Whitmer gives $1M to create 1,960 children’s savings accounts

(The Center Square) – Gov. Gretchen Whitmer awarded $1 million to two Children’s Savings Account (CSA) pilot programs, which will provide education money for 1,960 Michigan kids.

Battle Creek…

(The Center Square) – Gov. Gretchen Whitmer awarded $1 million to two Children’s Savings Account (CSA) pilot programs, which will provide education money for 1,960 Michigan kids.

Battle Creek Community Foundation and Wayne Metro Community Action Agency will receive a $500K grant to create CSA programs.

“By investing $1 million into the Children’s Savings Account pilot program, we are expanding opportunities and improving outcomes for Michigan’s children,” Whitmer said in a statement. “Children’s savings accounts offer an exciting platform to help families build wealth and pay for educational expenses, including extracurricular activities that are critical to a child’s development. We will continue working with our philanthropic partners to build children’s saving account pilot programs in urban and rural regions of Michigan and keep finding ways to empower every Michigander to chase their potential.”

Earlier in 2022, $1 million was given to the Community Economic Development Association of Michigan (CEDAM) to develop a statewide children’s savings account program. CEDAM will help the two above entities expand access to CSA programs.

Michigan’s birth rate is dropping, and its growth rate has slowed for two decades. CNBC says college costs have increased by 169% since 1980.

Cost of college tuition compared to average earnings
A  Georgetown University Center on Education and the Workforce graph shows the increasing cost of college relative to average earnings.

In contrast, some college degrees are less valuable as many companies toss education requirements in a tight labor market.

A new working paper analyzes how schools respond to financial incentives by studying a 2017 education reform in Brazil that fined schools for students receiving federal student loans who dropped out or defaulted.

Researchers from the University of Chicago, Stanford, and UC Berkeley found that a key reason for low student education outcomes “[I]s the misalignment of incentives between schools and students, particularly when educational quality is opaque and most fundings comes directly or indirectly from government sources.”

Colleges often spend lavishly on executives and administration but hike fees on students and taxpayers who give billions to higher education annually. For example, the University of Michigan had offered its former President Mark Schlissel a $10 million contract shortly before firing him for an inappropriate relationship.

“Consistent with the predictions of the model, we find that schools more reliant on government aid reduced dropout rates, primarily by increasing quality,” the researchers wrote.

The United States has a $1.6 trillion student loan deficit.

Meanwhile, Whitmer called for a one-time 5% funding boost for state universities and community colleges in her proposed 2023 budget on top of an already-incurring 5% pay boost, despite 12 of 15 state universities having recorded declining enrollment.

For example, Central Michigan University has lost nearly 30% of student enrollment since the 2012-13 school year.

In fiscal year 2020-21, Michigan gave $2.12 billion to higher education and community colleges statewide, or 4% of the total $61.6 billion budget.

Michigan 2021 Higher education spending

A graph from the House Fiscal Agency shows Michigan’s higher education budget for fiscal year 2020-21 totaled $2.1 billion, or 4% of the total $61.6 billion budget.

Kim Trent, Deputy Director for Prosperity at the Department of Labor and Economic Opportunity, welcomed the program.

“Battle Creek Community Foundation and Wayne Metro Community Action Agency have solid plans to execute the children’s savings account seed money through philanthropy and partnerships that will help Michigan families grow their future savings,” Trent said in a statement.

The Battle Creek Community Foundation will use the money to create 360 CSA accounts for the underserved school districts of Harper Creek Community Schools and Pennfield Schools, starting in kindergarten.

Wayne Metro Community Action Agency will aim to create 1,600 CSA accounts for all students enrolled in 14 Wayne Metro Head Start locations and Renaissance Head Start and Urban Neighborhood Initiative’s out-of-school programs.