Wisconsin 2023-2024 Regular Session

Wisconsin Senate Bill SB1036 Compare Versions

Only one version of the bill is available at this time.

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3	3	2023 - 2024 LEGISLATURE
4	4	2023 SENATE BILL 1036
5	5	February 19, 2024 - Introduced by Senators AGARD, ROYS, L. JOHNSON, LARSON and
6	6	SPREITZER, cosponsored by Representatives VINING, CLANCY, SUBECK, C.
7	7	ANDERSON, EMERSON, CONLEY, SINICKI, MOORE OMOKUNDE, HONG, J. ANDERSON,
8	8	BARE and OHNSTAD. Referred to Committee on Financial Institutions and
9	9	Sporting Heritage.
10	10	*AUTHORS SUBJECT TO CHANGE*
11	11	AN ACT to amend 20.144 (1) (g), 25.17 (3) (a), 69.14 (1) (a) and 69.22 (6); and to
12	12	create 20.144 (5) (title), 20.144 (5) (a), 20.144 (5) (c), 20.144 (5) (j), 20.144 (5)
13	13	(q), 25.14 (1) (a) 20., 25.17 (1) (aL), 25.18 (1) (q), 25.32, 69.20 (3) (b) 6., 69.20 (3)
14	14	(i), 71.05 (6) (b) 57., 71.78 (4) (w) and 224.58 of the statutes; relating to:
15	15	creating a baby bond program and baby bond fund, granting rule-making
16	16	authority, and making an appropriation.
17	17	Analysis by the Legislative Reference Bureau
18	18	This bill requires the Department of Financial Institutions to establish and
19	19	administer a baby bond program and creates a baby bond trust fund managed by the
20	20	State of Wisconsin Investment Board.
21	21	Under the bill, the State Registrar of Vital Records must provide to DFI a copy
22	22	of the record of birth for each child born in the state on or after the bill's effective date.
23	23	In consultation with the Department of Health Services and the Department of
24	24	Revenue, DFI must determine whether, on the day before the child was born, the
25	25	child's mother met the income requirements for the Medical Assistance program, and
26	26	if this criteria is satisfied, DFI must establish a baby bond account for the child, with
27	27	the child designated as the account beneficiary. DFI must then deposit $3,000 into
28	28	the baby bond trust fund and credit this amount to the child's baby bond account.
29	29	The amount in the account consists of the initial $3,000, investment income
30	30	generated through management of the baby bond trust fund by SWIB, and any
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38	38	SENATE BILL 1036
39	39	allocated donations, gifts, grants, bequests, or other contributions received by the
40	40	baby bond program. When the account beneficiary attains 18 years of age, if certain
41	41	conditions are satisfied, the account beneficiary may receive distribution of the full
42	42	account balance to pay expenses associated with postsecondary education of the
43	43	account beneficiary; child care or education of a minor dependent of the account
44	44	beneficiary; the purchase of a home by the account beneficiary; starting a business
45	45	by the account beneficiary; or contributing to a retirement savings account by the
46	46	account beneficiary. Upon application to DFI, an account beneficiary is eligible for
47	47	distribution of the account balance if all of the following requirements are satisfied:
48	48	1) the account beneficiary is at least 18 years of age; 2) with an exception, the account
49	49	beneficiary and at least one of the account beneficiary's parents is a Wisconsin
50	50	resident; 3) the account beneficiary has successfully completed a financial literacy
51	51	course developed by DFI; and 4) the account beneficiary certifies that the account
52	52	beneficiary will use the money distributed only to pay expenses described above. If
53	53	an account beneficiary or the account beneficiary's parents relocate from Wisconsin
54	54	prior to the account beneficiary's 18th birthday, the account beneficiary is eligible for
55	55	the distribution if the account beneficiary returns to Wisconsin and remains a
56	56	Wisconsin resident for at least one year thereafter. A distribution from an account
57	57	is not subject to state income tax. DFI may terminate an account beneficiary's
58	58	account if the account beneficiary dies, the account balance is $0, or the account
59	59	beneficiary is at least 30 years of age and has not requested a distribution or has
60	60	failed to satisfy the conditions for distribution. The balance of an account that is
61	61	terminated remains in the baby bond trust fund for further use for the baby bond
62	62	program.
