investment Board.
Under the bill, the State Registrar of Vital Records must provide to DFI a copy
of the record of birth for each child born in the state on or after the bill's effective date.
In consultation with the Department of Health Services and the Department of
Revenue, DFI must determine whether, on the day before the child was born, the
child's mother met the income requirements for the Medical Assistance program, and
if this criteria is satisfied, DFI must establish a baby bond account for the child, with
the child designated as the account beneficiary. DFI must then deposit $3,000 into
the baby bond trust fund and credit this amount to the child's baby bond account.
The amount in the account consists of the initial $3,000, investment income
generated through management of the baby bond trust fund by SWIB, and any
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allocated donations, gifts, grants, bequests, or other contributions received by the
baby bond program. When the account beneficiary attains 18 years of age, if certain
conditions are satisfied, the account beneficiary may receive distribution of the full
account balance to pay expenses associated with postsecondary education of the
account beneficiary; child care or education of a minor dependent of the account
beneficiary; the purchase of a home by the account beneficiary; starting a business
by the account beneficiary; or contributing to a retirement savings account by the
account beneficiary. Upon application to DFI, an account beneficiary is eligible for
distribution of the account balance if all of the following requirements are satisfied:
1) the account beneficiary is at least 18 years of age; 2) with an exception, the account
beneficiary and at least one of the account beneficiary's parents is a Wisconsin
resident; 3) the account beneficiary has successfully completed a financial literacy
course developed by DFI; and 4) the account beneficiary certifies that the account
beneficiary will use the money distributed only to pay expenses described above. If
an account beneficiary or the account beneficiary's parents relocate from Wisconsin
prior to the account beneficiary's 18th birthday, the account beneficiary is eligible for
the distribution if the account beneficiary returns to Wisconsin and remains a
Wisconsin resident for at least one year thereafter. A distribution from an account
is not subject to state income tax. DFI may terminate an account beneficiary's
account if the account beneficiary dies, the account balance is $0, or the account
beneficiary is at least 30 years of age and has not requested a distribution or has
failed to satisfy the conditions for distribution. The balance of an account that is
terminated remains in the baby bond trust fund for further use for the baby bond
program.
Because this bill relates to an exemption from state or local taxes, it may be
referred to the Joint Survey Committee on Tax Exemptions for a report to be printed
as an appendix to the bill.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SECTION 1. 20.144 (1) (g) of the statutes is amended to read:
20.144 (1) (g) General program operations. The amounts in the schedule for
the general program operations of the department of financial institutions. Except
as provided in pars. (a), (h), (i), (j), and (u) and sub. subs. (3) and (5), all moneys
received by the department, other than by the office of credit unions and the division
of banking, and 88 percent of all moneys received by the office of credit unions and
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the department's division of banking shall be credited to this appropriation, but any
balance at the close of a fiscal year under this appropriation shall lapse to the general
fund. Annually, $150,000 of the amounts received under this appropriation account
shall be transferred to the appropriation account under s. 20.575 (1) (g).
SECTION 2. 20.144 (5) (title) of the statutes is created to read:
20.144 (5) (title) BABY BOND PROGRAM.
SECTION 3. 20.144 (5) (a) of the statutes is created to read:
20.144 (5) (a) Administrative expenses. A sum sufficient for the administrative
expenses of the baby bond program under s. 224.58.
SECTION 4. 20.144 (5) (c) of the statutes is created to read:
20.144 (5) (c) Deposits into baby bond fund. A sum sufficient for deposits into
the baby bond fund as provided in s. 224.58 (3) (b) 2.
SECTION 5. 20.144 (5) (j) of the statutes is created to read:
20.144 (5) (j) Donations, gifts, and grants. All moneys received from donations,
gifts, grants, bequests, or other contributions to the baby bond program under s.
224.58, to carry out the purpose for which received, including deposit into the baby
bond fund.
SECTION 6. 20.144 (5) (q) of the statutes is created to read:
20.144 (5) (q) Payment of distributions; crediting accounts. From the baby bond
fund, a sum sufficient for the payment of distributions under s. 224.58 (4) and to
credit accounts under s. 224.58 (3) (b) 2.
SECTION 7. 25.14 (1) (a) 20. of the statutes is created to read:
25.14 (1) (a) 20. The baby bond fund.
SECTION 8. 25.17 (1) (aL) of the statutes is created to read:
25.17 (1) (aL) Baby bond fund (s. 25.32);
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SECTION 9. 25.17 (3) (a) of the statutes is amended to read:
25.17 (3) (a) Invest the core retirement investment trust, baby bond fund, state
life fund, local government property insurance fund, veterans trust fund, and injured
patients and families compensation fund in loans, securities, and any other
investments authorized by s. 620.22, and in bonds or other evidences of indebtedness
or preferred stock of companies engaged in the finance business whether as direct
lenders or as holding companies owning subsidiaries engaged in the finance
business. Investments permitted by sub. (4) are permitted investments under this
subsection.
