By: Zaffirini S.B. No. 62

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 individuals and 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) "Assets for Independence Act" means the federal Assets for Independence Act (42 U.S.C. Section 604 note).

(2) "Financial institution" has the meaning assigned by Section 201.101, Finance Code.

(3) "Individual development account" means a deposit account established by a participant at a financial institution selected by a sponsoring organization.

(4) "Participant" means an individual or household that has entered into an agreement with a sponsoring organization to participate in the program.

(5) "Program" means the individual development account program established under this subchapter.

(6) "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 start of a business.

(7) "Sponsoring organization" has the meaning assigned to "qualified entity" by Section 404(7), Assets for Independence Act.

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;

(2) sponsoring organizations are provided grant funds for use in administering the program and matching qualified expenditures made by program participants; and

(3) at least 85 percent of the grant funds described by Subdivision (2) 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 must include guidelines for contract monitoring, reporting, termination, and recapture of state funds.

(c) In adopting rules under the program, the comptroller shall state the selection criteria for sponsoring organizations and give priority to organizations that have demonstrated:

(1) a capacity to administer individual development account programs; and

(2) a commitment to serve areas of this state that currently do not have individual development account programs available.

Sec. 403.503. PARTICIPANT ELIGIBILITY. The comptroller by rule shall establish eligibility criteria for participation in the program that are consistent with the purposes of the program and with the 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 adopt rules to establish the duties of sponsoring organizations under the program.

(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 the comptroller's rules.

Sec. 403.506. MATCHING FUNDS; LIMITATIONS ON AMOUNT AND AVAILABILITY. (a) At the time a participant in the program makes a withdrawal from the participant's individual development account for a qualified expenditure described by Section 403.504(c), the participant shall receive matching funds from the sponsoring organization, payable directly to the service provider.

(b) If 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 Assets for Independence Act. If money other than 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. WITHDRAWALS; TERMINATION OF ACCOUNT FOR UNQUALIFIED WITHDRAWALS. (a) The comptroller by rule shall establish guidelines to ensure that a participant does not withdraw money from the participant's individual development account, except for a qualified expenditure described by Section 403.504(c).

(b) The sponsoring organization shall instruct the financial institution to terminate a participant's account if the participant does not comply with the guidelines established by comptroller rule.

(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. This Act takes effect September 1, 2007.