63	63	Because this bill relates to an exemption from state or local taxes, it may be
64	64	referred to the Joint Survey Committee on Tax Exemptions for a report to be printed
65	65	as an appendix to the bill.
66	66	For further information see the state fiscal estimate, which will be printed as
67	67	an appendix to this bill.
68	68	The people of the state of Wisconsin, represented in senate and assembly, do
69	69	enact as follows:
70	70	SECTION 1. 20.144 (1) (g) of the statutes is amended to read:
71	71	20.144 (1) (g) General program operations. The amounts in the schedule for
72	72	the general program operations of the department of financial institutions. Except
73	73	as provided in pars. (a), (h), (i), (j), and (u) and sub. subs. (3) and (5), all moneys
74	74	received by the department, other than by the office of credit unions and the division
75	75	of banking, and 88 percent of all moneys received by the office of credit unions and
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84	84	SECTION 1
85	85	SENATE BILL 1036
86	86	the department's division of banking shall be credited to this appropriation, but any
87	87	balance at the close of a fiscal year under this appropriation shall lapse to the general
88	88	fund. Annually, $150,000 of the amounts received under this appropriation account
89	89	shall be transferred to the appropriation account under s. 20.575 (1) (g).
90	90	SECTION 2. 20.144 (5) (title) of the statutes is created to read:
91	91	20.144 (5) (title) BABY BOND PROGRAM.
92	92	SECTION 3. 20.144 (5) (a) of the statutes is created to read:
93	93	20.144 (5) (a) Administrative expenses. A sum sufficient for the administrative
94	94	expenses of the baby bond program under s. 224.58.
95	95	SECTION 4. 20.144 (5) (c) of the statutes is created to read:
96	96	20.144 (5) (c) Deposits into baby bond fund. A sum sufficient for deposits into
97	97	the baby bond fund as provided in s. 224.58 (3) (b) 2.
98	98	SECTION 5. 20.144 (5) (j) of the statutes is created to read:
99	99	20.144 (5) (j) Donations, gifts, and grants. All moneys received from donations,
100	100	gifts, grants, bequests, or other contributions to the baby bond program under s.
101	101	224.58, to carry out the purpose for which received, including deposit into the baby
102	102	bond fund.
103	103	SECTION 6. 20.144 (5) (q) of the statutes is created to read:
104	104	20.144 (5) (q) Payment of distributions; crediting accounts. From the baby bond
105	105	fund, a sum sufficient for the payment of distributions under s. 224.58 (4) and to
106	106	credit accounts under s. 224.58 (3) (b) 2.
107	107	SECTION 7. 25.14 (1) (a) 20. of the statutes is created to read:
108	108	25.14 (1) (a) 20. The baby bond fund.
109	109	SECTION 8. 25.17 (1) (aL) of the statutes is created to read:
110	110	25.17 (1) (aL) Baby bond fund (s. 25.32);
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137	137	SECTION 9 SENATE BILL 1036
138	138	SECTION 9. 25.17 (3) (a) of the statutes is amended to read:
139	139	25.17 (3) (a) Invest the core retirement investment trust, baby bond fund, state
140	140	life fund, local government property insurance fund, veterans trust fund, and injured
141	141	patients and families compensation fund in loans, securities, and any other
142	142	investments authorized by s. 620.22, and in bonds or other evidences of indebtedness
143	143	or preferred stock of companies engaged in the finance business whether as direct
144	144	lenders or as holding companies owning subsidiaries engaged in the finance
145	145	business. Investments permitted by sub. (4) are permitted investments under this
146	146	subsection.
