Shohei Ohtani is famous for being the world’s best baseball player, the only major leaguer of the past century who can both hit and pitch at an elite level.

Perhaps he should take charge of California’s state budget too.

I say that because of his new contract. This winter, Ohtani signed a deal to play with the Los Angeles Dodgers. It was initially reported as a 10-year, $700 million contract, but baseball writers quickly discovered that its real details were quite different.

Ohtani had agreed to collect just $2 million a year for the next 10 years. The team would defer the rest of the deal, some $680 million—and pay it to Ohtani more than a decade from now, when he is in his 40s and retired. Ohtani essentially leaves the Dodgers more money to sign other top players and build an elite team around him for the rest of his career; the fact that his deferred salary could weaken future Dodgers teams isn’t his problem.

To find a public financial document in California with more deferrals than Ohtani’s contract, you’d have to look at the state budget Gov. Gavin Newsom proposed last month.

Attempting to close a $58 billion budget gap, Newsom is relying to a stunning degree on deferrals and delays. Depending on who is calculating, his budget includes at least $10 billion in deferred money.

Such deferrals can be very complicated—involving multiple shifts of moneys between accounts. For example, the proposed budget would defer payments to the state’s two university systems, obligating them to borrow, using the deferred payments as collateral. The budget also pushes $1.6 billion in transit grants and $700 million in school facilities funds into the future.

One might justify such maneuvers as prudence or caution. But some deferrals are just plain gimmicky. Newsom proposes to save $1 billion by pushing the last state payroll of the coming 2024-25 budget year back one day: from June 30, 2025 into the following week, which falls in a new budget year.

These $10 billion-plus in deferrals don’t include education, which Newsom and legislative Democrats have claimed their budget doesn’t cut. But here, the administration is playing a more deceptive game. The state’s non-partisan Legislative Analyst’s Office found that California is actually reducing spending on schools and community colleges by $15.2 billion, relative to the budget enacted in June 2023.

The way the state does this is too long and complicated to fully explain here—it involves the convoluted three-part Prop. 98 funding formula. But the short version is that Newsom is charging $9 billion in reductions to the 2022-23 school year and redefining these cuts as a reset of the funding baseline. There are several more billion in school cuts that appear in the budget without any explanation of how they might be achieved. The legislative analyst suggests these cuts might be enacted via deferrals that extend until 2030. Whatever the details, education gets less.

This shouldn’t surprise Californians. As this column has previously noted, “Screw the Kids” has effectively replaced “Eureka” as the state motto, even if it’s not yet printed on official documents. And playing accounting games with children isn’t limited to schools. The proposed budget uses a change in methodology for calculating childcare budgets to remove another $900 million off the current books.

Meanwhile, the state continues increasing its future obligations to retired workers. The budget makes few meaningful cuts in an expanding state bureaucracy that has seen significant pay raises in recent years. Those staffing increases and pay raises will produce even larger pension obligations in years to come. Payments to workers after they are retired, as Shohei Ohtani understands, are a form of deferred compensation.

Why is the budget so out of whack? For years, I’ve conducted a long-distance argument about this topic with David Crane, a former UC regent and state teachers pension fund board member who has founded a political organization, Govern for California, to elect more state lawmakers willing to make tough, public-spirited decisions. Sometimes our debate takes place through former state legislator Ted Lempert’s UC Berkeley class on California government, where we both have been guest lecturers.

Crane argues that California governance fails because we need people in government who have the courage to take on the state’s powerful labor and corporate lobbies.

I argue the problem is structural—that California’s misbegotten governing system and broken state constitution keep pushing the budget out of balance.

But in this particular budget season, I must concede that Crane has the better side of the argument. California is not in a recession. The governor and the state legislature’s Democratic supermajority have the money and the power to make hard choices now. By deferring so much, they will make it even harder to balance the budget in the future, and push more costs onto the next generation of Californians.

Which is why our leaders should take Crane’s advice, and do the hard work of evaluating programs for effectiveness. They should cut the departments and initiatives that don’t work, or that frustrate Californians’ ability to start businesses or build housing or infrastructure.

State agencies and local governments also need to enact Crane’s best idea: stop spending billions on retiree health care costs and instead have government workers rely on federal programs like Medicare and Obamacare, like other retirees do. Ending these retiree health benefits will free up money to invest in better services and schooling at the state and local levels.

