By: Naishtat H.B. No. 2450
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. Chapter 403, Government Code, is amended by
adding Subchapter O to read as follows:
SUBCHAPTER O. ASSET DEVELOPMENT INITIATIVE
FOR LOW-INCOME INDIVIDUALS AND HOUSEHOLDS
Sec. 403.501. DEFINITIONS. In this subchapter:
(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 a program.
(4) "Program" means the individual development
account program established by the comptroller under this
subchapter.
(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 insurance company;
(E) a provider of goods or services used for home
repairs;
(F) the lessor or vendor of office supplies or
equipment or retail space, office space, or other business space;
(G) the vendor of an automobile; and
(H) any other provider of goods or services used
for the commencement of a business.
(7) "Sponsoring organization":
(A) means a nonprofit organization that is:
(i) exempt from taxation under Section
501(c)(3), Internal Revenue Code of 1986; and
(ii) selected by the comptroller to
establish and administer individual development accounts under the
program; and
(B) includes an Indian tribe, as defined by
Section 4(12) of the Native American Housing Assistance and
Self-Determination Act of 1996 (25 U.S.C. Section 4103(12)),
including any tribal subsidiary, division, or other wholly owned
tribal entity of an Indian tribe.
Sec. 403.502. ESTABLISHMENT OF PROGRAM; RULES. (a) The
comptroller by rule may 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 comptroller shall contract with sponsoring
organizations to establish and administer the accounts in
accordance with the rules adopted by the comptroller.
(c) In adopting rules under the program, the comptroller
shall state the selection criteria for sponsoring organizations.
Sec. 403.503. PARTICIPANT ELIGIBILITY. (a) The
comptroller by rule shall establish eligibility criteria for
participants.
(b) The eligibility criteria established by the comptroller
must:
(1) require an eligible individual or member of an
eligible household, other than an eligible individual or member of
an eligible household receiving supplemental security income or
other public disability payments, to agree to make any
contributions to the individual's or household's individual
development account from the individual's or household's earned
income; and
(2) provide that the annual 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.
(c) The comptroller may establish different eligibility
criteria for participants receiving matching funds from different
sources.
Sec. 403.504. 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) Except as provided by Subsection (d), 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 necessary home repairs;
(4) the expenses of a self-employment enterprise;
(5) start-up business expenses for the adult account
holder; and
(6) the purchase of a used automobile if the
automobile is necessary for the participant or a member of the
participant's household to hold employment, including any need to
transport a child to a day care facility in order to be able to hold
employment.
(d) A participant may withdraw money contributed by the
participant to the participant's account to pay for expenses
relating to a personal crisis of the adult account holder or the
account holder's dependent child, including expenses relating to
illness, eviction, potential foreclosure, loss of employment, and
urgent family business.
Sec. 403.505. 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 participating agency under Section 403.503;
(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 403.504(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 403.507; 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 subchapter.
Sec. 403.506. MATCHING FUNDS; LIMITATIONS ON AMOUNT AND
AVAILABILITY. (a) Subject to the availability of matching funds,
at the time a participant in a 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 comptroller 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 a program in any
year is limited by the amount of funds available for that purpose in
that year.
Sec. 403.507. 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 403.504(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. 403.508. FUNDING. (a) The legislature may
appropriate money for the purposes of this chapter.
(b) A participating agency may accept gifts, grants, and
donations from any public or private source for the purposes of this
chapter.
Sec. 403.509. COORDINATION. (a) The comptroller shall
establish a division within the office of the comptroller to:
(1) serve as an information clearing house about state
and local, public and private, programs that facilitate asset
development among low-income families, including:
(A) earned income tax credit outreach
initiatives;
(B) financial literacy education;
(C) banks and other financial institutions that
provide low-cost savings options to low-income families, such as
free savings and checking accounts, individual development
accounts, 529 plans, the Texas Tomorrow fund, individual retirement
accounts, and 401(k) plans; and
(D) information regarding public and private
funding sources for earned income tax credit outreach, financial
literacy education, and matched savings accounts reserved for
equity-building purposes;
(2) publicize the availability of earned income tax
credits and other tax credits through statewide media campaigns and
other appropriate efforts; and
(3) partner with banks, nonprofit corporations,
chambers of commerce, the internal revenue service, and state
agencies that offer earned income tax credit outreach, financial
literacy education, or low-cost savings and investment options, to:
(A) help low-income individuals establish a
relationship with mainstream financial institutions;
(B) improve and expand financial service options
for working families;
(C) inform low-income individuals about the high
cost and liability of acquiring short term loans from tax refund
vendors;
(D) expand micro-enterprise efforts to encourage
more business opportunities for low and moderate income
individuals; and
(E) educate low income individuals about
low-cost savings and investment options, such as individual
development accounts, and the importance of saving;
(4) work with financial institutions and lending
institutions to encourage those institutions to:
(A) offer low-cost investment options; and
(B) expand programs that offer low-interest,
low-downpayment loans and refinancing packages to first-time and
low-income homebuyers;
(5) adopt statewide asset building performance
indicators to gauge state progress on providing opportunities for
asset development, asset protection, and economic mobility;
(6) examine the impact and feasibility of policies to
encourage children's savings accounts; and
(7) examine the impact of asset policies in public
assistance programs by analyzing information collected by the
Health and Human Services Commission under Section 531.078.
(b) The comptroller shall post the information described by
Subsection (a)(1) on the comptroller's Internet website.
(c) In this section, "public assistance program" includes:
(1) the nutritional assistance programs under Chapter
33, Human Resources Code;
(2) the financial assistance program under Chapter 31,
Human Resources Code;
(3) the child health plan program under Chapter 62,
Health and Safety Code; and
(4) the medical assistance program under Chapter 32,
Human Resources Code.
SECTION 2. Subchapter B, Chapter 531, Government Code, is
amended by adding Section 531.078 to read as follows:
Sec. 531.078. ASSET INFORMATION. (a) (c) In this section,
"public assistance program" includes:
(1) the nutritional assistance programs under Chapter
33, Human Resources Code;
(2) the financial assistance program under Chapter 31,
Human Resources Code;
(3) the child health plan program under Chapter 62,
Health and Safety Code; and
(4) the medical assistance program under Chapter 32,
Human Resources Code.
(b) The commission or the commission's contractor shall
collect information regarding the assets of low-income
individuals, including:
(1) applicants for public assistance programs who are
denied benefits or assistance because of program asset rules; and
(2) recipients of benefits under public assistance
programs described under Subdivision (1).
(c) Information collected under Subsection (a) must
include:
(1) the value of the individual's automobile, if any;
(2) the amount of money in savings or checking
accounts, if any; and
(3) the value of any other liquid or non-liquid assets
used to determine eligibility for a program described by Subsection
(a)(1).
(d) The commission shall provide the information obtained
under this section to the comptroller as necessary to implement
Subchapter O, Chapter 403.
SECTION 3. (a) The executive commissioner of the Health and
Human Services Commission shall collect the initial information
required under Section 531.078, Government Code, as added by this
Act, not later than the 90th day after the effective date of this
Act.
(b) The comptroller shall develop and implement the
individual development account program established under
Subchapter O, Chapter 403, Government Code, as added by this Act, as
soon as practicable but not later than the 180th day after the
effective date of this Act.
SECTION 4. This Act takes effect September 1, 2005.