147	147	SECTION 10. 25.18 (1) (q) of the statutes is created to read:
148	148	25.18 (1) (q) Invest any of the assets of the baby bond fund in any investment
149	149	that is an authorized investment for assets in the variable retirement investment
150	150	trust under s. 25.17 (5).
151	151	SECTION 11. 25.32 of the statutes is created to read:
152	152	25.32 Baby bond fund. (1) There is established a separate nonlapsible trust
153	153	fund designated as the baby bond fund. The fund shall consist of all of the following:
154	154	(a) Money deposited into the fund under s. 224.58 (3) (b) 2.
155	155	(b) All donations, gifts, grants, bequests, or other contributions deposited into
156	156	the fund under s. 224.58 (6).
157	157	(c) All earnings and other investment income of the fund.
158	158	(2) Except as provided in s. 25.187, moneys in the baby bond fund may be
159	159	expended only for the purpose of making distributions under s. 224.58 (4) and
160	160	deposits under s. 224.58 (3) (b) 2.
161	161	SECTION 12. 69.14 (1) (a) of the statutes is amended to read:
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188	188	SECTION 12
189	189	SENATE BILL 1036
190	190	69.14 (1) (a) Filing deadline. A record of birth for every birth that occurs in this
191	191	state shall be filed within 5 days after the birth with the state registrar, who shall
192	192	register the birth under this subchapter. The state registrar shall submit a copy of
193	193	the record of birth to the department of financial institutions, but shall redact from
194	194	the copy any parent's social security number.
195	195	SECTION 13. 69.20 (3) (b) 6. of the statutes is created to read:
196	196	69.20 (3) (b) 6. The information is submitted to the department of financial
197	197	institutions for the purpose of administering the baby bond program under s. 224.58.
198	198	SECTION 14. 69.20 (3) (i) of the statutes is created to read:
199	199	69.20 (3) (i) The state registrar shall disclose information on birth records,
200	200	other than a parent's social security number, to the department of financial
201	201	institutions for use in the administration of the baby bond program under s. 224.58.
202	202	SECTION 15. 69.22 (6) of the statutes is amended to read:
203	203	69.22 (6) The state registrar may charge a reasonable fee for providing
204	204	searches of vital records and for providing copies of vital records to state agencies for
205	205	program use, except that no fee may be charged for providing a copy of the record of
206	206	birth to the department of financial institutions under s. 69.14 (1) (a). The register
207	207	of deeds may provide free searches and free copies to agencies in his or her county
208	208	at the direction of the county board.
209	209	SECTION 16. 71.05 (6) (b) 57. of the statutes is created to read:
210	210	71.05 (6) (b) 57. The amount of a distribution made to an account beneficiary,
211	211	as defined in s. 224.58 (1) (b), under s. 224.58 (4).
212	212	SECTION 17. 71.78 (4) (w) of the statutes is created to read:
213	213	71.78 (4) (w) The department of financial institutions and the department of
214	214	health services for the purpose of determining eligibility under s. 224.58 (3) (a) 1.
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241	241	SECTION 18 SENATE BILL 1036
242	242	SECTION 18. 224.58 of the statutes is created to read:
243	243	224.58 Baby bond program. (1) DEFINITIONS. In this section:
244	244	(a) “Account” means a baby bond account established by the department under
245	245	sub. (3).
246	246	(b) “Account beneficiary” means an individual for whom the department
247	247	establishes an account.
248	248	(c) “Domestic business entity” has the meaning given in s. 180.1100 (2).
249	249	(d) “Eligible expense" means an expense associated with any of the following:
250	250	1. Postsecondary education of an account beneficiary.
251	251	2. Child care or education of a minor dependent of the account beneficiary.
252	252	3. The purchase of a home by an account beneficiary.
253	253	4. Starting a business by an account beneficiary if the business is a domestic
254	254	business entity or is a foreign business entity registered or authorized to do business
255	255	in this state under ch. 178, 179, 180, 181, or 183.