Ironically, when details of Ohtani’s contract were first disclosed, some top state financial officials criticized the deferrals. They complained that Ohtani is likely to dodge California’s income taxes by having retired from the Dodgers and left the state by the time that $680 million is paid to him.

They had a point—which is why the state shouldn’t imitate Ohtani now.

The truth, harder than an Ohtani fastball, is that California doesn’t have time to waste with gimmicks. Tax receipts are already running billions behind the overly optimistic revenue projections in Newsom’s January budget. If the governor were to tear up his proposal and offer a rigorous budget that relies more on rigorous reforms than deferrals, he’d be hitting a fiscal home run.

The post California Is Taking a Page From Shohei Ohtani’s $700 Million Deal appeared first on Zócalo Public Square.

But could the default scenario repeat itself—especially now that the United States is shouldering about $22 trillion of debt, plus tens of trillions more in Medicare, Social Security, and unfunded state and local pension obligations?

That unsettling prospect was the topic at a Zócalo/UCLA Anderson event titled “Could the United States Ever Go Bankrupt?” held at the RedZone at Gensler, in downtown Los Angeles. Moderator Warren Olney, host of KCRW’s “To the Point,” fired probing questions at Sebastian Edwards, a UCLA Anderson School of Management international economist and author of American Default: The Untold Story of FDR, the Supreme Court, and the Battle Over Gold, as the two men examined the financial perils that nearly sank the United States in 1933, as well as those that could be lurking in 2019 or 2020.

Yet, though their subject was serious, the repartee maintained a light touch. At one point, Edwards disclosed that his publisher had wanted him to sneak the word “Bitcoin” into his book’s subtitle, to sex it up more. Edwards also offered the aside that one of Roosevelt’s celebrated “Brain Trust” of advisers, Burton K. Wheeler, a New Deal Democrat who later broke with FDR, appears as the vice president in President Charles Lindbergh’s administration in Philip Roth’s 2004 semi-fictitious novel The Plot Against America.

“An economist who reads Philip Roth,” Olney joked, “I think that’s pretty good.”

And when an audience member, during the question-and-answer period, asked Edwards what would be the fastest way for a rival world power like China to drive the United States into default and bankruptcy, Olney piped up, “Don’t tell him!”

In fact, Edwards replied, plotting an online attack would be the swiftest means of bringing Uncle Sam to his candy-striped knees. “If a hacker were to stop the payment system, that would be devastating,” he said.

“Devastating” describes the impact of the Great Depression, and the main part of Wednesday’s discussion was devoted to Edwards recounting and dissecting what caused that global financial meltdown, and how FDR mustered economic policy to deal with the resulting social calamity in 1933—a year that, Olney said, “may well have been the most active and change-worthy in the peacetime United States.”

By the time FDR was sworn into office in March of that tumultuous year, America was heading toward unemployment of greater than 30 percent. National income would eventually drop 60 percent. Auto production and agricultural prices each fell about 80 percent, as farmers watched their mortgages sink underwater. Ruined men were jumping off buildings in despair. Small, weak banks were failing by the score.

And FDR’s predecessor, Herbert Hoover, was pressing the incoming Roosevelt administration to declare a bank holiday that would give the country some precious time to catch its breath while searching for ways to restore confidence in the economy. The truth was that nobody, from Wall Street to Washington, really had any idea about how to fix the mess.

Roosevelt, ever the political tactician, had declined Hoover’s proposal. But on April 5, 1933, within a month of taking the oath of office, FDR issued an executive order compelling each and every American, within three weeks, to sell all gold in their possession beyond a value of $100 to the U.S. government, at the official price of $20.67 per ounce. The order, published in newspapers and broadcast over radio, carried a non-compliance penalty of a $10,000 fine, 10 years’ imprisonment, or both.

This applied to all kinds of citizens. Grandmothers who’d stuffed gold coins in their mattresses as a hedge against the meltdown had to fork over their stashes. Kids who’d been given gold coins for a birthday or bar mitzvah were enjoined to turn over their holdings for the sake of the U.S. economy. Only dentists and coin collectors were exempted. “The Secretary of the Treasury was the number one coin collector in the country,” Edwards said, prompting chuckles from the audience.

Why was gold so badly needed by the U.S. government? Ever since Alexander Hamilton founded the U.S. Mint, the United States had operated on the gold standard, Edwards explained. For nearly a century and a half, our gold reserves had guaranteed that the full faith and credit of the United States government stood behind our economy, including our debts. When the Civil War erupted, the gold standard was suspended, and the Union started printing so-called “greenbacks,” but that had been only a temporary measure. During the first years of the Great Depression, the government badly needed to secure the estimated one-third of the gold supply that was being hoarded by the public and corporations. Adding that sum to the federal reserves, even if it required drastic action, was designed to shore up faith that the government would remain solvent.

