II

105TH CONGRESS

1ST SESSION S. 1106

To provide for the establishment of demonstration projects designed to determine the social, civic, psychological, and economic effects of providing

to individuals and families with limited means an opportunity to accumulate assets, and to determine the extent to which an asset-based policy

may be used to enable individuals and families with limited means to

achieve economic self-sufficiency.

IN THE SENATE OF THE UNITED STATES

JULY 31, 1997

Mr. COATS introduced the following bill; which was read twice and referred

to the Committee on Finance

A BILL

To provide for the establishment of demonstration projects

designed to determine the social, civic, psychological, and

economic effects of providing to individuals and families

with limited means an opportunity to accumulate assets,

and to determine the extent to which an asset-based

policy may be used to enable individuals and families

with limited means to achieve economic self-sufficiency.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

2 (a) SHORT TITLE.—This Act may be cited as the

3 ‘‘Assets for Independence Act’’.

4 (b) TABLE OF CONTENTS.—The table of contents of

5 this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings.

Sec. 3. Purposes.

Sec. 4. Definitions.

Sec. 5. Applications.

Sec. 6. Demonstration authority; annual grants.

Sec. 7. Reserve fund.

Sec. 8. Eligibility for participation.

Sec. 9. Selection of individuals to participate.

Sec. 10. Deposits by qualified entities.

Sec. 11. Local control over demonstration projects.

Sec. 12. Annual progress reports.

Sec. 13. Sanctions.

Sec. 14. Evaluations.

Sec. 15. Authorizations of appropriations.

Sec. 16. Funds in individual development accounts of demonstration project

participants disregarded for purposes of all means-tested Federal programs.

6 SEC. 2. FINDINGS.

7 Congress makes the following findings:

8 (1) Economic well-being does not come solely

9 from income, spending, and consumption, but also

10 requires savings, investment, and accumulation of

11 assets because assets can improve economic inde12 pendence and stability, connect individuals with a

13 viable and hopeful future, stimulate development of

14 human and other capital, and enhance the welfare of

15 offspring.

(2) Fully 1 16 ⁄2 of all Americans have either no,

17 negligible, or negative assets available for invest-
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1 ment, just as the price of entry to the economic

2 mainstream, the cost of a house, an adequate edu3 cation, and starting a business, is increasing. Fur4 ther, the household savings rate of the United States

5 lags far behind other industrial nations presenting a

6 barrier to economic growth.

7 (3) In the current tight fiscal environment, the

8 United States should invest existing resources in

9 high-yield initiatives. There is reason to believe that

10 the financial returns, including increased income, tax

11 revenue, and decreased welfare cash assistance, re12 sulting from individual development accounts will far

13 exceed the cost of investment in those accounts.

14 (4) Traditional public assistance programs con15 centrating on income and consumption have rarely

16 been successful in promoting and supporting the

17 transition to increased economic self-sufficiency. In18 come-based domestic policy should be complemented

19 with asset-based policy because, while income-based

20 policies ensure that consumption needs (including

21 food, child care, rent, clothing, and health care) are

22 met, asset-based policies provide the means to

23 achieve greater independence and economic well24 being.
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1 SEC. 3. PURPOSES.

2 The purposes of this Act are to provide for the estab3 lishment of demonstration projects designed to deter4 mine—

5 (1) the social, civic, psychological, and economic

6 effects of providing to individuals and families with

7 limited means an incentive to accumulate assets by

8 saving a portion of their earned income;

9 (2) the extent to which an asset-based policy

10 that promotes saving for education, homeownership,

11 and microenterprise development may be used to en12 able individuals and families with limited means to

13 increase their economic self-sufficiency; and

14 (3) the extent to which an asset-based policy

15 stabilizes and improves families and the community

16 in which they live.

17 SEC. 4. DEFINITIONS.

18 In this Act:

19 (1) APPLICABLE PERIOD.—The term ‘‘applica20 ble period’’ means, with respect to amounts to be

21 paid from a grant made for a project year, the cal22 endar year immediately preceding the calendar year

23 in which the grant is made.

24 (2) ELIGIBLE INDIVIDUAL.—The term ‘‘eligible

25 individual’’ means an individual who is selected to
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1 participate by a qualified entity under section 9 of

2 this Act.

3 (3) HOUSEHOLD.—The term ‘‘household’’

4 means all individuals who share use of a dwelling

5 unit as primary quarters for living and eating sepa6 rate from other individuals.