256	256	5. Contributing to a traditional individual retirement account, a Roth IRA, an
257	257	account associated with a 401 (k), 403 (b), 457, or Keogh plan, or a similar retirement
258	258	savings account by an account beneficiary.
259	259	(e) “Foreign business entity” has the meaning given in s. 180.1100 (3).
260	260	(f) “Last-known address” means the most recent contact information provided
261	261	to the department according to the department's records, which may be either a
262	262	physical address or an electronic mail address.
263	263	(2) BABY BOND PROGRAM. The department shall establish and administer a baby
264	264	bond program as described in this section.
265	265	(3) ESTABLISHING ACCOUNTS. (a) For each record of birth submitted to the
266	266	department under s. 69.14 (1) (a), the department shall do all of the following:
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294	294	SECTION 18
295	295	SENATE BILL 1036
296	296	1. In consultation with the department of health services and the department
297	297	of revenue, determine whether, on the day before the child was born, the mother
298	298	meets the income level described under s. 49.471 (4) (a) 1. or 2.
299	299	2. If the criteria in subd. 1. is satisfied, establish a baby bond account for the
300	300	child, with the child designated as the account beneficiary.
301	301	(b) Upon establishing an account for a child under par. (a) 2., the department
302	302	shall promptly do all of the following:
303	303	1. Provide written notice of the account to the last-known address of the child's
304	304	parents.
305	305	2. From the appropriation account under s. 20.144 (5) (c) or (j), deposit $3,000
306	306	into the baby bond fund and credit this amount to the child's account or, from the
307	307	appropriation amount under s. 20.144 (5) (q), credit $3,000 to the child's account if
308	308	such funds are available for this purpose as provided in s. 224.58 (5) (b).
309	309	(c) An account established under this subsection shall include the amount
310	310	specified in par. (b) 2., the account beneficiary's pro rata share of total net investment
311	311	earnings of the baby bond fund, and any amount allocated to the account under sub.
312	312	(5) (b) or (6) (b).
313	313	(4) DISTRIBUTIONS. (a) Not later than 30 days before an account beneficiary's
314	314	18th birthday, the department shall provide notice to the last-known address of the
315	315	account beneficiary and the account beneficiary's parents that the account
316	316	beneficiary may be eligible for distribution of the account balance.
317	317	(b) Upon application to the department by an account beneficiary, the
318	318	department shall distribute to the account beneficiary the full balance of the account
319	319	if all of the following requirements are satisfied:
320	320	1. The account beneficiary is at least 18 years of age.
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347	347	SECTION 18 SENATE BILL 1036
348	348	2. Except as provided in par. (c), the account beneficiary and at least one of the
349	349	account beneficiary's parents is a resident of this state.
350	350	3. The account beneficiary has successfully completed the financial literacy
351	351	course developed by the department under sub. (7) (a) 4.
352	352	4. The account beneficiary certifies that the account beneficiary will use the
353	353	money distributed only to pay eligible expenses.
354	354	(c) If an account beneficiary or the account beneficiary's parents have relocated
355	355	from this state as of the account beneficiary's 18th birthday, the account beneficiary
356	356	is eligible for distribution of the account balance under par. (b) if the account
357	357	beneficiary returns to this state and remains a resident of this state for at least one
358	358	year thereafter.
359	359	(d) An account beneficiary may use moneys distributed from the account only
360	360	to pay for eligible expenses.
361	361	(5) ACCOUNT TERMINATION. (a) The department may terminate an account
362	362	beneficiary's account if any of the following occurs:
363	363	1. The account beneficiary dies.
364	364	2. The account balance is $0.
365	365	3. The account beneficiary is at least 30 years of age and has not requested
366	366	distribution of the account balance or has failed to satisfy the conditions for
367	367	distribution of the account balance under sub. (4) (b) and (c).
