Toward an Agenda for CSA Delivery Systems

Tuesday, May 12, 2015

In December 2014, AEDI and the Federal Reserve Bank of Boston co-hosted a convening of the CSA field to discuss opportunities and challenges related to existing delivery platforms for Children's Savings Accounts (CSAs). The roundtable featured representatives from CSA programs using both 529 systems (as in Maine) and traditional deposit accounts (like in San Francisco's Kindergarten-to-College initiative), as well as researchers from the Center for Social Development, advocates from New America, and other key observers and stakeholders in the CSA space. We spent all day talking about what we believe CSAs can accomplish, and what is required from a delivery system to achieve those aims, and, then, what we will need to do as a field in order to build that kind of delivery system, capable of delivering transformative asset interventions to every American child.

Informed by those conversations, our reading of the existing literature on CSAs, our own thinking about the challenges facing the children's savings movement at this moment of scaling, and dozens of conversations before and after December, we co-wrote a paper on CSA delivery systems with Anthony Poore and Brian Clarke of the Federal Reserve Bank of Boston. We shared the principal findings of this report with the New England CSA Consortium in March and are now sharing it with the larger CSA field and others interested in crafting delivery systems that will meet the needs of CSA programs, and the children who depend on them.

We are grateful to colleagues who have helped to hone our thinking about delivery systems, what we should demand of them, and what compromises we must accept on our path to deliver a CSA to every child in the country. We are eager to continue the pursuit of a policy and research agenda that can advance delivery system reforms...and bring greater clarity about what they need to be. The paper does not seek to make a case for 529s over bank-based CSAs, or vice versa. Instead, we articulate the CSA field's shared principles, by which CSA delivery systems should be assessed and outline some of the concerns we see with each approach, according to these criteria, and the changes that could improve either system, to better suit it for CSA purposes. That means addressing sustainability of bank-based CSAs, since these accounts are expensive and, therefore, fairly unattractive to many financial institutions today. And, within 529s, it means finding ways to overcome technical hurdles that, today, prevent automatically enrolling children into an account into which they can directly save. 

It is, after all, the CSA intervention that research suggests is key to securing improved outcomes for disadvantaged children, not the financial instruments on which CSAs are built. At the December convening, CSA leaders clearly called for a delivery system with the ability to automatically and universally enroll children, streamline data sharing, efficiently provide accounts and administration, and serve progressive asset purposes throughout children's lifetimes. We believe that this is within our reach.

Most importantly, American children deserve a delivery system capable of getting that transformative experience of asset accumulation and account ownership into their lives. We hope that this paper, available on AEDI's website, is the next step toward that vision. We look forward to continuing the conversation.

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