The 2025-26 Budget

Scholarshare Investment Board

Introduction

Post Focuses on California Kids Investment and Development Savings (CalKIDS) Program. The Scholarshare Investment Board (SIB) administers the CalKIDS program, which provides college savings accounts for children. In this post, we provide background on the CalKIDS program and SIB’s current marketing and outreach efforts to increase program participation. We then analyze the Governor’s proposal to provide SIB with three new CalKIDS positions (two staff and one manager), with two of those positions focused on marketing and outreach. As discussed in the last section, we recommend approving the two requested staff positions given SIB’s workload challenges. We recommend rejecting the additional manager position at this time. The Legislature could revisit the need for more managerial support in the future once the existing marketing campaigns have been completed, more is known about the most cost-effective ways to increase program participation, and the state’s fiscal condition has improved.

Background

SIB Is Responsible for Administering the CalKIDS Program. The state created the CalKIDS program in the 2019-20 budget package. Under the program, SIB opens college savings accounts and makes deposits for eligible children (discussed in more detail below). The deposits are invested so they have the potential to grow over time. Once the child goes to college, the funds in their CalKIDS account can be spent on qualified higher education expenses—generally tuition and related fees, books and supplies, room and board, and computer equipment. Families can also link their CalKIDS account with their Scholarshare 529 account (explained in the nearby box). The state currently provides $185 million General Fund annually for the CalKIDS program.

CalKIDS Program Has Two Components. First, SIB opens a college savings account for every newborn. All newborns receive seed deposits regardless of their families’ financial need. Originally $25, seed deposits for newborns are now $100. The state is providing $45 million General Fund annually to pay for these seed deposits. Second, SIB provides a deposit of $500 to first graders who are low income (as defined under the Local Control Funding Formula). First graders qualify for an additional $500 deposit if they are foster youth and an additional $500 deposit if they are experiencing homelessness (for a maximum deposit of $1,500). SIB is to add these deposits to any existing CalKIDS accounts, while creating new accounts for any first graders who do not already have one. The state is providing $140 million General Fund annually to pay for these deposits. Additionally, the 2021-22 Budget Act temporarily expanded the program, with SIB providing CalKIDS deposits to all low-income students enrolled in grades 1 through 12 in that year.

SIB Has Four Positions Dedicated to the CalKIDS Program. SIB has two managers and two staff administering the CalKIDS program. One manager is responsible for providing programmatic direction and oversight for areas such as content development, marketing and outreach, data management, and customer service. The other manager is responsible for oversight of various operational and administrative activities. The two staff—Associate Governmental Program Analyst (AGPA) positions—are responsible for providing general programmatic support, including outreach, stakeholder engagement, data management, and customer service.

SIB Is Responsible for Encouraging Families to Claim CalKIDS Accounts. As of January 2025, SIB had opened approximately 5 million CalKIDS accounts. Though SIB has opened almost 5 million accounts, only 11 percent of them have been claimed by beneficiaries. Beneficiaries or their families go to the CalKIDS online portal to claim their account.

SIB Undertakes Various Outreach and Marketing Efforts to Increase Claim Rates. Once SIB opens a CalKIDS account for a particular child, SIB sends a letter to each family’s address notifying them of the account. SIB’s staff also perform CalKIDS outreach activities to make stakeholders aware of the program. These activities include engaging with families, local educational agencies, higher education institutions, community-based organizations, and nonprofits, as well as hosting educational webinars about the CalKIDS program. SIB has also hired external marketing firms to conduct media campaigns to increase the program’s claim rate. SIB undertook three media campaigns across 2023 and 2024. Two of the campaigns focused on broad advertising and included activities such as video advertisements, display banners, and audio streaming with messaging about the program to reach a wide audience. The other campaign targeted high school seniors (who may be about to enter college) through social media, paid advertisements, and mail campaigns to school districts. From the three media campaigns, SIB learned that the targeted high school campaign had the most success as it led to a 63 percent increase in the number of accounts claimed by high school seniors from February 2024 to May 2024.

Proposal

Governor Proposes Additional Staffing for CalKIDS Program. The Governor’s budget proposes $566,000 ongoing General Fund for three new full-time positions at SIB to help administer the CalKIDS program. SIB indicates that as the CalKIDS program continues to grow, the department cannot sustain necessary program functions at its current staffing level, including responsibilities related to marketing and outreach. Specifically, the three positions are:

• A Staff Services Manager I (SSMI) who will be responsible for developing and executing marketing strategies, building a strategic outreach plan, overseeing marketing contracts, and analyzing engagement trends.

• An Outreach AGPA who will be responsible for assisting with various marketing and outreach efforts, such as conducting educational workshops, developing requests for proposals, and monitoring engagement trends.