7 (4) INDIVIDUAL DEVELOPMENT ACCOUNT.—

8 (A) IN GENERAL.—The term ‘‘individual

9 development account’’ means a trust created or

10 organized in the United States exclusively for

11 the purpose of paying the qualified expenses of

12 an eligible individual, but only if the written

13 governing instrument creating the trust meets

14 the following requirements:

15 (i) No contribution will be accepted

16 unless it is in cash or by check.

17 (ii) The trustee is a federally insured

18 financial institution.

19 (iii) The assets of the trust will be in20 vested in accordance with the direction of

21 the eligible individual after consultation

22 with the qualified entity providing deposits

23 for the individual under section 10 of this

24 Act.
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1 (iv) The assets of the trust will not be

2 commingled with other property except in

3 a common trust fund or common invest4 ment fund.

5 (v) Except as provided in clause (vi),

6 any amount in the trust which is attrib7 utable to a deposit provided under section

8 10 of this Act may be paid or distributed

9 out of the trust only for the purpose of

10 paying the qualified expenses of the eligible

11 individual.

12 (vi) Any balance in the trust on the

13 day after the date on which the individual

14 for whose benefit the trust is established

15 dies shall be distributed within 30 days of

16 that date as directed by that individual to

17 another individual development account es18 tablished for the benefit of an eligible indi19 vidual.

20 (B) CUSTODIAL ACCOUNTS.—For purposes

21 of subparagraph (A), a custodial account shall

22 be treated as a trust if the assets of the custo23 dial account are held by a bank (as defined in

24 section 408(n) of the Internal Revenue Code of

25 1986) or another person who demonstrates, to
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1 the satisfaction of the Secretary, that the man2 ner in which such person will administer the

3 custodial account will be consistent with the re4 quirements of this Act, and if the custodial ac5 count would, except for the fact that it is not

6 a trust, constitute an individual development

7 account described in subparagraph (A). For

8 purposes of this Act, in the case of a custodial

9 account treated as a trust by reason of the pre10 ceding sentence, the custodian of that custodial

11 account shall be treated as the trustee thereof.

12 (5) NON-FEDERAL PUBLIC SECTOR FUNDS.—

13 The term ‘‘non-Federal public sector funds’’ includes

14 any non-Federal funds disbursed from a source pur15 suant to a program operated under the temporary

16 assistance for needy families program under part A

17 of title IV of the Social Security Act (42 U.S.C. 601

18 et seq.).

19 (6) PROJECT YEAR.—The term ‘‘project year’’

20 means, with respect to a demonstration project, any

21 of the 4 consecutive 12-month periods beginning on

22 the date the project is originally authorized to be

23 conducted.

24 (7) QUALIFIED ENTITY.—
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1 (A) IN GENERAL.—The term ‘‘qualified en2 tity’’ means—

3 (i) one or more not-for-profit organi4 zations described in section 501(c)(3) of

5 the Internal Revenue Code of 1986 and ex6 empt from taxation under section 501(a)

7 of such Code; or

8 (ii) a State or local government agen9 cy submitting an application under section

10 5 jointly with an organization described in

11 clause (i).

12 (B) RULE OF CONSTRUCTION.—Nothing in

13 this paragraph shall be construed as preventing

14 an organization described in subparagraph

15 (A)(i) from collaborating with a financial insti16 tution or for-profit community development cor17 poration to carry out the purposes of this Act.

18 (8) QUALIFIED EXPENSES.—The term ‘‘quali19 fied expenses’’ means 1 or more of the following, as

20 provided by the qualified entity:

21 (A) POSTSECONDARY EDUCATIONAL EX22 PENSES.—Postsecondary educational expenses

23 paid from an individual development account di24 rectly to an eligible educational institution. In

25 this subparagraph:
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1 (i) POST-SECONDARY EDUCATIONAL

2 EXPENSES.—The term ‘‘post-secondary

3 educational expenses’’ means the following:

4 (I) TUITION AND FEES.—Tuition

5 and fees required for the enrollment

6 or attendance of a student at an eligi7 ble educational institution.

8 (II) FEES, BOOKS, SUPPLIES,

9 AND EQUIPMENT.—Fees, books, sup10 plies, and equipment required for

11 courses of instruction at an eligible

12 educational institution.

13 (ii) ELIGIBLE EDUCATIONAL INSTITU14 TION.—The term ‘‘eligible educational in15 stitution’’ means the following:

16 (I) INSTITUTION OF HIGHER

17 EDUCATION.—An institution described

18 in section 481(a)(1) or 1201(a) of the

19 Higher Education Act of 1965 (20

20 U.S.C. 1088(a)(1) or 1141(a)), as

21 such sections are in effect on the date

22 of enactment of this Act.

