2002 Legislation
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HOUSE BILL NO. 671 – Individual dvlpmnt accts/low-income

HOUSE BILL NO. 671

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Daily Data Tracking History



H0671..........................................................by EDUCATION
INDIVIDUAL DEVELOPMENT ACCOUNTS - Adds to existing law relating to
individual development accounts for lower-income individuals to provide
legislative findings; to provide for purposes of the accounts and account
features; to provide program qualifications and guidelines; and to provide
for the Individual Development Account Advisory Board.
                                                                        
02/22    House intro - 1st rdg - to printing
02/25    Rpt prt - to Educ
02/28    Rpt out - rec d/p - to 2nd rdg
03/01    2nd rdg - to 3rd rdg
03/04    3rd rdg - PASSED - 55-9-6
      AYES -- Aikele, Barraclough, Bedke, Bieter, Black, Block, Boe, Bolz,
      Bradford, Bruneel, Callister, Collins, Cuddy, Deal, Denney,
      Ellsworth, Eskridge, Field(20), Gagner, Hadley, Hammond, Harwood,
      Henbest, Higgins, Hornbeck, Jaquet, Jones, Kellogg(Duncan), Kendell,
      Kunz, Lake, Langford, Loertscher, Mader, Martinez, McKague, Meyer,
      Montgomery, Pischner, Pomeroy, Raybould, Ridinger, Robison, Sali,
      Schaefer, Shepherd, Smith(33), Smith(23), Smylie, Stone, Tilman,
      Trail, Wood, Young, Mr. Speaker
      NAYS -- Barrett, Bell, Campbell, Crow, Moyle, Pearce, Sellman,
      Stevenson, Wheeler
      Absent and excused -- Clark, Ellis, Field(13), Gould, Mortensen,
      Roberts
    Floor Sponsor - Higgins
    Title apvd - to Senate
03/05    Senate intro - 1st rdg - to Health/Wel
03/06    Rpt out - rec d/p - to 2nd rdg
03/07    2nd rdg - to 3rd rdg
03/13    3rd rdg - PASSED - 35-0-0
      AYES -- Andreason, Boatright, Branch(Bartlett), Brandt, Bunderson,
      Burtenshaw, Cameron, Darrington, Davis, Deide, Dunklin, Frasure,
      Geddes, Goedde, Hawkins, Hill, Ingram, Ipsen, Keough, King-Barrutia,
      Little, Lodge, Marley, Noh, Richardson, Risch, Sandy, Schroeder,
      Sims, Sorensen, Stegner, Stennett, Thorne, Wheeler, Williams
      NAYS -- None
      Absent and excused -- None
    Floor Sponsor - Wheeler
    Title apvd - to House
03/14    To enrol
03/15    Rpt enrol - Sp signed
    Pres signed
03/15    To Governor
03/20    Governor signed
         Session Law Chapter 149
         Effective: 07/01/02

Bill Text


                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-sixth Legislature                  Second Regular Session - 2002
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 671
                                                                        
                                   BY EDUCATION COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO INDIVIDUAL DEVELOPMENT ACCOUNTS; AMENDING TITLE 56, IDAHO CODE, BY
  3        THE ADDITION OF A NEW CHAPTER 11, TITLE 56, IDAHO CODE, TO  DEFINE  TERMS,
  4        TO  PROVIDE  LEGISLATIVE  FINDINGS, TO PROVIDE GUIDELINES AND CRITERIA FOR
  5        PERSONS QUALIFYING AS ACCOUNT HOLDERS, TO PROVIDE FOR APPROVED PURPOSES OF
  6        INDIVIDUAL DEVELOPMENT ACCOUNTS,  TO  PROVIDE  FOR  WITHDRAWALS  FROM  THE
  7        ACCOUNT  AND  TO  PROVIDE  FOR  REMOVAL  FROM  THE PROGRAM, TO PROVIDE FOR
  8        REQUIRED ACCOUNT FEATURES AND TO PROVIDE FOR CERTAIN RESTRICTIONS RELATING
  9        TO MATCHING MONEYS, TO PROVIDE  FOR  THE  INDIVIDUAL  DEVELOPMENT  ACCOUNT
 10        ADVISORY BOARD, TO PROVIDE FOR THE AUTHORITY AND DUTIES OF FIDUCIARY ORGA-
 11        NIZATIONS  AND  TO  EXCLUDE  CERTAIN  MONEYS  FROM CONSIDERATION IN PUBLIC
 12        ASSISTANCE ELIGIBILITY DETERMINATIONS.
                                                                        