But what FDR ordered had never happened before, and it left a bitter legacy for some Americans. Olney said that his grandmother always hated FDR because he made her surrender her gold coins. She wasn’t the only one. “That is, from today’s perspective, very un-American,” Edwards said.

Still, Roosevelt’s stratagem ultimately worked. The combination of decisive action and his “Fireside Chat” radio addresses soothed an anxious public. Before reopening the banks, he’d managed to reassure ordinary Americans that their money would be safe.” And since by that time the economy was beginning to improve, Edwards said, “they gave him the benefit of the doubt.”

“It seems to me to suggest that public confidence is more important than gold,” said Olney, in his own calming, made-for-radio timbre.

“That’s a great way to put it,” Edwards said.

But the question framing the discussion remained, and Olney raised it: Could we be due for a sequel?

Our debt is indeed huge, standing at 104 percent of national Gross Domestic Product. (A percentage of greater than 90 is considered by economists to be a red flag.) Our actual total debt is closer to $80 trillion, Edwards said, when you add in all the government’s social service funding obligations.

“I think it’s a real possibility that we will default on some of that debt,” Edwards said. And, as there was in the 1930s, there could be another massive legal battle if the government tries to reduce benefits to save money, culminating in another Supreme Court showdown. In the wake of the 2007-2009 Great Recession, lawyers for economically strapped countries like Greece have used the so-called “excusable debt” argument to avoid paying back their creditors. It’s likely that Venezuela, which is spiraling into bankruptcy, or worse, will use similar arguments to try and fend off its debt collectors.

As the evening drew to a close, one audience member asked if we might ever return to the gold standard, as a way to keep our financial house in order. Edwards, who spends a chunk of his working life flying around the world, giving lectures, and supplying economic counsel to foreign governments, said that U.S. Sen. Rand Paul of Kentucky and The Wall Street Journal’s editorial page writers would like us to return to a gold standard. But, despite its glittery allure, the precious metal that once bailed out Franklin D. Roosevelt may not be available to rescue some future administration that spends too much and saves too little.

“I think it’s good conversation,” Edwards said of a gold standard revival, “but not feasible.”

The post In the 1930s, America Defaulted on Its Debt. It Could Happen Again. appeared first on Zócalo Public Square.

Here’s a new maxim for Californians to live by, courtesy of this election: Don’t dismiss apocalyptic warnings from Stockton.

If you’re a Californian with a television or a mailbox, you’re encountering a barrage of ill-advised Stockton dismissals. Specifically, Gov. Jerry Brown, labor unions, and Sacramento building and infrastructure lobbies are trying to defeat a November ballot initiative—Prop 53, which would require voter approval for state revenue bonds of $2 billion or more—by marginalizing it as merely the flawed idea of a rich and selfish “Stockton farmer.”

This messaging turns out to be doubly wrong, as I learned firsthand on a recent visit to Stockton.

For one thing, the “Stockton farmer” slight badly underestimates the man in question, Dino Cortopassi, who turns out to be a formidable if blustery businessman with diverse interests, a knack for marketing, and a taste for taking on difficult fights. For another, the political message trivializes the real trauma in the city of 300,000 as it struggles through the aftermath of municipal bankruptcy. As a result, Stockton and its citizens, including Cortopassi, know the perils of irresponsible borrowing like Pittsburghers know steel and Houstonians know oil.

Cortopassi grew up on Stockton’s eastside and has spent his life in the area, despite amassing a multimillion-dollar fortune that would allow him to move anywhere he desired. He’s also all too familiar with the difficulties of debt. He started as a tenant farmer, borrowing heavily to buy equipment and farm as much land as he could, and then plugging back the profits into further expansion.

“I was in debt a long part of my life,” he told me during the half-day we spent together in a conference room at his business. “Debt never goes away. So when you borrow, don’t forget you have to pay it back.”