23 (II) POSTSECONDARY VOCA24 TIONAL EDUCATION SCHOOL.—An

25 area vocational education school (as
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1 defined in subparagraph (C) or (D) of

2 section 521(4) of the Carl D. Perkins

3 Vocational and Applied Technology

4 Education Act (20 U.S.C. 2471(4)))

5 which is in any State (as defined in

6 section 521(33) of such Act), as such

7 sections are in effect on the date of

8 enactment of this Act.

9 (B) FIRST-HOME PURCHASE.—Qualified

10 acquisition costs with respect to a qualified

11 principal residence for a qualified first-time

12 homebuyer, if paid from an individual develop13 ment account directly to the persons to whom

14 the amounts are due. In this subparagraph:

15 (i) QUALIFIED ACQUISITION COSTS.—

16 The term ‘‘qualified acquisition costs’’

17 means the costs of acquiring, constructing,

18 or reconstructing a residence. The term in19 cludes any usual or reasonable settlement,

20 financing, or other closing costs.

21 (ii) QUALIFIED PRINCIPAL RESI22 DENCE.—The term ‘‘qualified principal

23 residence’’ means a principal residence

24 (within the meaning of section 1034 of the

25 Internal Revenue Code of 1986), the quali-
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1 fied acquisition costs of which do not ex2 ceed 100 percent of the average area pur3 chase price applicable to such residence

4 (determined in accordance with paragraphs

5 (2) and (3) of section 143(e) of such

6 Code).

7 (iii) QUALIFIED FIRST-TIME HOME8 BUYER.—

9 (I) IN GENERAL.—The term

10 ‘‘qualified first-time homebuyer’’

11 means an individual participating in

12 the project (and, if married, the indi13 vidual’s spouse) who has no present

14 ownership interest in a principal resi15 dence during the 3-year period ending

16 on the date of acquisition of the prin17 cipal residence to which this subpara18 graph applies.

19 (II) DATE OF ACQUISITION.—

20 The term ‘‘date of acquisition’’ means

21 the date on which a binding contract

22 to acquire, construct, or reconstruct

23 the principal residence to which this

24 subparagraph applies is entered into.
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1 (C) BUSINESS CAPITALIZATION.—Amounts

2 paid from an individual development account di3 rectly to a business capitalization account which

4 is established in a federally insured financial in5 stitution and is restricted to use solely for

6 qualified business capitalization expenses. In

7 this subparagraph:

8 (i) QUALIFIED BUSINESS CAPITALIZA9 TION EXPENSES.—The term ‘‘qualified

10 business capitalization expenses’’ means

11 qualified expenditures for the capitalization

12 of a qualified business pursuant to a quali13 fied plan.

14 (ii) QUALIFIED EXPENDITURES.—The

15 term ‘‘qualified expenditures’’ means ex16 penditures included in a qualified plan, in17 cluding capital, plant, equipment, working

18 capital, and inventory expenses.

19 (iii) QUALIFIED BUSINESS.—The term

20 ‘‘qualified business’’ means any business

21 that does not contravene any law or public

22 policy (as determined by the Secretary).

23 (iv) QUALIFIED PLAN.—The term

24 ‘‘qualified plan’’ means a business plan, or
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1 a plan to use a business asset purchased,

2 which—

3 (I) is approved by a financial in4 stitution, a microenterprise develop5 ment organization, or a nonprofit loan

6 fund having demonstrated fiduciary

7 integrity;

8 (II) includes a description of

9 services or goods to be sold, a market10 ing plan, and projected financial

11 statements; and

12 (III) may require the eligible in13 dividual to obtain the assistance of an

14 experienced entrepreneurial adviser.

15 (D) TRANSFERS TO IDAS OF FAMILY MEM16 BERS.—Amounts paid from an individual devel17 opment account directly into another such ac18 count established for the benefit of an eligible

19 individual who is—

20 (i) the individual’s spouse; or

21 (ii) any dependent of the individual

22 with respect to whom the individual is al23 lowed a deduction under section 151 of the

24 Internal Revenue Code of 1986.
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1 (9) QUALIFIED SAVINGS OF THE INDIVIDUAL

2 FOR THE PERIOD.—The term ‘‘qualified savings of

3 the individual for the period’’ means the aggregate

4 of the amounts contributed by the individual to the

5 individual development account of the individual

6 during the period.

7 (10) SECRETARY.—The term ‘‘Secretary’’

8 means the Secretary of Health and Human Services.

9 SEC. 5. APPLICATIONS.

10 (a) SUBMISSION.—Not later than 6 months after the

11 date of enactment of this Act, a qualified entity may sub12 mit to the Secretary an application to conduct a dem13 onstration project under this Act.