SECTION 10. 25.18 (1) (q) of the statutes is created to read:
25.18 (1) (q) Invest any of the assets of the baby bond fund in any investment
that is an authorized investment for assets in the variable retirement investment
trust under s. 25.17 (5).
SECTION 11. 25.32 of the statutes is created to read:
25.32 Baby bond fund. (1) There is established a separate nonlapsible trust
fund designated as the baby bond fund. The fund shall consist of all of the following:
(a) Money deposited into the fund under s. 224.58 (3) (b) 2.
(b) All donations, gifts, grants, bequests, or other contributions deposited into
the fund under s. 224.58 (6).
(c) All earnings and other investment income of the fund.
(2) Except as provided in s. 25.187, moneys in the baby bond fund may be
expended only for the purpose of making distributions under s. 224.58 (4) and
deposits under s. 224.58 (3) (b) 2.
SECTION 12. 69.14 (1) (a) of the statutes is amended to read:
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69.14 (1) (a) Filing deadline. A record of birth for every birth that occurs in this
state shall be filed within 5 days after the birth with the state registrar, who shall
register the birth under this subchapter. The state registrar shall submit a copy of
the record of birth to the department of financial institutions, but shall redact from
the copy any parent's social security number.
SECTION 13. 69.20 (3) (b) 6. of the statutes is created to read:
69.20 (3) (b) 6. The information is submitted to the department of financial
institutions for the purpose of administering the baby bond program under s. 224.58.
SECTION 14. 69.20 (3) (i) of the statutes is created to read:
69.20 (3) (i) The state registrar shall disclose information on birth records,
other than a parent's social security number, to the department of financial
institutions for use in the administration of the baby bond program under s. 224.58.
SECTION 15. 69.22 (6) of the statutes is amended to read:
69.22 (6) The state registrar may charge a reasonable fee for providing
searches of vital records and for providing copies of vital records to state agencies for
program use, except that no fee may be charged for providing a copy of the record of
birth to the department of financial institutions under s. 69.14 (1) (a). The register
of deeds may provide free searches and free copies to agencies in his or her county
at the direction of the county board.
SECTION 16. 71.05 (6) (b) 57. of the statutes is created to read:
71.05 (6) (b) 57. The amount of a distribution made to an account beneficiary,
as defined in s. 224.58 (1) (b), under s. 224.58 (4).
SECTION 17. 71.78 (4) (w) of the statutes is created to read:
71.78 (4) (w) The department of financial institutions and the department of
health services for the purpose of determining eligibility under s. 224.58 (3) (a) 1.
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SECTION 18 ASSEMBLY BILL 1143
SECTION 18. 224.58 of the statutes is created to read:
224.58 Baby bond program. (1) DEFINITIONS. In this section:
(a) “Account” means a baby bond account established by the department under
sub. (3).
(b) “Account beneficiary” means an individual for whom the department
establishes an account.
(c) “Domestic business entity” has the meaning given in s. 180.1100 (2).
(d) “Eligible expense" means an expense associated with any of the following:
1. Postsecondary education of an account beneficiary.
2. Child care or education of a minor dependent of the account beneficiary.
3. The purchase of a home by an account beneficiary.
4. Starting a business by an account beneficiary if the business is a domestic
business entity or is a foreign business entity registered or authorized to do business
in this state under ch. 178, 179, 180, 181, or 183.
5. Contributing to a traditional individual retirement account, a Roth IRA, an
account associated with a 401 (k), 403 (b), 457, or Keogh plan, or a similar retirement
savings account by an account beneficiary.
(e) “Foreign business entity” has the meaning given in s. 180.1100 (3).
(f) “Last-known address” means the most recent contact information provided
to the department according to the department's records, which may be either a
physical address or an electronic mail address.
(2) BABY BOND PROGRAM. The department shall establish and administer a baby
bond program as described in this section.
(3) ESTABLISHING ACCOUNTS. (a) For each record of birth submitted to the
department under s. 69.14 (1) (a), the department shall do all of the following:
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1. In consultation with the department of health services and the department
of revenue, determine whether, on the day before the child was born, the mother
meets the income level described under s. 49.471 (4) (a) 1. or 2.
2. If the criteria in subd. 1. is satisfied, establish a baby bond account for the
child, with the child designated as the account beneficiary.
(b) Upon establishing an account for a child under par. (a) 2., the department
shall promptly do all of the following:
1. Provide written notice of the account to the last-known address of the child's
parents.
2. From the appropriation account under s. 20.144 (5) (c) or (j), deposit $3,000
into the baby bond fund and credit this amount to the child's account or, from the
appropriation amount under s. 20.144 (5) (q), credit $3,000 to the child's account if
such funds are available for this purpose as provided in s. 224.58 (5) (b).
