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January 3, 2023

Political clashes leave CT Baby Bonds program in limbo

MARK PAZNIOKAS / CT MIRROR State Treasurer Shawn Wooden and Gov. Ned Lamont in August 2018. Wooden championed the CT Baby Bonds program, but opposition from the administration has kept it from getting off the ground.

In June 2021, state Treasurer Shawn Wooden made history in Connecticut with the passage of the CT Baby Bonds program, a first-of-its-kind statewide policy aimed at narrowing the racial wealth gap. 

The concept, introduced by a pair of economists over a decade ago, is simple enough: Set aside and invest money on behalf of children born into poor families. When they turn 18, they can use the funds to pay for life-changing opportunities that people born into wealth access with comparative ease — a down payment on a home, tuition for school, seed capital to start or invest in a business.

Poor children of any race would qualify, but because Black, Latino, and Indigenous children experience poverty at disproportionate rates, they would stand to benefit the most from the program. 

“I witnessed firsthand how generational poverty holds a community and individuals back,” said Wooden, a Black man who grew up in a poor neighborhood in Hartford, on the day he announced the proposal. 

Supporters around the country celebrated Wooden and the passage of his legacy program, heralding Connecticut as a leader in addressing racial inequality. 

But, nearly a year and a half after CT Baby Bonds was signed into law, it has yet to become a reality — largely because of political interference from Gov. Ned Lamont’s office.

Documents obtained by the CT Mirror show how the governor’s office led a campaign of quiet but fierce opposition to the program from the time of its passage, weakening it at several points on its path to implementation — with a last-minute change to the program’s funding structure, then by stalling meetings between the treasurer’s office and agency partners and arranging for a two-year delay in launching the program.

The governor and his spokesperson did not say specifically why they supported the program’s delay, but administration officials told the CT Mirror that, along the way, they objected to how Wooden structured the program’s funding, which included an “automatic authorization” for its bonding that they claimed sidestepped the governor’s authority as chair of the State Bond Commission. The administration also said agency heads from the Department of Social Services and the Office of Policy and Management had concerns about the program’s implementation.

The opposition was stronger than the coalition that Wooden built to support it. People close to the situation say Wooden failed to create the momentum to ensure the program’s funding would pass, and his stunning April announcement that he wouldn’t seek another term further derailed the program’s support and left him with little political capital in Democratic circles. 

Last year, the legislature voted to delay the program’s start date by two years, from July 2, 2021 to July 1, 2023, but the records obtained by the CT Mirror cast doubt on whether the baby bonds program will take effect this year, as planned — or ever. 

Wooden laid the responsibility for the setback directly with Lamont.

“We’ve recently had to deal with the governor tapping the brakes and delaying implementation,” Wooden told an audience at a baby bonds event hosted by the New York Federal Reserve in September.

Wooden would only speak on background for this story. His office responded to questions with written statements and asked that they be attributed to an unnamed spokesperson. Much of this story is told by documents and texts obtained via public records requests.

The story of CT Baby Bonds provides a glimpse into policymaking that those outside of it rarely see, including the critical role of politics and the behind-the-scenes levers the governor can use to all but destroy a program, even after the legislature passes it into law.

The future of baby bonds is shaky at best.

Last year, the legislature voted to push its start back by two years, to 2023. But for that to happen, the State Bond Commission must vote to allocate the bonding to pay for it. 

When asked last month whether he supports funding the program this year, Lamont hedged.

“You have to make choices in life,” Lamont said. “I worked with the legislature on this. If they want to cut back on affordable housing or other legislative bonding priorities — but, you can’t do everything.”

The legislature already made its decision about baby bonds in 2021, when it voted to pass the program into law. With that vote, it “authorized” the program’s funding.

The next step in the bonding process is for the bond commission to “allocate” those funds. The governor holds tremendous power over this second stage. Besides setting the bond commission’s agenda, Lamont chairs the 10-member panel, and two of his top administrators hold seats.

“Is he not releasing the money this year?” asked a confused Sen. Marilyn Moore, D-Bridgeport, when told of Lamont’s response. Moore serves as co-chair of the bonding sub-committee and was an early champion of the program.

“It was my understanding he was going to delay it, but he was going to delay it to ’23,” she said, noting that people not just in Connecticut but all over the country are tracking the program’s implementation.

When the CT Mirror asked Lamont’s office to clarify his stance, his spokesperson Anthony Anthony responded:

“It’s premature for the governor to put baby bonds on the bond agenda until programmatic and budgetary concerns expressed by implementing agencies are addressed,” said Anthony. 

Emails between members of the governor’s staff reveal that Lamont’s office has long been considering repealing the program entirely.