14 (b) CRITERIA.—In considering whether to approve an

15 application to conduct a demonstration project under this

16 Act, the Secretary shall assess the following:

17 (1) SUFFICIENCY OF PROJECT.—The degree to

18 which the project described in the application ap19 pears likely to aid project participants in achieving

20 economic self-sufficiency through activities requiring

21 qualified expenses. In making such assessment, the

22 Secretary shall consider the overall quality of project

23 activities in making any particular kind or combina24 tion of qualified expenses to be an essential feature

25 of any project.
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1 (2) ADMINISTRATIVE ABILITY.—The experience

2 and ability of the applicant to responsibly administer

3 the project.

4 (3) ABILITY TO ASSIST PARTICIPANTS.—The

5 experience and ability of the applicant in recruiting,

6 educating, and assisting project participants to in7 crease their economic independence and general well8 being through the development of assets.

9 (4) COMMITMENT OF NON-FEDERAL FUNDS.—

10 The aggregate amount of direct funds from non11 Federal public sector and from private sources that

12 are formally committed to the project as matching

13 contributions.

14 (5) ADEQUACY OF PLAN FOR PROVIDING IN15 FORMATION FOR EVALUATION.—The adequacy of

16 the plan for providing information relevant to an

17 evaluation of the project.

18 (6) OTHER FACTORS.—Such other factors rel19 evant to the purposes of this Act as the Secretary

20 may specify.

21 (c) PREFERENCES.—In considering an application to

22 conduct a demonstration project under this Act, the Sec23 retary shall give preference to an application that—

24 (1) demonstrates the willingness and ability to

25 select individuals described in section 8 who are pre-
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1 dominantly from households in which a child (or

2 children) is living with the child’s biological or adop3 tive mother or father, or with the child’s legal guard4 ian;

5 (2) provides a commitment of non-Federal

6 funds with a proportionately greater amount of such

7 funds committed by private sector sources; and

8 (3) targets such individuals residing within 1 or

9 more relatively well-defined neighborhoods or com10 munities (including rural communities) that experi11 ence low rates of income or employment.

12 (d) APPROVAL.—Not later than 9 months after the

13 date of enactment of this Act, the Secretary shall, on a

14 competitive basis, approve such applications to conduct

15 demonstration projects under this Act as the Secretary

16 deems appropriate, taking into account the assessments

17 required by subsections (b) and (c). The Secretary is en18 couraged to ensure that the applications that are approved

19 involve a range of communities (both rural and urban) and

20 diverse populations.

21 (e) CONTRACTS WITH NONPROFIT ENTITIES.—The

22 Secretary may contract with an entity described in section

23 501(c)(3) of the Internal Revenue Code of 1986 and ex24 empt from taxation under section 501(a) of such Code to
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1 conduct any responsibility of the Secretary under this sec2 tion or section 12 if—

3 (1) such entity demonstrates the ability to con4 duct such responsibility; and

5 (2) the Secretary can demonstrate that such re6 sponsibility would not be conducted by the Secretary

7 at a lower cost.

8 SEC. 6. DEMONSTRATION AUTHORITY; ANNUAL GRANTS.

9 (a) DEMONSTRATION AUTHORITY.—If the Secretary

10 approves an application to conduct a demonstration

11 project under this Act, the Secretary shall, not later than

12 10 months after the date of enactment of this Act, author13 ize the applicant to conduct the project for 4 project years

14 in accordance with the approved application and the re15 quirements of this Act.

16 (b) GRANT AUTHORITY.—For each project year of a

17 demonstration project conducted under this Act, the Sec18 retary shall make a grant to the qualified entity author19 ized to conduct the project on the first day of the project

20 year in an amount not to exceed the lesser of—

21 (1) the aggregate amount of funds committed

22 as matching contributions by non-Federal public or

23 private sector sources; or

24 (2) $1,000,000.
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1 SEC. 7. RESERVE FUND.

2 (a) ESTABLISHMENT.—A qualified entity under this

3 Act, other than a State or local government agency, shall

4 establish a Reserve Fund which shall be maintained in ac5 cordance with this section.

6 (b) AMOUNTS IN RESERVE FUND.—

7 (1) IN GENERAL.—As soon after receipt as is

8 practicable, a qualified entity shall deposit in the Re9 serve Fund established under subsection (a)—

10 (A) all funds provided to the qualified en11 tity by any public or private source in connec12 tion with the demonstration project; and

13 (B) the proceeds from any investment

14 made under subsection (c)(2).

