I

103D CONGRESS

1ST SESSION H. R. 455

To amend title IV of the Social Security Act to remove the barriers and

disincentives in the program of aid to families with dependent children

that prevent recipients of such aid from moving toward self-sufficiency.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 6, 1993

Mr. HALL of Ohio (for himself, Mr. GRANDY, Mrs. COLLINS of Illinois, and

Mr. EMERSON) introduced the following bill; which was referred to the

Committee on Ways and Means

A BILL

To amend title IV of the Social Security Act to remove

the barriers and disincentives in the program of aid

to families with dependent children that prevent recipients of such aid from moving toward self-sufficiency.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Microenterprise and

5 Asset Development Act’’.
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1 SEC. 2. DISREGARD OF INCOME AND RESOURCES DES2 IGNATED FOR EDUCATION, TRAINING, AND

3 EMPLOYABILITY.

4 (a) DISREGARD AS RESOURCE.—Section

5 402(a)(7)(B) of the Social Security Act (42 U.S.C.

6 602(a)(7)(B)) is amended—

7 (1) by striking ‘‘or’’ before ‘‘(iv)’’; and

8 (2) by inserting ‘‘, or (v) in the case of a family

9 receiving aid under the State plan (and a family not

10 receiving such aid but which received such aid in at

11 least 1 of the preceding 4 months or became ineli12 gible for such aid during the preceding 12 months

13 because of excessive earnings), any amount not to

14 exceed $10,000 in a qualified asset account (as de15 fined in section 406(i)) of such family’’ before ‘‘;

16 and’’.

17 (b) DISREGARD AS INCOME.—

18 (1) IN GENERAL.—Section 402(a)(8)(A) of such

19 Act (42 U.S.C. 602(a)(8)(A)) is amended—

20 (A) by striking ‘‘and’’ at the end of clause

21 (vii); and

22 (B) by inserting after clause (viii) the fol23 lowing new clause:

24 ‘‘(ix) shall disregard any interest or

25 income earned on a qualified asset account

26 (as defined in section 406(i)); and’’.
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1 (2) NONRECURRING LUMP SUM EXEMPT FROM

2 LUMP SUM RULE.—Section 402(a)(17) of such Act

3 (42 U.S.C. 602(a)(17)) is amended by adding at the

4 end the following: ‘‘; and that this paragraph shall

5 not apply to earned or unearned income received in

6 a month on a nonrecurring basis to the extent that

7 such income is placed in a qualified asset account

8 (as defined in section 406(i)) the total amounts in

9 which, after such placement, does not exceed

10 $10,000;’’.

11 (3) TREATMENT AS INCOME.—Section

12 402(a)(7) of such Act (42 U.S.C. 602(a)(7)) is

13 amended—

14 (A) by striking ‘‘and’’ at the end of sub15 paragraph (B);

16 (B) by striking the semicolon at the end of

17 subparagraph (C) and inserting ‘‘; and’’; and

18 (C) by adding at the end the following new

19 subparagraph:

20 ‘‘(D) shall treat as income any distribu21 tions from a qualified asset account (as defined

22 in section 406(i)(1)) which do not meet the def23 inition of a qualified distribution under section

24 406(i)(2);’’.
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1 (c) QUALIFIED ASSET ACCOUNTS.—Section 406 of

2 such Act (42 U.S.C. 606) is amended by adding at the

3 end the following:

4 ‘‘(i)(1) The term ‘qualified asset account’ means a

5 mechanism approved by the State (such as individual re6 tirement accounts, escrow accounts, or savings bonds) that

7 allows savings of a family receiving aid to families with

8 dependent children to be used for qualified distributions.

9 ‘‘(2) The term ‘qualified distributions’ means dis10 tributions for expenses directly related to 1 or more of

11 the following purposes:

12 ‘‘(A) The attendance of a member of the family

13 at any education or training program.

14 ‘‘(B) The improvement of the employability (in15 cluding self-employment) of a member of the family

16 (such as through the purchase of an automobile).

17 ‘‘(C) The purchase of a home for the family.

18 ‘‘(D) A change of the family residence.’’.

19 (d) STUDY OF USE OF QUALIFIED ASSET ACCOUNTS;

20 REPORT.—The Secretary of Health and Human Services

21 shall conduct a study of the use of qualified asset accounts

22 established pursuant to the amendments made by this sec23 tion, and shall report on such study and any recommenda24 tions for modifications of such amendments to the Com25 mittee on Finance of the Senate and the Committee on
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1 Ways and Means of the House of Representatives not later

2 than January 1, 1996.

3 (e) REPORT ON AFDC ASSET LIMIT ON AUTO4 MOBILES.—Within 3 months after the date of the enact5 ment of this section, the Secretary of Health and Human

6 Services shall submit to the Congress a report on—

7 (1) the need to revise the limitation, established

8 in regulations pursuant to section 402(a)(7)(B)(i) of

9 the Social Security Act, on the value of a family

10 automobile required to be disregarded by a State in

11 determining the eligibility of the family for aid to

12 families with dependent children under the State

13 plan approved under part A of title IV of such Act;

14 and

15 (2) the extent to which such a revision would

16 increase the employability of recipients of such aid.

