This website will be unavailable from Thursday, May 30, 2024 at 6:00 p.m. through Monday, June 3, 2024 at 7:00 a.m. due to data center maintenance.
78R4749 KSD-D
By: Naishtat H.B. No. 2213
A BILL TO BE ENTITLED
AN ACT
relating to the creation of the individual development account
program to provide savings incentives and opportunities to eligible
low-income, working individuals.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle B, Title 4, Labor Code, is amended by
adding Chapter 312 to read as follows:
CHAPTER 312. INDIVIDUAL DEVELOPMENT ACCOUNT PROGRAM
Sec. 312.001. DEFINITIONS. In this chapter:
(1) "Financial institution" has the meaning assigned
by Section 201.101, Finance Code.
(2) "Individual development account" means a deposit
account established by a participant at a financial institution
selected by a sponsoring organization.
(3) "Participant" means an individual or household
that has entered into an agreement with a sponsoring organization
to participate in the program.
(4) "Program" means the individual development
account program established under this chapter.
(5) "Service provider" means a person to whom a
qualified expenditure from a participant's individual development
account is made. The term includes:
(A) a public or private institution of higher
education;
(B) a provider of occupational or vocational
education, including a proprietary school;
(C) a mortgage lender;
(D) a title company;
(E) the lessor or vendor of office supplies or
equipment or retail space, office space, or other business space;
and
(F) any other provider of goods or services used
for the commencement of a business.
(6) "Sponsoring organization" means a nonprofit
organization that is:
(A) exempt from taxation under Section
501(c)(3), Internal Revenue Code of 1986 (26 U.S.C. Section
501(c)(3)); and
(B) selected by the commission to establish and
administer individual development accounts under the program.
Sec. 312.002. ESTABLISHMENT OF PROGRAM; RULES. (a) The
commission by rule shall develop and implement a program under
which individual development accounts are established for eligible
low-income individuals to provide those individuals with an
opportunity to accumulate assets and to facilitate and mobilize
savings.
(b) The commission shall contract with sponsoring
organizations to establish and administer the accounts in
accordance with commission rules.
(c) In adopting rules under the program, the commission
shall state the selection criteria for sponsoring organizations.
Sec. 312.003. PARTICIPANT ELIGIBILITY. (a) The commission
by rule shall establish eligibility criteria for participants.
(b) The eligibility criteria established by the commission
must:
(1) require an eligible individual or member of an
eligible household to be employed by the public or private sector;
and
(2) provide that the income of an eligible individual
or household may not exceed 200 percent of the poverty level
according to the federal Office of Management and Budget poverty
index when applied to the savings goals of the individual or
household.
(c) The commission may establish different eligibility
criteria for participants receiving matching funds from different
sources.
Sec. 312.004. CONTRIBUTIONS AND EXPENDITURES BY
PARTICIPANT. (a) A participant may contribute to the
participant's individual development account.
(b) A participant's contributions to the participant's
individual development account shall accrue interest.
(c) A participant may withdraw money from the participant's
account only to pay for the following qualified expenditures:
(1) postsecondary educational or training expenses
for the adult account holder and dependent children;
(2) the expenses of purchasing or financing a home for
the adult account holder for the first time;
(3) the expenses of a self-employment enterprise;
(4) start-up business expenses for the adult account
holder; and
(5) emergency expenses.
Sec. 312.005. DUTIES OF SPONSORING ORGANIZATIONS. Each
sponsoring organization shall:
(1) recruit low-income individuals or households
employed by the public or private sector to participate in the
program;
(2) determine the eligibility of individuals or
households to participate in the program based on the criteria
established by the commission under Section 312.003;
(3) conduct orientations for prospective participants
on the philosophy underlying the program and the general
requirements of the program;
(4) facilitate the opening of an individual
development account for each participant at a participating
financial institution to enable the participant to save money for
qualified expenditures described by Section 312.004(c);
(5) provide credit counseling, budgeting, and
financial management training to each participant;
(6) assist each participant in developing specific
goals and performance criteria for the participant's account;
(7) monitor contributions to and withdrawals from each
individual development account to ensure that any applicable limits
on withdrawals are not exceeded;
(8) instruct a financial institution to terminate a
participant's individual development account if termination is
required by Section 312.007; and
(9) solicit matching funds from any public or private
source to be used to match the contributions made by participants to
individual development accounts under this chapter.
Sec. 312.006. MATCHING FUNDS; LIMITATIONS ON AMOUNT AND
AVAILABILITY. (a) Subject to the availability of matching funds,
at the time a participant in the program makes a qualified
expenditure from the participant's account, the participant shall
receive matching funds from the sponsoring organization, payable
directly to the service provider, at the time of the eligible
individual's expenditure of the money.
(b) If federal Temporary Assistance for Needy Families
(TANF) funds are used as matching funds, the amount of matching
funds expended for each individual development account may not
exceed $2,000 a year. If funds other than TANF funds are used as
matching funds, the commission by rule may set a different limit on
the amount of matching funds that may be expended per account per
year.
(c) This chapter may not be construed to create an
entitlement of a participant to receive matching funds. The number
of participants who receive matching funds under the program in any
year is limited by the amount of funds available for that purpose in
that year.
Sec. 312.007. TERMINATION OF ACCOUNT FOR UNQUALIFIED
WITHDRAWALS. (a) A participant may withdraw contributions made by
the participant to the participant's individual development
account for a purpose other than for a qualified expenditure
described by Section 312.004(c) only once. The participant's
account terminates if the participant again withdraws
contributions for a purpose other than for a qualified expenditure.
(b) A participant whose account is terminated under this
section is entitled to withdraw from the participant's account the
amount of money contributed to the account by the participant and
any interest that has accrued on that amount.
Sec. 312.008. FUNDING. (a) The legislature may
appropriate money for the purposes of this chapter.
(b) The commission may accept gifts, grants, and donations
from any public or private source for the purposes of this chapter.
SECTION 2. As soon as possible after the effective date of
this Act, the Texas Workforce Commission shall develop and
implement the individual development account program required by
Chapter 312, Labor Code, as added by this Act.
SECTION 3. This Act takes effect September 1, 2003.