Cortopassi, 79, got ahead by doing things the hard way. He specialized in “headache” crops—like tomatoes, cucumbers, bell peppers, and onions—that require more labor and attention, and that carry more risks in terms of weather, disease, and volatile market prices. While he identifies himself as a farmer (albeit a retired one), much of his business was in food processing. Business associates say he was an early adopter of new technologies, an unusually talented marketer, and maker of food brands, and a savvy investor (most notably in Dreyer’s ice cream). And his combativeness distinguished him; he was willing to wage big fights against larger food companies and against powerful unions, including the Teamsters, when they crossed him.

In recent years, as he’s stepped away from day-to-day management of his business, Cortopassi has had time to watch, with growing fury, as his hometown of Stockton declined and ultimately fell into bankruptcy.

That Stockton story is a convoluted one. But the heart of the tale is this: The city accumulated all sorts of unsustainable debts in a variety of ways, without realizing it.

The fundamental lesson is that when things go bad, even private debts or “safe” borrowing for projects can unexpectedly become obligations for the public. Stockton’s leaders had assumed that city revenues would keep increasing. Then the housing market collapse overextended Stockton homeowners and crushed the city budget. The city had little cushion because it had borrowed aggressively in the previous decade to pay for various public buildings, an arena, housing projects, and marina and downtown improvements. The final straw was a bond that Stockton sold in 2007, just before the financial crisis, to try to cover the costs of compensation and pension benefits it had promised its employees.

As a result of its crisis and bankruptcy, Stockton had to cut all sorts of basic services, including policing. That’s contributed to an ongoing tragedy: Stockton has one of the highest crime rates among California cities and is one of the country’s most violent places.

Cortopassi says he was frustrated about how, despite the fiscal carnage in Stockton and other cities, public borrowing has continued apace, with too little public attention. So, using rhetoric about as subtle as that of your angriest uncle, he’s started issuing warnings—in interviews, in self-published pamphlets (including one called “Liar, Liar, Pants on Fire!”), and, in a charmingly journalist-friendly touch, newspaper ads about “the Sacramento gang” that is borrowing without understanding the dangers of the “Debt Dragon.”

Cortopassi can be loud and bombastic. During our half-day together, Cortopassi yelled at me when I argued with him about the finer points of Prop 53 and about some of the numbers he uses on state debt. But, beyond the bluster, I found him to be quite thoughtful and strategic.

Prop 53 reflects Cortopassi’s strategic impulses. It can appear like a broadside against one mode of borrowing—a requirement for voter approval for state revenue bonds, bonds that have some guaranteed source of funds to pay them back (like tolls for a bridge). But the initiative is a carefully crafted political document full of exemptions for local governments, and with a requirement so high—only bonds of $2 billion or more would require voter approval—that it’s not clear to me that it would have much practical impact at all. After all, California voters approve most of the bonds upon which they already cast ballots. And state revenue bonds are hardly the only financing mechanism available to big projects.

What’s more, revenue-bond projects of that size are rare—precisely because it’s so hard to do anything big in California these days. The state’s non-partisan legislative analyst found Prop 53, if approved, would only prove an obstacle to two current state projects: High-speed rail and the governor’s proposed water tunnels through the Sacramento-San Joaquin Delta. And both of those projects face so much opposition and so many obstacles that they could both die whether Prop 53 passes or not.

Cortopassi has business interests in the Delta, so the “No” on 53 campaign has argued that he’s acting primarily to frustrate the tunnels and serve himself. Cortopassi acknowledges his fervent opposition to the tunnels and desire to protect the Delta (among his passions there are restoring marsh habitat and duck hunting) but says his Delta interests are less than 5 percent of his empire.

When pressed, Cortopassi said that Prop 53, like any ballot initiative, can’t do everything. His goals for the measure, he told me, are to gain attention for the state’s debt issues and to win a victory at the polls that could set up future initiatives and political action to force a reckoning with debt.

Whatever you think of Prop 53’s particulars (and I remain skeptical), Cortopassi’s larger point is inarguable: California and its many governments have taken on too many different kinds of debts, and leaders and citizens alike are not facing up to them.

In his ads and writings, Cortopassi shows how debt is already cutting into the public services upon which Californians rely. He writes about how the state’s prison realignment has created new and largely hidden financial burdens for cities, including Stockton; about how water and parks bond measures are often corrupt efforts to secure money for the favored projects of the measures’ sponsors; about the $60 billion-plus in deferred maintenance on state roads; and especially about the many billions of dollars in unfunded pension liabilities.

“We act like we don’t have to pay debt back,” he says.

If you’re from Stockton, you know better.

The post What California Can Learn From Stockton’s Debt appeared first on Zócalo Public Square.

