Aurora is looking at establishing education savings accounts for Aurora students in a pilot program involving the West Aurora and East Aurora school districts.
Mayor Richard Irvin this week announced the rollout of the program in an interview with The Beacon-News. He called it an “important partnership between the city and the school districts.”
“If we’re going to commit resources to anyone, it would be our children,” he said.
Known as Aurora Promise, the program is based on a similar one that has been going in San Francisco for 18 years. The city just graduated its first class of students in the program. There are similar ones in New York City, Boston and Los Angeles.
While there are 120 universal children’s savings account programs in 39 states, Aurora Promise would be the first municipal child savings program in Illinois.
The city would seed the beginnings of savings accounts for post-secondary education for every kindergarten student in the city with $50. It would be for any post-secondary schooling – college or a trade school.
The plan would be for parents to then begin adding to the savings over the years, and the city would look for corporate sponsors to help.
Aurora Chief Community Services Officer Viviana Ramirez said the idea is to “incentivize the families to grow that account.”
“It’s a long-term savings account program,” she said. “It tells students Aurora believes in them.”
While the potential savings does not seem like a lot compared to the cost of college, national studies have shown that with any kind of savings, students are more likely to continue their education after high school, Ramirez said.
A study by the Center for Social Development at the George Warren Brown School of Social Work at Washington University in St. Louis showed that even when families have saved less than $500, low- to moderate-income children are three times more likely to enroll in college and more than four times more likely to graduate from college than those with no savings account.
The state of Illinois does have a 529 plan for college savings, named for Section 529 of the IRS tax code. It offers tax benefits and is used to pay for college expenses.
The city program would not preclude anyone from having a 529 account too, but Ramirez said to get a 529 account, a person must have a Social Security number. The city’s plan would cover all students, even those without a Social Security number, she said.
Right now, West Aurora School District 129 has just under 500 kindergarten students who live in the city, and there are about 600 kindergarten students in East Aurora School District 131.
Irvin said those two districts were chosen for the pilot because they have the most students living in the city. Both districts have told the city they are committed to the program.
Eventually, the program would include all six school districts in the city. Part of the Oswego School District, Indian Prairie School District, Batavia School District and the Kaneland School District are in Aurora.
“This is specifically for Aurora kids,” Irvin said.
The program would be only for public school children, officials said. While there is no income guideline for Aurora Promise (some of the other programs do have a guideline), the target is low-income students and public schools serve a higher number of them, said Martha Paschke, Innovation and Strategy director for the city.
Also, the program requires a partnership between the districts and the city. One of the main parts of that is data sharing by the district with the city, which has to be worked out.
Paschke said the hope is the city can get “meaningful data for analysis.”
She said the program cannot use a traditional bank because a specialized digital platform is necessary. The city will put out a request for proposals to find a financial institution that could handle the accounts.
CitiBank has developed a platform called CitiStart that could work, and she said there is an organization in Atlanta that has done similar type of work.
The city is hoping to use staff from its Financial Empowerment Center to help administer the program.
The initial funding for the program will come from money the city got as a local share from Columbia Care, when it opened the first marijuana cultivation facility in Aurora about nine years ago.
The money was a contribution related to when the original company that opened the facility, Curative Health, was sold early in Irvin’s first term as mayor. The amount is about $145,000, which would seed the program, Irvin said.
He added that the city would look to raise money from other sources, similar to what it has done with the Financial Empowerment Center. He said the program benefits businesses because it creates a future source of employees.
“We believe corporations will donate because it’s working for them,” Irvin said.
The program would become part of the city budget, he said.
The pilot was approved by the City Council through the 2024 budget process. Any future contracts or changes connected to the program also would have to be approved by the council.
slord@tribpub.com