(c) An account established under this subsection shall include the amount
specified in par. (b) 2., the account beneficiary's pro rata share of total net investment
earnings of the baby bond fund, and any amount allocated to the account under sub.
(5) (b) or (6) (b).
(4) DISTRIBUTIONS. (a) Not later than 30 days before an account beneficiary's
18th birthday, the department shall provide notice to the last-known address of the
account beneficiary and the account beneficiary's parents that the account
beneficiary may be eligible for distribution of the account balance.
(b) Upon application to the department by an account beneficiary, the
department shall distribute to the account beneficiary the full balance of the account
if all of the following requirements are satisfied:
1. The account beneficiary is at least 18 years of age.
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2. Except as provided in par. (c), the account beneficiary and at least one of the
account beneficiary's parents is a resident of this state.
3. The account beneficiary has successfully completed the financial literacy
course developed by the department under sub. (7) (a) 4.
4. The account beneficiary certifies that the account beneficiary will use the
money distributed only to pay eligible expenses.
(c) If an account beneficiary or the account beneficiary's parents have relocated
from this state as of the account beneficiary's 18th birthday, the account beneficiary
is eligible for distribution of the account balance under par. (b) if the account
beneficiary returns to this state and remains a resident of this state for at least one
year thereafter.
(d) An account beneficiary may use moneys distributed from the account only
to pay for eligible expenses.
(5) ACCOUNT TERMINATION. (a) The department may terminate an account
beneficiary's account if any of the following occurs:
1. The account beneficiary dies.
2. The account balance is $0.
3. The account beneficiary is at least 30 years of age and has not requested
distribution of the account balance or has failed to satisfy the conditions for
distribution of the account balance under sub. (4) (b) and (c).
(b) If an account is not distributed and is terminated under par. (a) with a
balance in the account, the balance shall remain in the baby bond fund and may be
used to fund new accounts or allocated in the manner described in sub. (6) (b).
(c) Not fewer than 90 days before terminating an account for the reason
provided in par. (a) 3., the department shall provide notice to the last-known address
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of the account beneficiary and the account beneficiary's parents of the department's
intent to terminate the account and the date on which the termination will occur if
the account beneficiary has not applied for distribution of the account balance by that
date.
(6) DONATIONS AND OTHER CONTRIBUTIONS TO PROGRAM. (a) The department may
receive donations, gifts, grants, bequests, or other contributions to the baby bond
program and use them for the purposes for which they are made.
(b) If no purpose is stated for a donation, gift, grant, bequest, or other
contribution received by the department, the department may deposit the amount
into the baby bond fund and use the amount to fund new accounts or to equitably
allocate the amount among existing accounts.
(c) The department may receive only monetary donations, gifts, grants,
bequests, or other contributions. The department may not accept property or other
in-kind donations, gifts, grants, bequests, or contributions.
(7) POWERS AND DUTIES OF THE DEPARTMENT. (a) The department shall do all of
the following:
1. Collaborate with the department of health services and the department of
revenue to determine eligibility under sub. (3) (a) 1.
2. From the pooled assets and investments of the baby bond fund, maintain an
accounting under which each account beneficiary's share of the total is identified as
a separate account.
3. Provide to each account beneficiary and the account beneficiary's parents,
at their last-known addresses, an annual statement of the account beneficiary's
account, including the account balance, the date the account beneficiary is eligible
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for distribution of the account balance, and the requirements the account beneficiary
must satisfy to receive the distribution.
4. Develop and maintain an online, interactive financial literacy course. The
course shall be organized into modules, with a test of knowledge at the conclusion
of each module. The course shall require the course participant to successfully
complete the test before continuing to the next module, but the course may not limit
the number of times the participant may retake the test to achieve successful
completion.
5. Maintain as confidential all personal and financial information pertaining
to an account beneficiary and the account beneficiary's parents.
(b) The department may do any of the following:
1. Enter into contracts for the services of accountants, actuaries, attorneys,
consultants, or other professionals to assist in the administration of the baby bond
program established under this section.
2. Conduct marketing, advertising, and fundraising for the baby bond program,
including through contracts with 3rd parties.
3. Promulgate rules to implement and administer this section.
(8) EXCLUSION FROM CONSIDERATION FOR NEED-BASED PROGRAMS OR BENEFITS.
Notwithstanding any other provision of law, neither the balance of an account
beneficiary's account nor distributions to the account beneficiary may be considered
for purposes of determining the account beneficiary's eligibility for any state or local
program or benefit in which the account beneficiary's income, assets, or financial
need is a criteria for eligibility.
SECTION 19.0Initial applicability.
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(1) The treatment of ss. 69.14 (1) (a), 69.20 (3) (b) 6. and (i), and 69.22 (6) first
applies to children born on the effective date of this subsection.
SECTION 20.0Effective date.
(1) This act takes effect on the first day of the 7th month beginning after
publication.
(END)
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