A few weeks ago, I finally finished paying off almost $60,000 in student loans.

According to the to a recent analysis of government data by Mark Kantrowitz of the college-planning resource Edvisors, the class of 2015 owes an average of $35,000 in loans per graduate. American students past and present now owe almost $1.2 trillion, which could buy 333 billion slices of my late-night spinach Sicilian pizza from Pinocchio’s. Even after paying off my loans, those numbers are still daunting to me; finances are not my forte.

Fair warning: This isn’t a sob story. I know friends who paid loans off five years early, friends who’ve pulled every trick in the book to defer and extend payments, even friends who have defaulted. In contrast, I was slow and steady. By setting clear expectations of my quality of life, I mastered my debt through a combination of frugality, unwavering progress, and head-in-the-sand ignorance.

I come from a solidly middle-class family: parents still married, two kids, a tract house on a cul-de-sac in a good school district. Mom was raised on a farm in Montana; Dad’s an Air Force brat from Arizona. Both have degrees in the sciences from large public universities, and both have been near-continuously employed from college through retirement. My plans were similar: I thought I would attend UCLA, pay in-state tuition, eat the occasional slice of pizza, and become a pediatrician or veterinarian—for the work, not for the money. Already prudent as a teenager, I’d heard tall tales of inescapable student loan debt, and thought a state school was a good bet.

These neat ambitions soon veered off my intended path. When a set of twins a year older than me got into Harvard and told me about its need-blind admissions program, I decided to apply. Need-blind schools promise to provide as much financial aid as necessary to any admitted student, through a combination of scholarships and loans. When I was accepted, the financial aid package wasn’t as generous as other schools’, but I took a leap of faith and thought I could make it work.

In my first week on campus, I walked into a cramped lecture hall to sign promissory notes I didn’t understand. Since financial aid offers only apply to the current school year, I didn’t know that I would end up borrowing roughly $18,000. Even the first year’s loan (about $5,000) was daunting to someone who’d never handled money in such large sums. My largest purchase to date was my first car, a used Toyota Celica that cost a tenth of that.

These loans and scholarships covered tuition, housing, and a full meal plan. On my own, I was responsible for textbooks, clothes, entertainment, and other incidentals. So I bought used books, shopped for vintage winter coats at the aptly named Dollar a Pound, and rarely went out to eat; those slices of late-night Noch’s pizza were a special treat. I did occasionally splurge on my passion of watching live theatre.

While other students had more expensive clothes and hobbies, I never felt I was missing out. College fit my expectations: still comfortably middle-class, just with warmer clothing. After the first couple of months, neither daily finances nor future promissory notes seemed scary. The loans were easy to ignore; I only saw statements once a year, when signing new promissory notes. I didn’t have a plan for how to pay them off, just confidence that I would, once I got a real job.

After graduation, three former professors asked me to be their teaching assistant, so I delayed applying to medical school. Responsible for my own room and board, I shared one floor of a triple-decker with two roommates and learned how to cook simple meals. I easily handled rent and utilities, so when loan payments kicked in after a six-month grace period, they just seemed like another check to write. I chose the standard plan of equal monthly payments for 10 years rather than the gradated plan where payments increase every month; I didn’t really understand the finances, but thought that identical checks seemed easier to write.

A year after graduation, my former undergrad dorm invited me to become a resident advisor, so I could live and eat for free. This financial freedom helped me rethink my life goals. Instead of medical school, I enrolled in grad school for architecture in 2002. The Graduate School of Design at Harvard offered me loans and summer work-study, but no scholarships. I was able, however, to continue teaching chemistry and serving as an RA. For three and a half years of school, I only took on an additional $40,000 in loans, much better than friends who took out over $150,000 in debt. Again, I set my expectations differently; I thrived with multiple challenges, while other classmates focused solely on school, and were willing to take out more loans to do so.

After I graduated, in 2006, I returned to Los Angeles. Even with about $54,000 in loans, I looked for jobs based on the design experience I would gain, not the paycheck I’d earn. Having paid my loans previously, I was sure I could do it again. I found an amazing firm that specialized in designing theatres. My starting salary, just over $40,000, was much lower than it would have been at a corporate firm, but I was able to turn a passion into a career.

I didn’t stop living frugally. I shared an apartment in a charming fourplex with a college friend, cooked most meals at home (including bringing lunch to work), and limited myself to two drinks on a night out. I swapped out Dollar a Pound for Jet Rag and Target. My infrequent vacations were road trips, staying with friends and family rather than in hotels. I didn’t feel like I was missing out on anything, because this was how I’d set my expectations: simple, relaxed, middle-class.