 13    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 14        SECTION 1.  That Title 56, Idaho Code, be, and the same is hereby  amended
 15    by  the addition thereto of a NEW CHAPTER, to be known and designated as Chap-
 16    ter 11, Title 56, Idaho Code, and to read as follows:
                                                                        
 17                                      CHAPTER 11
 18                        IDAHO FAMILY ASSET BUILDING INITIATIVE
                                                                        
 19        56-1101.  DEFINITIONS.  As  used  in  this  chapter,  unless  the  context
 20    requires otherwise:
 21        (1)  "Account holder" means a member of a low-income household who is  the
 22    named depositor of an individual development account.
 23        (2)  "Board"  means  the  individual development account advisory board as
 24    established pursuant to the provisions of this chapter.
 25        (3)  "Fiduciary organization" means a nonprofit, fundraising  organization
 26    that  is  exempt from taxation under section 501(c)(3) of the Internal Revenue
 27    Code, approved by the state, including any Indian tribe as defined in  section
 28    4(12)  of the native American housing assistance and self-determination act of
 29    1996 (25 U.S.C. section 4103(12)) and any tribal subsidiary,  subdivision,  or
 30    other wholly owned tribal entity.
 31        (4)  "Financial  institution" means any state bank, national bank, savings
 32    bank, savings and loan association, credit union, insurance company, brokerage
 33    firm or other similar entity that insures the deposits of its investors and is
 34    authorized to do business in this state.
 35        (5)  "Individual development account" means a contract between an  account
 36    holder and a fiduciary organization, for the deposit of funds into a financial
 37    institution  by the account holder, and the deposit of matching funds into the
 38    financial institution by the fiduciary organization from  private  and  public
 39    contributions  made  to  the fiduciary organization for such purpose, to allow
 40    the account holder to accumulate assets for use toward  achieving  a  specific
 41    purpose approved by the fiduciary organization.
 42        (6)  "Low-income household" means a single person or family whose adjusted
                                                                        
                                           2
                                                                        
                                                                        
                                                                        
  1    annual  income  is  less than two hundred percent (200%) of the annual federal
  2    poverty guideline.
                                                                        
  3        56-1102.  LEGISLATIVE FINDINGS. The legislature finds that:
  4        (1)  The problem of poverty will not be solved solely by  government  pro-
  5    grams and income subsidies.
  6        (2)  It is in the best interest of all Idahoans to structure incentives in
  7    a  way  that  will result in a greater likelihood that low-income and working-
  8    poor individuals will attain self-sufficiency.
  9        (3)  It is in the best interest of all Idahoans  to  encourage  low-income
 10    individuals,  neighborhoods  and  communities to benefit from the developments
 11    achieved through the growth in assets and investments.
 12        (4)  Achieving self-sufficiency and  assessing  economic  opportunity  for
 13    low-income and working-poor individuals can be addressed through public policy
 14    that  invests in asset accumulation and is supported by private sector philan-
 15    thropy.
 16        (5)  Providing a structured savings situation for low-income and  working-
 17    poor  individuals  enhances  their  chances of fulfilling major life goals and
 18    opportunities and incorporates them into the economic mainstream.
 19        (6)  The state has an opportunity to take advantage of private and  public
 20    resources  by  making  the  transition to an asset-based antipoverty strategy.
 21    Those resources include, but are not limited to, the assets  for  independence
 22    act (42 U.S.C. section 604) and the workforce investment act (P.L. 105-220).
 23        (7)  Investment  through  an  individual  development account program will
 24    help lower-income households obtain the assets they need to succeed.  Communi-
 25    ties  and  this  state  will experience resultant economic and social benefits
 26    accruing from the promotion of job training and higher education, home  owner-
 27    ship and small business development.
 28        (8)  It  is  desirable for this state to enact legislation that enables an
 29    authorized fiduciary organization sufficient flexibility to  receive  private,
 30    state  and federal moneys for individual development accounts. The legislature
 31    should periodically review the provisions of this chapter to ensure that  this
 32    state  maximizes the receipt of available federal moneys for individual devel-
 33    opment accounts.
                                                                        