On April 20, after Wooden announced that he wouldn’t seek reelection but before the program’s delay went into effect, Dan DeSimone, a senior adviser to Lamont, sent an email to deputy chief of staff Jonathan Dach, asking about the status of baby bonds’ funding.

“With the Treasurer’s retirement, we’re hoping to defund it,” Dach said. DeSimone then asked whether the program was currently funded. 

“It’s not. We may undo the bond authorization,” Dach responded.

Days later, Lamont’s chief of staff, Paul Mounds Jr., texted Comptroller Natalie Braswell, writing, “Yesterday I told legislators that the governor wants to repeal baby bonds for good.”

When asked in an interview whether the governor had expressed a desire to repeal the program “for good,” Mounds said his statement to legislators was a negotiation tactic. 

Dach will soon replace Mounds as chief of staff. January will bring several other shifts in the Lamont administration. 

Publicly, the administration has expressed a willingness to work towards the program’s implementation with incoming State Treasurer Erick Russell, who confirmed to CT Mirror reporters that he supports baby bonds. 

“We’re not making any formal decision yet as the office is waiting to begin conversations with the incoming treasurer,” said Anthony, the governor’s spokesperson. 

But additional text messages between Mounds and Braswell suggest that, if Russell chooses to push for the program’s passage, he may face an uphill battle. 

On May 7, Mounds sent Braswell a text that included a screenshot of an announcement that the Democrats had endorsed Russell for treasurer. In the clip, Russell committed to backing baby bonds.

“Lol @ baby bonds we’ll fix that,” wrote Braswell.

Reached by the CT Mirror, a spokesperson for the comptroller’s office declined to comment further on the text.

Last-minute change

How did a nationally celebrated program end up at a point where its implementation may never become a reality?

The documents obtained by the CT Mirror reveal efforts by high-ranking officials in Lamont’s office, led by Mounds, to derail the program at critical points in its development. 

That effort began with a last-minute tweak to its funding.

As originally passed into law, CT Baby Bonds placed $3,200 in a trust on behalf of each baby born onto HUSKY, the state’s Medicaid program, after July 1, 2021 — around 15,600 children per year. Wooden’s office estimated that, by the time the recipients reached adulthood, the funds could grow to over $11,000, a significant figure, considering that the median wealth for Black and Latino households nationally is around $24,000 and $36,000, respectively.

The legislature approved $600 million in bonding — $50 million a year for 12 years — to pay for the program. 

The state borrows billions of dollars annually to finance capital projects and other programs. But even after the legislature authorizes the borrowing, the treasurer cannot issue bonds on Wall Street unless the bond commission also approves the financing.

The commission routinely allocates only a portion of the bonding authorized by the legislature. Connecticut currently has $16.8 billion in legislative bond authorizations, some of which date back more than a decade, that have never cleared the bond commission.

Wooden designed CT Baby Bonds to avoid this pitfall. In the version that originally passed as part of the 2021 bond bill, the treasurer included what’s called an “automatic authorization,” which is a mechanism that effectively bypasses bond commission review.

But before the session ended, Lamont’s office had convinced lawmakers to reverse themselves. They specifically included new language, buried in the budget implementer — a technical, omnibus measure necessary to implement the new state budget — which required commission approval for the baby bonds financing every year beginning in 2022. 

“I thought that when it passed, it was passed with funding,” said Rep. Geraldo Reyes Jr., D-Waterbury, co-chair of the Black and Puerto Rican Caucus and one of the program’s biggest champions. “I’m chalking it up to lessons learned. I will never assume that anything’s funded anymore until I see that it’s funded.”

Mounds claimed responsibility for the change, according to texts obtained by the CT Mirror. 

In July 2021, first lady Annie Lamont texted Mounds to ask whether baby bonds had passed, calling the program “wonderful in intent.” 

Mounds told her that it passed in the bond bill, adding, “I made it so it wasn’t an automatic authorization with gov approval, and that is why wooden is going on a press roadshow about it so we will release the funding on a future bond.”

Mounds said in an interview with the CT Mirror that the administration viewed the mechanism as sidestepping the authority of the governor and his agency heads.

“We had to deal with the fact that baby bonds was looking to be passed as an automatic authorization, which bypasses the scrutiny of [the Office of Policy and Management] and the governor in setting a bond agenda,” he said.

Mounds and Melissa McCaw, then-secretary of OPM, kept tabs as Wooden toured the country promoting the program.

Shortly before the program passed, McCaw forwarded a Yahoo Finance article titled “CT State Treasurer on becoming first state to pass baby bonds program.” Mounds responded, “I could care less about him doing bs press.”