My student loan debt taught me that regular, progressive finances work for me. Even in my first job, I made small contributions to a retirement plan. After five years and a few raises, I increased my student loan payments and began to save for a down payment for a house. Steadily paying back tens of thousands of dollars in student loans helped give me a high credit rating, and I easily qualified for a mortgage. In 2013, I bought a duplex with a good friend, and we’ve been slowly renovating.

This September, when I paid off my loans, it was actually underwhelming—no champagne, no nothing. To put my loans in perspective, my half of the mortgage is about $220,000 of debt. But even that doesn’t seem scary when spread out over 30 years. I’ve slowly increased my standard of living within my means. I may still have a roommate, but I do eat out more frequently—and still long for that spinach pizza from Noch’s.

The post My Secret to Paying Off Student Loans appeared first on Zócalo Public Square.

California and other states, instead of compensating for tuition increases, are handing out less financial aid than before. The drop has been steep; the Stanford Public Policy Institute estimates that financial aid per student dropped 40 percent, on an inflation-adjusted basis, between 1990 and 2007. The result: a shift of the burden of paying for college onto families, and more borrowing to pay for college. The average student with loans graduated with almost $27,000 in debt in 2011, with lower-income students carrying heavier loads.

And that’s for the students who manage to enroll. It’s a hard, heartbreaking fact: about half of all low-and moderate-income students who are qualified for college will never set foot on campus because the costs of attending are out of reach.

So, with so many students struggling to afford a degree, why are California and other states helping to foot the college bill for the wealthiest families?

Aid for the wealthy comes in the form of a tax incentive. In the mid-1990s, Congress established what are known as 529 college savings accounts (so named because of the section of the IRS code creating them). To entice families to contribute, these accounts carry generous state and federal tax benefits; balances grow tax-free, and withdrawals used for college expenses are never taxed. Today, there are 11 million 529 accounts with around $167 billion in deposits nationwide.

That sounds like good news—lots of money saved for tuition, allowing kids to attend college—but only out of context. A bias in favor of tax incentives is a bias in favor of the rich. The families most motivated by the 529 tax incentives are naturally the ones with the highest amount of taxes to shelter, not the ones with the greatest need. According to the Government Accountability Office (GAO), the median financial assets of families with 529s are $413,500. And the advantages escalate as 529 beneficiaries get richer.

For example, households earning over $150,000 had a median “withdrawal” (meaning the amount of money saved in the account and used for school) from their 529s of around $18,000 and a tax savings of over $3,000, according to the GAO. Households earning under $100,000 had a median withdrawal of around $7,500 and tax savings of only $561. So not only are higher-income households able to save more successfully; they also receive a greater amount of public subsidy—via tax breaks—to do so. As such, 529 accounts have become vehicles for transferring wealth to the wealthy at the expense of other programs that could actually help more students earn a college degree.

It doesn’t have to be this way.

Groundbreaking research from Willie Elliott, a professor at the Assets and Education Initiative at the University of Kansas, shows that college savings, even in very modest amounts, help build the positive expectations that can keep low-income students on the path to college. (Those savings also can reduce the amount of debt of low-income students who manage to graduate). And research shows that when low-income families know about accounts (surveys show they are often unaware of 529s), are given access to accounts, and receive sufficient incentives to save (tax incentives often don’t help because such families often have little or no tax liability), low-income families save as well.

The existing 529 accounts will be just as appealing to poorer families as rich ones—if we just make a few tweaks. One model for a new approach to college savings is already being practiced successfully in California. In 2010, San Francisco created a system of universal college accounts for public school students. Known as Kindergarten to College (K2C), the program creates and seeds accounts with $50 for every student entering kindergarten in that city’s public schools and provides an additional $50 to students eligible for the National School Lunch Program. There are also matches for student deposits.

A similar approach could be implemented in the 529 system; every child could be given an account, with seed deposits and matches for those who need the boost. This type of system sends the message to every student from the first day of his or her academic career that college is within reach, and we’re going to help you get there. The results could have transformative effects on broadening college access and increasing affordability.

As states evaluate ways to get a greater return from their existing investments, they should look to change their existing 529 programs in ways that build the expectations, and balances, of all students.

The post Are College Savings Just for Rich Folks? appeared first on Zócalo Public Square.