JKC C.S.H.B. 2125 75(R)BILL ANALYSIS HUMAN SERVICES H.B. 2125 By: Maxey 4-28-97 Committee Report (Substituted) BACKGROUND An important component of building economic security can be the accumulation of assets. Across the country, states such as Virginia, Arizona, and Massachusetts have implemented Individual Development Accounts (IDAs) as a mechanism for welfare recipients to accumulate savings for specific purposes without being penalized for accruing resources. IDAs are based on the idea that economic growth and long-term security are achieved through savings and asset accumulation rather than through income and consumption. IDAs build families, communities, and economies, increase savings, and develop assets and enduring escapes from poverty. Individual Development Accounts (IDAs) are dedicated savings accounts, similar in structure to Individual Retirement Accounts (IRAs). IDAs may be used only for educational and medical expenses, work-related expenses, purchasing a first home, capitalizing a small business and moving expenses. IDAs were first introduced in Texas as a pilot project in HB 1863 from the 74th Legislature. PURPOSE This legislation directs the Texas Workforce Commission to develop and implement a pilot project that would set up an individual development account for employees in work subsidy programs and directs the Workforce Commission to work with local community organizations to encourage these organizations to contribute to the individual development accounts. RULEMAKING AUTHORITY This legislation provides rulemaking authority to the commission in SECTION 1, Section 31.067(a) and in SECTION 2, Section 31.0321(b). SECTION BY SECTION ANALYSIS Sec. 301.067. Pilot Program: Individual Development Accounts for Certain Employees. (a)Directs the Texas Workforce Commission, by rule, to establish individual development accounts (IDAs) for individuals participating in subsidized work programs. (b)Directs the commission to establish and administer the account or contract with an outside organization to establish and administer the accounts. (c)Directs the commission to encourage the following to match deposits made to individual development accounts (IDAs): (1)private employers; (2)community groups; and (3)financial institutions. (d)Limits the items on which the money in the account may be spent. (e)Directs the commission to report to the governor and the legislature not later than December 1, 1998 and December 1, 2000. (f)Expiration Date: September 1, 2001. SECTION 2.Subchapter B, Chapter 31, Human Resources Code, amends Section 31.0321 as follows: Sec. 31.0321.Exclusion of Certain Income and Resources. (a)The Department of Human Services may not consider the money contributed to the individual development account (IDA) when determining eligibility for financial assistance, except as provided in Subsection (b). (b)After consulting with the Texas Workforce Commission, the Department of Human Services (DHS), by rule, may place limits on the amount of money not considered as income under Subsection (a). (c)Expiration Date: September 1, 2001. SECTION 3.Allows DHS to postpone implementation of the program if it is determined that a federal waiver is necessary for implementation. SECTION 4.Emergency Clause. COMPARISON OF ORIGINAL TO SUBSTITUTE 1)SECTION 1.The bill now refers to Subchapter D, Chapter 301, Labor Code because the responsibility for the pilot project was given to the Texas Workforce Commission. 2)SECTION 1.Section 301.067 is added, which sets up the individual development accounts (IDAs) as a pilot project rather than as a statewide initiative. Language is added to this section which defines the parameters of the pilot project. The Workforce Commission, rather than the private employer, is directed to set up the IDAs. The employer is no longer required to contribute to the IDAs. Instead, the Workforce Commission is directed to work with the community to encourage organizations to contribute voluntarily to IDAs. 3)SECTION 2.This section is changed to direct the Department of Human Services (DHS) to develop, by rule, how much of the income in the account may be considered when determining eligibility for financial assistance. Additionally, it allows DHS to place limits on the amount of money placed in the account.