 34        56-1103.  PERSONS QUALIFYING AS ACCOUNT HOLDERS. (1) A person  who  quali-
 35    fies  to become an account holder may enter into an agreement with a fiduciary
 36    organization for the establishment of an individual development account.
 37        (2)  A person is qualified to become an account holder if the person is  a
 38    member of a low-income household.
 39        (3)  A  person  applying to establish an account must enroll in a personal
 40    development plan developed by the person and the fiduciary  organization.  The
 41    plan must provide the person with financial training and counseling, career or
 42    business  planning and other services designed to increase the independence of
 43    the person and the person's household through  achievement  of  the  account's
 44    approved purpose.
                                                                        
 45        56-1104.  APPROVED  PURPOSE  OF ACCOUNT -- EMERGENCY WITHDRAWAL -- REMOVAL
 46    OF ACCOUNT HOLDER FROM PROGRAM. (1)  A  person  may  establish  an  individual
 47    development  account  only for a purpose approved by a fiduciary organization.
 48    Disbursements from an account for an approved purpose shall be  made  directly
 49    by  the fiduciary organization on behalf of the account holder but in no event
 50    shall the fiduciary organization make a disbursement for an  approved  purpose
                                                                        
                                           3
                                                                        
                                                                        
                                                                        
  1    directly  to  the account holder. Purposes that the fiduciary organization may
  2    approve are:
  3        (a)  Educational costs for any family member eighteen (18) years of age or
  4        older, at an accredited institution of postsecondary education.
  5        (b)  The purchase of a primary residence. In addition to  payment  on  the
  6        purchase  price  of  the  residence, account moneys may be used to pay any
  7        usual or reasonable settlement, financing  or  other  closing  costs.  The
  8        account  holder  must  not  have owned or held any interest in a residence
  9        during the three (3) years prior to making  the  purchase.  However,  this
 10        three  (3)  year  period  shall not apply to displaced homemakers or other
 11        individuals who have lost home ownership as a result of divorce.
 12        (c)  The capitalization of a small business. Account moneys  may  be  used
 13        for  capital, plant, equipment and inventory expenses or for working capi-
 14        tal pursuant to a business plan. The business plan must have  been  devel-
 15        oped through a financial institution, nonprofit microenterprise program or
 16        other  qualified  agent  demonstrating  business  expertise  and have been
 17        approved by the fiduciary organization. The business plan must  include  a
 18        description of the services or goods to be sold, a marketing plan and pro-
 19        jected financial statements.
 20        (2) (a)  If  an  emergency  occurs,  an account holder may withdraw all or
 21        part of the account holder's deposits to an individual development account
 22        for a purpose not described in subsection (1) of this section. As used  in
 23        this  paragraph, an approved emergency includes making payments for neces-
 24        sary medical expenses, to avoid eviction of the account  holder  from  the
 25        account  holder's  residence and for necessary living expenses following a
 26        loss of employment.
 27        (b)  The account holder must reimburse the account for  the  amount  with-
 28        drawn  under  this  subsection within twelve (12) months after the date of
 29        the withdrawal. Failure of an account holder to make a  timely  reimburse-
 30        ment  to  the  account is grounds for removing the account holder from the
 31        individual development account program. Until the reimbursement  has  been
 32        made  in  full, an account holder shall not be approved for matching funds
 33        or accrued interest on matching funds.
 34        (3)  If an account holder withdraws, or directs the withdrawal, of  moneys
 35    from an individual development account for other than an approved purpose, the
 36    fiduciary organization may remove the account holder from the program.
 37        (4)  If  an  account  holder moves from the area where the program is con-
 38    ducted or is otherwise unable to continue in the program, the fiduciary  orga-
 39    nization may remove the account holder from the program.
 40        (5)  If  an  account  holder  is removed from the program under subsection
 41    (2), (3) or (4) of this section, the account holder shall retain moneys he  or
 42    she  deposited  in the account, including interest earned. In the event of the
 43    death of the account holder, moneys deposited in the account  by  the  account
 44    holder  and interest earned on those deposits shall be distributed to the des-
 45    ignated beneficiary of the account and, if there is none,  then  according  to
 46    the  laws of the state of Idaho as moneys of the estate of the account holder.
 47    If the account holder is removed from the program  or  in  the  event  of  the
 48    account  holder's death, all matching deposits in the account and all interest
 49    earned on matching deposits shall revert to the  fiduciary  organization.  The
 50    fiduciary  organization  shall  use the reverted funds as a source of matching
 51    deposits for other accounts.
                                                                        