368	368	(b) If an account is not distributed and is terminated under par. (a) with a
369	369	balance in the account, the balance shall remain in the baby bond fund and may be
370	370	used to fund new accounts or allocated in the manner described in sub. (6) (b).
371	371	(c) Not fewer than 90 days before terminating an account for the reason
372	372	provided in par. (a) 3., the department shall provide notice to the last-known address
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400	400	SECTION 18
401	401	SENATE BILL 1036
402	402	of the account beneficiary and the account beneficiary's parents of the department's
403	403	intent to terminate the account and the date on which the termination will occur if
404	404	the account beneficiary has not applied for distribution of the account balance by that
405	405	date.
406	406	(6) DONATIONS AND OTHER CONTRIBUTIONS TO PROGRAM. (a) The department may
407	407	receive donations, gifts, grants, bequests, or other contributions to the baby bond
408	408	program and use them for the purposes for which they are made.
409	409	(b) If no purpose is stated for a donation, gift, grant, bequest, or other
410	410	contribution received by the department, the department may deposit the amount
411	411	into the baby bond fund and use the amount to fund new accounts or to equitably
412	412	allocate the amount among existing accounts.
413	413	(c) The department may receive only monetary donations, gifts, grants,
414	414	bequests, or other contributions. The department may not accept property or other
415	415	in-kind donations, gifts, grants, bequests, or contributions.
416	416	(7) POWERS AND DUTIES OF THE DEPARTMENT. (a) The department shall do all of
417	417	the following:
418	418	1. Collaborate with the department of health services and the department of
419	419	revenue to determine eligibility under sub. (3) (a) 1.
420	420	2. From the pooled assets and investments of the baby bond fund, maintain an
421	421	accounting under which each account beneficiary's share of the total is identified as
422	422	a separate account.
423	423	3. Provide to each account beneficiary and the account beneficiary's parents,
424	424	at their last-known addresses, an annual statement of the account beneficiary's
425	425	account, including the account balance, the date the account beneficiary is eligible
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451	451	SECTION 18 SENATE BILL 1036
452	452	for distribution of the account balance, and the requirements the account beneficiary
453	453	must satisfy to receive the distribution.
454	454	4. Develop and maintain an online, interactive financial literacy course. The
455	455	course shall be organized into modules, with a test of knowledge at the conclusion
456	456	of each module. The course shall require the course participant to successfully
457	457	complete the test before continuing to the next module, but the course may not limit
458	458	the number of times the participant may retake the test to achieve successful
459	459	completion.
460	460	5. Maintain as confidential all personal and financial information pertaining
461	461	to an account beneficiary and the account beneficiary's parents.
462	462	(b) The department may do any of the following:
463	463	1. Enter into contracts for the services of accountants, actuaries, attorneys,
464	464	consultants, or other professionals to assist in the administration of the baby bond
465	465	program established under this section.
466	466	2. Conduct marketing, advertising, and fundraising for the baby bond program,
467	467	including through contracts with 3rd parties.
468	468	3. Promulgate rules to implement and administer this section.
469	469	(8) EXCLUSION FROM CONSIDERATION FOR NEED-BASED PROGRAMS OR BENEFITS.
470	470	Notwithstanding any other provision of law, neither the balance of an account
471	471	beneficiary's account nor distributions to the account beneficiary may be considered
472	472	for purposes of determining the account beneficiary's eligibility for any state or local
473	473	program or benefit in which the account beneficiary's income, assets, or financial
474	474	need is a criteria for eligibility.
475	475	SECTION 19.0Initial applicability.
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502	502	SECTION 19
503	503	SENATE BILL 1036
504	504	(1) The treatment of ss. 69.14 (1) (a), 69.20 (3) (b) 6. and (i), and 69.22 (6) first
505	505	applies to children born on the effective date of this subsection.
506	506	SECTION 20.0Effective date.
507	507	(1) This act takes effect on the first day of the 7th month beginning after
508	508	publication.
509	509	(END)
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