Chapter 399
2025 -- H 6071 SUBSTITUTE A
Enacted 07/02/2025

A N   A C T
RELATING TO PUBLIC FINANCE -- RHODE ISLAND BABY BOND TRUST

Introduced By: Representatives Giraldo, Stewart, Voas, Potter, Alzate, Felix, Tanzi, Solomon, Kislak, and Diaz

Date Introduced: March 12, 2025

It is enacted by the General Assembly as follows:
     SECTION 1. Title 35 of the General Laws entitled "PUBLIC FINANCE" is hereby
amended by adding thereto the following chapter:
CHAPTER 24
RHODE ISLAND BABY BOND TRUST
     35-24-1. Definitions.
     As used in this chapter:
     (1) “Designated beneficiary” means an individual who is:
     (i) Born on or after January 1, 2026; and
     (ii) Whose parent or guardian is enrolled in the Rhode Island works program pursuant to §
40-5.2-1, et seq, within the first twelve (12) months of their life.
     (2) “Eligible expenditure” means an expenditure associated with any of the following:
     (i) Continuing education of a designated beneficiary at an institution of higher learning,
trade school, vocational school, or professional apprenticeship program in Rhode Island;
     (ii) Ownership of a home in Rhode Island by a designated beneficiary;
     (iii) Ownership of a business with a principal place of business in Rhode Island by a
designated beneficiary; or
     (iv) Any investment in financial assets or personal capital that provides long-term gains to
wages or wealth, as defined by regulation promulgated by the general treasurer.
     (3) “Trust” means the Rhode Island baby bond trust, which consists of:
     (i) All money from public or private sources appropriated or made available to the state for
the benefit of the trust; and
     (ii) All earnings on the money in the trust.
     35-24-2. Establishment.
     (a) There is hereby established the Rhode Island baby bond trust. The trust shall constitute
an instrumentality of the state and shall perform essential governmental functions as provided under
the provisions of this chapter. The trust shall receive and hold all payments and deposits or
contributions intended for the trust, as well as gifts, bequests, endowments, or federal, state, or local
grants and any other funds from any public or private source and all earnings until disbursed in
accordance with § 35-24-7.
     (b) The amounts on deposit in the trust shall not constitute property of the state and the
trust shall not be construed to be a department, institution, or agency of the state. Amounts on
deposit in the trust shall not be commingled with state funds and the state shall have no claim to or
against, or interest in, such funds. Any contract entered into by, or any obligation of, the trust shall
not constitute a debt or obligation of the state and the state shall have no obligation to any
designated beneficiary or any other person on account of the trust and all amounts obligated to be
paid from the trust shall be limited to amounts available for such obligation on deposit in the trust.
The amounts on deposit in the trust may only be disbursed in accordance with the provisions of this
chapter. The trust shall continue in existence as long as it holds any deposits or has any obligations
and until its existence is terminated by law. Upon termination, any unclaimed assets shall return to
the state.
     (c) The general treasurer shall be responsible for the receipt, maintenance, administration,
investigation, and disbursements from the trust. The trust shall not receive deposits in any form
other than cash.
     35-24-3. Powers of the general treasurer.
     (a) The general treasurer, on behalf of the trust and for purposes of the trust, may:
     (1) Receive and invest monies in the trust in any instruments, obligations, securities, or
property in accordance with the provisions of this chapter;
     (2) Enter into one or more contractual agreements, including contracts for legal, actuarial,
accounting, custodial, advisory, management, administrative, advertising, marketing, and
consulting services from the trust and pay for such services from the gains and earnings of the trust;
     (3) Procure insurance in connection with the trust’s property, assets, activities, or deposits
to the trust;
     (4) Apply for, accept, and expend gifts, grants, or donations from public or private sources
to enable the trust to carry out its objectives;
     (5) Adopt rules and regulations it deems necessary to effectuate the purposes of this
chapter;
     (6) Sue and be sued;
     (7) Establish one or more funds within the trust and maintain separate accounts for each
designated beneficiary; and
     (8) Take any other action necessary to effectuate the purposes of this chapter, and incidental
to the duties imposed on the general treasurer pursuant to this chapter.
     (b) The general treasurer shall create a process within the office of the general treasurer to
determine whether an expenditure proposed by a designated beneficiary is an eligible expenditure
before the designated beneficiary is to receive any distribution under § 35-24-7.
     35-24-4. Investment of funds in the trust.