 52        56-1105.  REQUIRED ACCOUNT FEATURES -- MATCHING MONEYS. (1) The  fiduciary
                                                                        
                                           4
                                                                        
                                                                        
                                                                        
  1    organization shall structure the accounts to have the following features:
  2        (a)  The  fiduciary  organization matches amounts deposited by the account
  3        holder according to a formula established by the  fiduciary  organization.
  4        The  fiduciary organization shall deposit not less than one dollar ($1.00)
  5        nor more than five dollars ($5.00) into the account for  each  one  dollar
  6        ($1.00) deposited by the account holder.
  7        (b)  The matching deposits by the fiduciary organization to the individual
  8        development  account are placed in a savings account that is controlled by
  9        the fiduciary organization and held separately from the savings account of
 10        the account holder.
 11        (2)  Deposits by a fiduciary organization to an account shall  not  exceed
 12    three thousand dollars ($3,000) in any twelve (12) month period.
 13        (3)  The  total  amount paid into an individual development account during
 14    its existence, including amounts from deposits, matching deposits and interest
 15    or investment earnings, may not exceed twenty thousand dollars ($20,000).
 16        (4)  Nothing in this chapter shall be construed to create  an  entitlement
 17    to  matching moneys. The number of individuals who may receive disbursement of
 18    matching philanthropic moneys by sponsoring organizations pursuant to the pro-
 19    visions of this chapter shall necessarily be limited by the amount of  philan-
 20    thropic moneys available in any given year for such purpose.
                                                                        
 21        56-1106.  INDIVIDUAL  DEVELOPMENT  ACCOUNT  ADVISORY  BOARD  -- POWERS AND
 22    DUTIES. There is hereby created the individual  development  account  advisory
 23    board.  The board shall consist of the administrator of the division of finan-
 24    cial management or his designee who shall serve as chair, the director of  the
 25    department  of  finance  or designee, the director of the department of health
 26    and welfare or designee, the director of the department of commerce or  desig-
 27    nee,  the  chairman  of  the  Idaho  state tax commission or designee, and the
 28    superintendent of public instruction or designee. A quorum shall be  necessary
 29    to  transact  business.  Members  of  the  board shall be compensated by their
 30    appointing entity. The individual development account board shall:
 31        (1)  Develop and administer the individual development account program  in
 32    a  manner  consistent with this chapter through the adoption of guidelines and
 33    procedures, and rules adopted in compliance with chapter 52, title  67,  Idaho
 34    Code;
 35        (2)  Retain  professional  services,  if necessary, including accountants,
 36    auditors, consultants and other experts;
 37        (3)  Seek rulings and other guidance, as necessary, from the United States
 38    department of the treasury, the internal revenue service  and  the  state  tax
 39    commission relating to the program;
 40        (4)  Make changes to the program required for the participants in the pro-
 41    gram  to  obtain the federal income tax benefits or treatment provided by sec-
 42    tion 529 of the Internal Revenue Code of 1986, as amended.
 43        (5)  Interpret, in rules, policies, guidelines and procedures, the  provi-
 44    sions of this chapter broadly in light of its purpose and objectives; and
 45        (6)  Approve  fiduciary organizations to implement the individual develop-
 46    ment account program and administer moneys for individual development  account
 47    purposes.  In  making the selections, the board shall consider factors includ-
 48    ing, but not limited to:
 49        (a)  The ability of the fiduciary organization to implement and administer
 50        the individual development account program, including the ability to  ver-
 51        ify  account  holder  eligibility, certify that matching deposits are used
 52        only for approved purposes and exercise general fiscal accountability;
                                                                        
                                           5
                                                                        
                                                                        
                                                                        