In the weeks after baby bonds became law, Mounds sent McCaw another article, “Connecticut baby bonds program is treasurer’s ‘passion project’,” writing, “He still hasn’t got the information from dss. I have no idea how he’s going to run this program. We should game plan on this.”

Meetings stalled

Once the program passed into law, the governor’s office also stalled progress on the program’s implementation, records show.

“Key agency partners were directed by the Governor’s office to slow down their cooperation with the Office of the Treasurer on the CT Baby Bonds implementation,” wrote a Treasurer’s office spokesperson in a response to questions from the CT Mirror.

Emails obtained by the CT Mirror from both the governor’s office and the Department of Social Services confirmed this account.

From September to November 2021, staff at the treasurer’s office and DSS were in regular communication, collaborating to understand how the program would identify babies who qualified and how to keep in touch with them over time. 

On Nov. 3, DSS Commissioner Deidre Gifford asked her staff to pull back. 

“Can you stall on further meetings until we get the structure sorted with OPM and OTG? thanks,” wrote Gifford in an email to several members of her staff later that day. 

Gifford said DSS had identified questions regarding the program’s implementation, the most evident of which was how to identify eligible individuals. But when DSS communicated those concerns to the treasurer’s office, they were rebuffed. 

“The Treasurer’s Office was not in agreement with many of the issues raised by DSS,” Gifford said in response to questions from the CT Mirror. “Because the path forward on program operation and implementation was unclear, a higher level meeting on fundamental programmatic issues was needed.”

DSS staff complied with the request, appearing to understand that there were political sensitivities surrounding baby bonds. Emails show staff referring to the program as a “grenade” and “tangled at high levels.” 

“I will note that there were some underlying big questions that seemed to be unanswered — as in, does [the governor’s office] support this initiative at all?” wrote DSS program director Peter Hadler in mid-January 2022.

During this time and beyond, Gifford repeatedly pushed the governor’s office and OPM to schedule a meeting with the treasurer’s office to discuss outstanding concerns about the program.

“Wondering when the conversation with [the Treasurer] will be scheduled to present our significant concerns about the program as currently structured? I have asked my team to hold off meeting for now. If we can at least say we are waiting til after a meeting of the principals that would be helpful,” Gifford wrote in a Dec. 14, 2021 email that included Mounds and McCaw.

The emails released to the CT Mirror did not include a response to Gifford. A few days into the new year, she followed up again.

“Treasurer’s office continues to reach out to DSS to make plans. We are putting them off but it’s getting awkward,” she wrote, signing off, “DSS would recommend a bit of a working group to develop a more practicable, sustainable program. LMK how we can help.”

McCaw responded, “I believe Paul [Mounds] was taking this one. Paul — how would you like to proceed? Do you want OPM to schedule?”

A few weeks later, Gifford followed up again.

“We are running out of time especially if we need legislative changes,” McCaw responded, offering to schedule the meeting herself. 

Mounds did not respond to those emails, according to records provided to the CT Mirror.

A “working group” style meeting like the one Gifford recommended in early January — that included OPM, DSS, the governor’s office and the treasurer’s office — never happened, according to spokespeople from both DSS and the treasurer’s office. The treasury spokesperson said Wooden and Lamont did meet to discuss the program in February. 

Mounds denied he deliberately stalled the program’s implementation. 

“I didn’t delay meetings,” he said. “I asked for meetings based on timing and what we needed to figure out internally — what our stance [was] to support the administration’s position.”

In February, treasury staff also met with the new OPM secretary, Jeff Beckham. He told them the governor would not support the baby bonds program as authorized but that he would support a one-time funding of $30 million — 5% of the original $600 million budget. 

Over the course of a month of requests from the CT Mirror, Beckham’s spokesperson wouldn’t make him available for an interview.

On March 30, DSS and OPM staff finally met with treasury staff, though no one from Lamont’s office attended. According to an agenda circulated in advance of the meeting, OPM and DSS presented their financial and operational concerns about the program.

The treasurer’s office recently claimed that Mounds then made one final push to ensure the demise of baby bonds. 

Since its passage, the Black and Puerto Rican Caucus has served as the core of the legislative support for CT Baby Bonds. A treasury spokesperson stated last month that, in late April, Mounds threatened members of the caucus with “political repercussions, including denying bond funding for projects in such members’ districts” if they continued to publicly support baby bonds. The spokesperson confirmed that Wooden approved the statement. 

“The accusations made by the outgoing treasurer are false,” said Mounds on Dec. 14 when informed of the statement by Wooden’s office.