     Notwithstanding the provisions of §§ 35-10-12 to 35-10-14, inclusive, the general treasurer
shall invest the amounts on deposit in the trust in a manner reasonable and appropriate to achieve
the objectives of the trust, exercising the discretion and care of a prudent person in similar
circumstances with similar objectives. The general treasurer shall give due consideration to rate of
return, risk, term or maturity, diversification of the portfolio within the trust, liquidity, the projected
disbursements of the total portfolio within the trust, liquidity, the projected disbursements and
expenditures and the expected payments, deposits, contributions, and gifts to be received. The
general treasurer shall not require the trust to invest directly in obligations of the state or any
political subdivision of the state or in any investment or other fund administered by the general
treasurer. The assets of the trust shall be continuously invested and reinvested in a manner
consistent with the objectives of the trust until disbursed for eligible expenditures as defined by this
chapter or expended on expenses incurred by the operations of the trust.
     35-24-5. Exemption from taxation.
     (a) The property of the trust and the earnings on the trust shall be exempt from all taxation
by the state and all political subdivisions of the state. Distributions made pursuant to § 35-24-7
shall be considered income subject to taxation in accordance with chapter 30 of title 44 and shall
be subject to federal and state withholdings.
     (b) The tax administrator may adopt rules and regulations necessary to monitor, implement,
and administer the Rhode Island personal income tax provisions referred to in subsection (a) of this
section.
     35-24-6. Monies invested in trust not considered assets or income.
     Except as otherwise required by federal law, any money deposited into the trust and
credited to a designated beneficiary, and any increase in the values thereof, shall not be used to
calculate the personal assets of a designated beneficiary for purposes of determining income
eligibility of the designated beneficiary for state or local assistance programs including:
     (1) Any disability, medical, or other health benefits administered by the state; and
     (2) Any student loan program, student grant program, or other student financial program
administered by the state.
     35-24-7. Accounting for designated beneficiary. Claim for accounting.
     (a) The general treasurer shall establish in the Rhode Island baby bond trust an accounting
for each designated beneficiary. Each such account shall include the amount transferred to the trust
pursuant to § 35-24-8, plus the designated beneficiary’s pro rata share of total net earnings from
investments of sums as determined by the general treasurer and held in the trust.
     (b) The department of human services shall notify the office of the general treasurer of the
birth or enrollment of each designated beneficiary.
     (c) Upon a designated beneficiary’s eighteenth birthday, if such a beneficiary is a resident
of the state and has been for the two (2) years immediately preceding receipt of any distribution
under this section, such beneficiary shall become eligible to receive the total sum of the accounting
under subsection (a) of this section to be used for eligible expenditures.
     (d) A designated beneficiary must submit a claim that meets the requirements set forth in
this chapter before the designated beneficiary reaches thirty-five (35) years of age.
     (e) If a designated beneficiary is deceased before their eighteenth birthday, does not submit
a timely claim, or is no longer a resident of the state upon reaching thirty-five (35) years of age,
such accounting shall be credited back to the general fund of the state.
     (f) The general treasurer shall furnish each eligible beneficiary with an annual statement
relating to the individual’s accounting, which shall include:
     (1) A statement of the balance attributable to the individual;
     (2) A projection of the balance’s growth by the time the individual attains the age of
eighteen (18);
     (3) Resources and information to promote financial wellness and literacy of the designated
beneficiary; and
     (4) Such other information as the general treasurer deems relevant.
     35-24-8. Transfer to trust upon birth of designated beneficiary.
     (a) Upon the birth of a designated beneficiary, the general treasurer shall allocate three
thousand dollars ($3,000) from the trust to be credited toward the accounting of such designated
beneficiary pursuant to § 35-24-7.
     35-24-9. Implementation.
     The general treasurer's duty to implement this chapter is contingent upon availability of
public or private funds the general treasurer deems sufficient to administer the trust consistent with
the provisions of § 35-24-8.
     SECTION 2. This act shall take effect upon passage.
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LC001696/SUB A
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