  1        (b)  The capacity of the fiduciary organization to provide or raise match-
  2        ing funds for the deposits of account holders;
  3        (c)  The capacity of the fiduciary organization to provide financial coun-
  4        seling and other related services to account holders;
  5        (d)  The links that the fiduciary organization has to other activities and
  6        programs designed to increase the  independence  of  this  state's  lower-
  7        income households through education and training, home ownership and small
  8        business development; and
  9        (e)  The  ability  to  meet criteria established by the federal government
 10        relating to individual development account programs.
                                                                        
 11        56-1107.  FIDUCIARY ORGANIZATIONS -- AUTHORITY AND DUTIES. (1) Subject  to
 12    rules  of the individual development account advisory board, a fiduciary orga-
 13    nization has sole authority over, and responsibility for,  the  administration
 14    of  individual development accounts. The responsibility of the fiduciary orga-
 15    nization extends to all aspects of the account program, including marketing to
 16    participants, soliciting matching contributions, counseling  account  holders,
 17    providing financial training, and conducting required verification and compli-
 18    ance  activities.  The fiduciary organization may establish program provisions
 19    as the organization believes necessary to  ensure  account  holder  compliance
 20    with the provisions of this chapter.
 21        (2)  A  fiduciary organization may act in partnership with other entities,
 22    including businesses, government agencies, nonprofit organizations,  community
 23    development  corporations,  community action programs, housing authorities and
 24    congregations to assist in the fulfillment of fiduciary organization responsi-
 25    bilities under this chapter.
 26        (3)  A fiduciary organization may use a reasonable portion of moneys allo-
 27    cated to the individual development account program for administration, opera-
 28    tion and evaluation purposes.
 29        (4)  A fiduciary organization selected to administer moneys for individual
 30    development account purposes or to receive tax deductible contributions  shall
 31    provide  the board with an annual report of the fiduciary organization's indi-
 32    vidual development account program activity. The  report  shall  be  filed  no
 33    later  than ninety (90) days after the end of the fiscal year of the fiduciary
 34    organization, or November 1 of each year, whichever occurs first.  The  report
 35    shall  include,  but not be limited to, the following information for the pre-
 36    ceding year:
 37        (a)  The number of individual development  accounts  administered  by  the
 38        fiduciary organization;
 39        (b)  The amount of deposits and matching deposits for each account;
 40        (c)  The purpose of each account;
 41        (d)  The  amount of withdrawals made for approved purposes, and the amount
 42        of withdrawals made for nonapproved purposes;
 43        (e)  The determination of whether certain donors are corporations; and
 44        (f)  Any other information the board may require for the purpose of making
 45        a return on investment analysis.
                                                                        
 46        56-1108.  PUBLIC ASSISTANCE -- ELIGIBILITY  DETERMINATION.  Moneys  in  an
 47    individual  development account established pursuant to the provisions of this
 48    chapter, or moneys withdrawn from an individual development account on  behalf
 49    of an account holder for an approved purpose, shall not be counted as an asset
 50    of  the  account  holder  for the purpose of eligibility determination for any
 51    public assistance offered by the state of Idaho or a political subdivision  of
                                                                        
                                           6
                                                                        
                                                                        
                                                                        
  1    the state of Idaho.

Statement of Purpose / Fiscal Impact


                    STATEMENT OF PURPOSE
                              
                         RS 12146C1
                              
In over 250 communities across the United States, matched savings
accounts - known as IDAs - are beginning to endow low-income families
with productive assets such as a first home, a college education, or
a small business. These assets have, through incentives from the
federal government, helped secure the American dream for millions of
families; but such assets have been and continue to be out of reach
for nearly all poor working families. This legislation lays the
groundwork necessary for IDAs to be established in Idaho and to
participate in the federal funding and tax benefits available.
Through matching the savings of low income households and providing
necessary financial training to participants, IDA s will place home
ownership, college educations, and business capitalization within
reach of Idaho s working poor.

                       FISCAL IMPACT
                              
This legislation is carefully crafted to have no fiscal impact on
state funds. The only fiscally related aspect, as it relates to state
funds, is the exception in proposed 56-1108 that would allow asset
accumulation in an IDA account without penalizing a participant for
purposes of public assistance.


Contact
Name:  Rep Kent A. Higgins
Phone: 332-1000



STATEMENT OF PURPOSE/FISCAL NOTE               H 671