The CT Mirror spoke with three members of the BPRC: co-chair Reyes, Sen. Moore, and Sen. Doug McCrory, D-Hartford. None of them said they had received threats personally or had heard of any such threats made to other caucus members.

Agencies’ concerns

As these delays were playing out, DSS and OPM officials expressed concerns about the baby bonds program. 

DSS put together a presentation documenting the agency’s outstanding questions about how the program would run. These included: How would the program obtain parental consent to enroll children? How would it identify eligible babies? Who would conduct outreach and maintain enrollee contact information? Who would administer the program’s required financial literacy tests?

The agency’s No. 1 recommendation — which it labeled “essential” — was to “push back start date to address critical start-up issues related to consent, enrollment, and administrative structure,” noting “all other recommendations also benefit from more time.” 

OPM was mainly concerned with the idea of funding the program through bonding.

“This would limit our current and future ability to pay for critically needed services and capital investments that can help those most in need right now — including assistance for day care, building new schools, and community investments,” OPM spokesperson Chris Collibee said. 

The treasurer’s office insisted that it had made progress on programmatic issues raised by the agencies.

“We took significant steps to stand up the program and get everything in order for a July 1, 2022, funding authorization,” including the establishment of the trust for beneficiaries, an investment plan for the trust’s assets, and a mechanism to identify eligible babies, stated a spokesperson. “Unfortunately, the delay came in the midst of this progress.”

Two-year delay

The latest major effort by the governor’s office to thwart the baby bonds program came in 2022, when it coordinated its two-year delay. 

On May 2, the 2022 budget implementer passed and, for the second year in a row, it included a blow to baby bonds, pushing the program’s effective start date from July 1, 2021 to July 1, 2023.

Documents show the governor’s office coordinated the change.

“Marilyn [Moore] agreed to delay of baby bonds … We are writing language,” Mounds wrote to OPM secretary Beckham and deputy secretary Paul Potamianos.

“Excellent,” Potamianos responded.

A spokesperson with the treasurer’s office said that Wooden was not made aware of the change until after the implementer was released. 

When asked why the governor’s office advocated to delay the program by two years, Lamont’s spokesperson directed reporters to previous comments the governor made about baby bonds.

“As an answer to this, please use the governor’s on the record comments about the legislature needing to make choices on what to do with bonding,” wrote Anthony in a Dec. 8 email. 

Mounds said he discussed the change with Moore because, as co-chair of the subcommittee on bonding, she negotiates the bond package. Moore said she does not recall the specific conversation.

“If it was part of a voting package, I would not hold up other funds for that, but I do not recall having that conversation with Paul,” she said.

Too little, too late

A program can overcome strong opposition from a governor, as long as its champion builds an even stronger coalition to support it. Here, according to legislators, Wooden fell short. 

Both Reyes and Moore said that while Wooden worked to pass the program into law in 2021, he could have done more to push for its funding authorization in 2022. 

“I don’t know, beyond Shawn, where was his base to champion it — to make sure that once it got passed, that it got the attention that it needed,” said Moore, who toured with Wooden to promote the program’s passage in late 2021 but said he did not reach out to her for help building support for its implementation the following year. 

Wooden’s office rejects this criticism, saying that the Black and Puerto Rican Caucus considered baby bonds a top legislative priority and that the bill “had support from legislators in every region of the state.”

“The claim that the Treasurer did very little to drum up support is simply not accurate,” said a spokesperson from Wooden’s office.

Treasurer’s office continues to reach out to DSS to make plans. We are putting them off but it’s getting awkward.

Reyes, co-chair of the BPRC, confirmed that the program is a priority for the caucus but conceded that Wooden’s effort could have been more “focused.”

“I don’t know that I would say he didn’t do enough. I would say maybe he wasn’t as proactive as he could have been. We kind of went into a lull, if you will, in the middle.” said Reyes. “And then, at the end, I think, when Treasurer Wooden found that he was going to be leaving, I think he realized that he needed to move a little quicker on this.”

Reyes’ comments point to another issue that thwarted Wooden’s ability to effectively lead the program to success: his announcement, just a month before baby bonds failed to secure its funding, that he would not seek reelection. Baby bonds would lose its biggest advocate before it even started.

Moore said she’s concerned about the program’s prospects following Wooden’s departure.

“I don’t know who’s going to pick up the mantle,” she said.

And there’s still a lot of work left to do for the program to have a chance at success, according to state agencies. Most notably, according to a DSS spokesperson, the program would require the establishment of a new database to track eligible participants over time. 

With Lamont’s opposition to the program showing no signs of waning and Wooden’s departure leaving baby bonds without a champion, it’s unclear whether this historic program will ever become a reality for Connecticut’s children.

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