By: Barrientos, et al. S.B. No. 1538
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 or households.
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 CERTAIN 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 the program.
(4) "Program" means the individual development
account program established 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) 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":
(A) means a nonprofit organization that is:
(i) exempt from taxation under Section
501(a), Internal Revenue Code of 1986, as an organization described
by Section 501(c)(3) of that code; 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:
(1) individual development accounts are facilitated
and administered by sponsoring organizations for eligible
low-income individuals and households to provide those individuals
and households with an opportunity to accumulate assets and to
facilitate and mobilize savings; and
(2) sponsoring organizations are provided grant funds
for use in administering the program and matching qualified
expenditures made by program participants. At least 85 percent of
the grant funds must be used by the sponsoring organization for
matching qualified expenditures.
(b) The comptroller shall contract with sponsoring
organizations to facilitate the establishment of and to administer
the individual development accounts in accordance with the rules
adopted by the comptroller. The comptroller's rules promulgated to
implement this subchapter shall include guidelines for contract
monitoring, reporting, and termination of grant recipients.
(c) In adopting rules under the program, the comptroller
shall state the selection criteria for sponsoring organizations.
The comptroller shall give priority to organizations that have
demonstrated:
(1) a capacity to administer individual account
programs; and
(2) a commitment to serve areas of the state that
currently do not have individual development account programs
available.
Sec. 403.503. PARTICIPANT ELIGIBILITY. (a) The
comptroller by rule shall establish eligibility criteria for
participants in the program.
(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 regular
contributions to the individual's or household's individual
development account from the individual's or household's earned
income;
(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;
(3) establish the rate at which a participant's
contributions to the individual development account may be matched,
not to exceed the match rate established by the federal Assets for
Independence Act (Pub. L. No. 105-285); and
(4) establish limits on the amount of matching funds a
participant is eligible to receive, not to exceed the limit on
federal matching funds established by the federal Assets for
Independence Act.
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) 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; and
(4) start-up business expenses for the adult account
holder.
Sec. 403.505. DUTIES OF SPONSORING ORGANIZATIONS. (a) The
comptroller shall promulgate rules that establish the duties of
sponsoring organizations that shall include recruiting
requirements, standards for determination of eligibility of
participants, education of participants, operations and account
management, solicitation of matching funds and such other subjects
as may be deemed necessary by the comptroller to carry out the
purposes and objectives of this subchapter.
(b) Each sponsoring organization shall provide to the
comptroller any information necessary to evaluate the sponsoring
organization's performance in fulfilling the duties outlined in
Subsection (a).
Sec. 403.506. MATCHING FUNDS; LIMITATIONS ON AMOUNT
AND AVAILABILITY. (a) At the time a participant in the program
makes a withdrawal for a qualified expenditure described by Section
403.504(c) from the participant's individual development account,
the participant shall receive matching funds from the sponsoring
organization, payable directly to the service provider.
(b) If federal Assets for Independence Act money is used as
matching funds, the amount of federal matching funds spent for each
individual development account may not exceed the limits
established by the federal Assets for Independence Act. If money
other than federal Assets for Independence Act money is used as
matching funds, the comptroller by rule may set a different limit on
the amount of matching funds that may be spent for each account.
(c) This subchapter 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. 403.507. TERMINATION OF ACCOUNT FOR UNQUALIFIED
WITHDRAWALS. (a) The comptroller by rule shall establish
guidelines to ensure that a participant does not withdraw funds in
the individual development account, except for a qualified
expenditure described by Section 403.504(c). These guidelines
shall:
(1) include a requirement that a sponsoring
organization approve a participant's request to make a withdrawal
from an individual development account in writing;
(2) provide that no participant may withdraw funds
from an individual development account earlier than six months
after the date on which the participant first deposits funds in the
account; and
(3) require a participant to reimburse the individual
development account for any funds withdrawn for a purpose other
than for a qualified expenditure described by Section 403.504(c).
(b) The sponsoring organization shall instruct the
financial institution to terminate the participant's account if the
participant does not comply with the guidelines established under
Subsection (a).
(c) A participant whose individual development account is
terminated under this section is entitled to withdraw from the
participant's account the amount of money the participant
contributed to the account and any interest that has accrued on that
amount.
Sec. 403.508. FUNDING. (a) The legislature may
appropriate money for the purposes of this subchapter.
(b) The comptroller may accept gifts, grants, and donations
from any public or private source for the purposes of this
subchapter.
Sec. 403.509. COORDINATION. The comptroller shall:
(1) serve as a clearinghouse for information relating
to state and local and public and private programs that facilitate
asset development among low-income families; and
(2) post the information described by Subdivision (1)
on the comptroller's Internet website.
Sec. 403.510. INTERAGENCY CONTRACTS. The comptroller may
enter into interagency contracts with other state agencies to
facilitate the effective administration of this subchapter.
Sec. 403.511. AGENCY COOPERATION. To the extent allowed by
law, the Health and Human Services Commission shall provide
information to the comptroller as necessary to implement this
subchapter.
SECTION 2. The comptroller of public accounts 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 3. This Act takes effect September 1, 2005.