Gov. Tim Walz wants to end child poverty in Minnesota. What would that take?

Gov. Tim Walz has made a simple — but ambitious — pledge in his second term: to put an end to children living in poverty in the state of Minnesota.

The DFL governor's inaugural promise aims to lift roughly 139,000 children in the state above the poverty threshold and keep others from falling below that level, a change that experts say could be transformational for the trajectory of their lives and have wide-ranging benefits for the state.

"We can't have this be aspirational," Walz said in an interview with the Star Tribune. "It's that dignity of each family, it's the dignity of each child and the benefits that I think we get from that being a state that cares."

Walz has pitched reorganizing state government to create a new agency focused exclusively on children and families, while proposing billions out of the $17.5 billion budget surplus on a suite of tax credits and direct payments that he hopes will lift families in poverty and on the edge into stability.

It's a daunting task, involving an ever-changing population of Minnesotans and is something other states are working toward, but none has so far managed to accomplish.

"Getting kids out of poverty isn't enough, that's a far cry from getting their parents to economic stability. That's the floor," said Debra Fitzpatrick, policy and research director with the Children's Defense Fund of Minnesota. "But this idea that we can have that as a mandate, that's super bold and exciting and is something that we could track as a state."

Roughly 1.3 million children under 18 live in Minnesota, and 11% are in households that fall below the federal poverty threshold. A family of two adults and two children was below the poverty threshold in 2021 if their annual household income was less than $27,479.

The number of children living in poverty in Minnesota has dropped dramatically over the past several decades, down from more than 20% in the 1990s. But racial disparities have persisted despite the declines, and many more families live at the margins of that threshold, at risk of dipping into poverty suddenly if one parent loses a job or another child is added to the family.

"We tend to think of people in poverty as if it's a constant state, but the reality is a majority of people who experience poverty do so for a short period of time," said State Demographer Susan Brower.

Roughly 100,000 more children in Minnesota are on the edge of falling under the poverty level, she said.

A new state child tax credit

The federal expansion of the child tax credit to more families during the pandemic dramatically slashed child poverty rates and childhood hunger in the country, but Congress didn't renew the program.

Walz wants to build off that success with a new state refundable tax credit for children younger than 18, providing $1,000 per child to lower income families with less than $50,000 in household income, with a maximum credit of $3,000. The Department of Revenue estimates nearly 364,000 Minnesota filers would benefit from the credit.

Unlike the federal program, the proposed state credit would allow people who make very little or no income to qualify, and it would be available until children hit 18 years old. The state payment would come in one lump sum, unlike the expanded federal credit, which came monthly. The Institute for Taxation and Economic Policy, a left-leaning nonprofit tax policy organization, estimates that a state-based child tax credit would reduce childhood poverty by roughly 25%.

"Putting money in the hands of people who lack money — that's the definition of poverty — we know that can make a massive difference in people's lives, empowering them to make decisions in their family about how to spend it," said DFL Rep. Dave Pinto, chair of the House Children and Families Finance and Policy Committee.

Walz also wants to expand a dependent care tax credit to help families with young children afford child care. Families with one child under 5 years old would receive up to $4,000 per year, while families with three children under 5 could receive up to $10,500. The benefit would phase out between $200,000 and $240,000 in household income.

The governor argues his plan for rebate checks also directs more funding toward families, who could receive $2,000 and an additional $200 for each dependent, up to three children. That could mean rent, groceries or setting aside money for emergencies.

"The goal is to try and intersect strategically in all of those places," Walz said. "A family that was unstable in housing, unstable in food, unstable in child care, now all of a sudden is stable in all of those places."

Mohammed Rahman's salary from his nonprofit clerical position is being stretched to cover most of the rent for the Bloomington subsidized housing he lives in with his wife and 9-month-old son. He wants the best formula and diapers money can buy, but they struggle to afford them. Rahman can't wrap his head around how they're going to pay for child care when his wife goes back to school.

"You try to fathom it and you get kind of terrified," said Rahman, who said child care rebates would make a huge difference. He hopes direct aid can come even sooner. "That would give us a good breather for probably a month or two of difficult decisions."

Stepping in after the pandemic

Families struggle the most and get the least amount of government spending in the earliest years of their children's lives, despite those years being the most critical for setting up a child for long-term success, said Aaron Sojourner, a senior researcher at the W. E. Upjohn Institute for Employment Research.

Studies show children whose family income is below the poverty line experience worse outcomes in virtually every metric, from physical and mental health to graduation rates and their success in the job market.

"You can see from random control studies that if you randomly assign kids — all from disadvantaged families — access to more resources in their first few years of life, it changes the trajectory of their lives," he said.

The proposal for direct rebate checks has gotten a lukewarm reception from legislative Democrats, but Republicans in the minority are now proposing direct checks and a one-time child tax credit similar to Walz's proposal.

Republicans also want to decrease the first two income tax tiers by one percentage point, which they say would provide ongoing relief for low-income families. "Every time you get your paycheck you would have more money in your pocket," said Rep. Brian Daniels, the Republican lead on the House children and families committee.

The progress on Walz's child poverty pledge would be tracked through a new agency he's proposing called the Department of Children, Youth, and Families. The idea is that the agency would focus on early learning, as well as food, economic and other support for children, areas that are now spread out among several agencies with competing priorities, said Erin Bailey, assistant commissioner of the governor's Children's Cabinet.

"We're excited about the moment we're in and what is possible," Bailey said. "If we want different results we truly have to do things differently."

DFL legislators say they are aligned with Walz's goal of helping struggling children and families. The House passed legislation for emergency aid for early learning and child care, and Walz has signed food shelf funding. In many cases, the state is stepping in as federal pandemic-era programs end.

"We saw how much simple support for families can lift people out poverty," said Sen. Erin Maye Quade, DFL-Apple Valley, who sponsored the food shelf bill. "Now it's up to states to figure out how to continue that work, and there is a lot that we can do."