• A Data/Customer Support AGPA who will be responsible for data analysis and customer support, including tasks such as responding to program inquiries, troubleshooting user-experience issues, and analyzing participation and account data.

Assessment

SIB Indicates It Is Experiencing Challenges Handling CalKIDS Workload. SIB shared that it is experiencing CalKIDS workload challenges related to data management and analysis, customer service, communications, and outreach. Most notably, SIB indicates the two current AGPAs do not have the capacity to perform all necessary tasks related to their workload. Specifically, one AGPA does not have time to perform various data-related tasks, such as analyzing and reporting on data trends, due to other workload responsibilities, such as handling participant inquiries. Additionally, the other AGPA does not have the capacity to conduct all outreach activities, as many participants are in hard to reach areas and require personalized outreach efforts. Given these identified issues, the new data/customer support AGPA would be responsible for participant inquiries, and the new outreach AGPA would be responsible for outreach efforts.

Marketing Efforts Are Still Underway to Determine Best Approach for Increasing Claim Rates. To date, SIB has received $14.3 million in one-time funding for marketing efforts. Of this amount, $9 million is state funding and $5.3 million is private funding. The state provided SIB with one-time marketing funds with the goal of implementing different marketing activities and analyzing best practices for increasing CalKIDS claim rates. Though SIB has analyzed its completed paid media campaigns, the department is still in the process of spending down one-time state funding for marketing. Specifically, SIB is in the midst of spending the remaining $7.5 million in one-time state funds on a two-year marketing campaign in partnership with an external marketing firm. SIB has onboarded the firm, and primary marketing activities are set to begin in spring 2025. As part of the marketing contract, the firm is to conduct an analysis to determine the effectiveness of different marketing strategies. Additionally, SIB is working with the Los Angeles Unified School District and Riverside County Office of Education to increase CalKIDS participation. SIB will submit a report on these local efforts by September 30, 2025. Therefore, data will continue to be collected over the next couple of years to understand what marketing efforts have the greatest impact on increasing claim rates.

With Another Manager, CalKIDS Staffing Would Remain Top Heavy. The CalKIDS program currently has one manager position for every one staff position. This ratio is much higher than the state average. As of March 2024, the average statewide ratio of supervisorial positions (such as SSMIs) to non-supervisorial positions (such as AGPAs) is one-to-six. Under the new SIB staffing request, the CalKIDS staffing ratio would remain high, having three supervisorial positions to four non-supervisorial positions.

Administration Exempted SIB From State Operation Reductions. To balance the 2024-25 budget, the state authorized reductions in most agencies’ state operations funding. Specifically, most agencies were subject to reductions of up to 7.95 percent, in addition to having certain vacant positions eliminated. Because SIB is such a small department, the administration exempted it from both of these reductions. (The administration indicates it exempted all departments with 20 or fewer positions from these reductions.) The state is facing projected out-year deficits too—meaning additional budget solutions could be needed in 2026-27 to balance the budget. Any ongoing spending increases the Legislature approves in 2025-26 could come at the expense of other programs the following year. For this reason, we recommend (throughout our office’s initial budget publications this year) that the Legislature set a high bar for approving any new ongoing spending.

Recommendations

Recommend Approving Two AGPA Positions. For the CalKIDS program to expand college access, families need to know about the funds deposited into their child’s account and how funds can be used. Thus, marketing and outreach activities are central to the success of the program. Given current staff cannot perform all necessary responsibilities, including areas such as marketing and outreach, as well as data management and customer service, we recommend the Legislature approve both AGPA positions. The two new AGPA positions will cost $384,000 ongoing General Fund. (This is 32 percent less than the proposed request of $566,000.)

Recommend Revisiting Request for SSMI Position in the Future. SIB has already spent or is in the process of spending state funding dedicated to marketing activities. Additionally, SIB has already onboarded the external marketing firm that will complete CalKIDS marketing activities using the remaining one-time state funds. Thus, the new SSMI will not need to conduct work related to onboarding new marketing firms at this time. SIB is also still in the exploratory phase of understanding which marketing and outreach efforts yield the highest results. Given this exploratory phase is still underway, it is difficult to know what marketing and outreach strategies a new SSMI should focus on. We recommend the Legislature reevaluate the request for a marketing and outreach SSMI once SIB has completed the marketing activities currently in progress, analyzed their impacts, and provided data on best practices. This new information will help inform the Legislature about what workload gaps related to marketing exist and if an additional manager or lower-level staff position is warranted. The job classification of any additional positions will be important to consider given the CalKIDS ratio of management to staff positions is currently above the state average.