Print Friendly HOUSE BILL NO. 671 – Individual dvlpmnt accts/low-income
HOUSE BILL NO. 671
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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,
Absent and excused -- Clark, Ellis, Field(13), Gould, Mortensen,
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
03/15 To Governor
03/20 Governor signed
Session Law Chapter 149
|||| 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
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-
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
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
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
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;
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
1 the state of Idaho.
STATEMENT OF PURPOSE
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.
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.
Name: Rep Kent A. Higgins
STATEMENT OF PURPOSE/FISCAL NOTE H 671