17 (f) EFFECTIVE DATE.—The amendments made by

18 this section shall take effect on October 1, 1993.

19 SEC. 3. DISREGARD OF INCOME AND RESOURCES RELATED

20 TO SELF-EMPLOYMENT.

21 (a) STATE PLAN REQUIREMENTS.—Section 402(a)

22 of the Social Security Act (42 U.S.C. 602(a)) is amend23 ed—

24 (1) by striking ‘‘and’’ at the end of paragraph

25 (44);
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1 (2) by striking the period at the end of para2 graph (45) and inserting ‘‘; and’’; and

3 (3) by inserting after paragraph (45) the fol4 lowing:

5 ‘‘(46) provide that the State agency—

6 ‘‘(A)(i) shall not include as a resource of

7 the family of which a child referred to in para8 graph (7)(A) is a member, for purposes of

9 paragraph (7)(B), the first $10,000 of the net

10 worth (assets reduced by liabilities with respect

11 thereto) of all microenterprises (as defined in

12 section 406(j)(1)) owned, in whole or in part,

13 by the child or by a relative or other individual

14 referred to in paragraph (7)(A), for a period

15 not to exceed 2 years; and

16 ‘‘(ii) shall take into consideration as

17 earned income of the family of which the child

18 is a member, only the net profits (as defined in

19 section 406(j)(2)) of such microenterprises, for

20 a period not to exceed 2 years; and

21 ‘‘(B) shall ensure that caseworkers are

22 able to properly advise recipients of aid under

23 the State plan of the option of microenterprise

24 as a legitimate route towards self-sufficiency,

25 and that caseworkers encourage recipients of
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1 such aid who are interested in starting a

2 microenterprise to participate in a program de3 signed to assist them in such effort.’’.

4 (b) DEFINITIONS.—Section 406 of such Act (42

5 U.S.C. 606), as amended by section 2(c) of this Act, is

6 amended by adding at the end the following:

7 ‘‘(j)(1) The term ‘microenterprise’ means a commer8 cial enterprise which has 5 or fewer employees, 1 or more

9 of whom owns the enterprise.

10 ‘‘(2) The term ‘net profits’ means, with respect to

11 a microenterprise, the gross receipts of the business,

12 minus—

13 ‘‘(A) payments of principal or interest on a loan

14 to the microenterprise;

15 ‘‘(B) transportation expenses;

16 ‘‘(C) inventory costs;

17 ‘‘(D) expenditures to purchase capital equip18 ment;

19 ‘‘(E) cash retained by the microenterprise for

20 future use by the business;

21 ‘‘(F) taxes paid by reason of the business;

22 ‘‘(G) if the business is covered under a policy

23 of insurance against loss—

24 ‘‘(i) the premiums paid for such insurance;

25 and
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1 ‘‘(ii) the losses incurred by the business

2 that are not reimbursed by the insurer solely by

3 reason of the existence of a deductible with re4 spect to the insurance policy;

5 ‘‘(H) the reasonable costs of obtaining 1 motor

6 vehicle necessary for the conduct of the business;

7 and

8 ‘‘(I) the other expenses of the business.’’.

9 (c) INCLUSION OF MICROENTERPRISE TRAINING AND

10 ACTIVITIES IN THE JOBS PROGRAM.—

11 (1) IN GENERAL.—Section 482(d)(1) of such

12 Act (42 U.S.C. 682(d)(1)) is amended by adding at

13 the end the following:

14 ‘‘(C) The services and activities referred to in sub15 paragraph (A)—

16 ‘‘(i) in the case that at least 3 percent of the

17 adult recipients of aid under the State plan approved

18 under part A (as of the close of the immediately pre19 ceding fiscal year) elect to participate in

20 microenterprise activities, shall include programs de21 scribed in paragraph (4); or

22 ‘‘(ii) in the case that not more than 3 percent

23 of the adult recipients of such aid elect to partici24 pate in microenterprise activities, may include pro25 grams described in paragraph (4).’’.
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1 (2) MICROENTERPRISE PROGRAMS.—Section

2 482(d) of such Act (42 U.S.C. 682(d)) is amended

3 by adding at the end the following:

4 ‘‘(4) The programs described in this paragraph are

5 programs of public and private organizations, agencies,

6 and other entities (including nonprofit and for-profit enti7 ties) to enable such entities to facilitate economic develop8 ment by—

9 ‘‘(A) providing technical assistance, advice, and

10 business support services (including assistance, ad11 vice, and support relating to business planning, fi12 nancing, marketing, and other microenterprise devel13 opment activities) to owners of microenterprises and

14 persons developing microenterprises; and

15 ‘‘(B) providing general support (such as peer

16 support and self-esteem programs) to owners of

17 microenterprises and persons developing

18 microenterprises.’’.

19 (d) EFFECTIVE DATE.—The amendments made by

20 this section shall apply to payments under part A of title

21 IV of the Social Security Act for calendar quarters begin22 ning on or after October 1, 1993.

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