15 (2) UNIFORM ACCOUNTING REGULATIONS.—

16 The Secretary shall prescribe regulations with re17 spect to accounting for amounts in the Reserve

18 Fund established under subsection (a).

19 (c) USE OF AMOUNTS IN THE RESERVE FUND.—

20 (1) IN GENERAL.—A qualified entity shall use

21 the amounts in the Reserve Fund established under

22 subsection (a) to—

23 (A) assist participants in the demonstra24 tion project in obtaining the skills (including

25 economic literacy, budgeting, credit, and coun26 seling) and information necessary to achieve
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1 economic self-sufficiency through activities re2 quiring qualified expenses;

3 (B) provide deposits in accordance with

4 section 10 for individuals selected by the quali5 fied entity to participate in the demonstration

6 project;

7 (C) administer the demonstration project;

8 and

9 (D) provide the research organization eval10 uating the demonstration project under section

11 14 with such information with respect to the

12 demonstration project as may be required for

13 the evaluation.

14 (2) AUTHORITY TO INVEST FUNDS.—

15 (A) GUIDELINES.—The Secretary shall es16 tablish guidelines for investing amounts in the

17 Reserve Fund established under subsection (a)

18 in a manner that provides an appropriate bal19 ance between return, liquidity, and risk.

20 (B) INVESTMENT.—A qualified entity shall

21 invest the amounts in its Reserve Fund that are

22 not immediately needed to carry out the provi23 sions of paragraph (1), in accordance with the

24 guidelines established under subparagraph (A).
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1 (3) LIMITATION ON USES.—Not more than 7.5

2 percent of the amounts provided to a qualified entity

3 under section 6(b) shall be used by the qualified en4 tity for the purposes described in subparagraphs

5 (A), (C), and (D) of paragraph (1), except that if

6 2 or more qualified entities are jointly administering

7 a project, no qualified entity shall use more than its

8 proportional share for such purposes.

9 (d) UNUSED FEDERAL GRANT FUNDS TRANS10 FERRED TO THE SECRETARY WHEN PROJECT TERMI11 NATES.—Notwithstanding subsection (c), upon the termi12 nation of any demonstration project authorized under this

13 section, the qualified entity conducting the project shall

14 transfer to the Secretary an amount equal to—

15 (1) the amounts in its Reserve Fund at time of

16 the termination; multiplied by

17 (2) a percentage equal to—

18 (A) the aggregate amount of grants made

19 to the qualified entity under section 6(b); di20 vided by

21 (B) the aggregate amount of all funds pro22 vided to the qualified entity by all sources to

23 conduct the project.
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1 SEC. 8. ELIGIBILITY FOR PARTICIPATION.

2 (a) IN GENERAL.—Any individual who is a member

3 of a household that is eligible for assistance under the

4 State temporary assistance for needy families program es5 tablished under part A of title IV of the Social Security

6 Act (42 U.S.C. 601 et seq.), or that meets the following

7 requirements shall be eligible to participate in a dem8 onstration project conducted under this Act:

9 (1) INCOME TEST.—The adjusted gross income

10 of the household does not exceed the income limits

11 established under section 32(b)(2) of the Internal

12 Revenue Code of 1986.

13 (2) NET WORTH TEST.—

14 (A) IN GENERAL.—The net worth of the

15 household, as of the end of the calendar year

16 preceding the determination of eligibility, does

17 not exceed $10,000.

18 (B) DETERMINATION OF NET WORTH.—

19 For purposes of subparagraph (A), the net

20 worth of a household is the amount equal to—

21 (i) the aggregate market value of all

22 assets that are owned in whole or in part

23 by any member of the household; minus

24 (ii) the obligations or debts of any

25 member of the household.
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1 (C) EXCLUSIONS.—For purposes of deter2 mining the net worth of a household, a house3 hold’s assets shall not be considered to include

4 the primary dwelling unit and 1 motor vehicle

5 owned by the household.

6 (b) INDIVIDUALS UNABLE TO COMPLETE THE

7 PROJECT.—The Secretary shall establish such regulations

8 as are necessary, including prohibiting future eligibility to

9 participate in any other demonstration project conducted

10 under this Act, to ensure compliance with this Act if an

11 individual participating in the demonstration project

12 moves from the community in which the project is con13 ducted or is otherwise unable to continue participating in

14 that project.

15 SEC. 9. SELECTION OF INDIVIDUALS TO PARTICIPATE.

16 From among the individuals eligible to participate in

17 a demonstration project conducted under this Act, each

18 qualified entity shall select the individuals—

19 (1) that the qualified entity deems to be best

20 suited to participate; and

21 (2) to whom the qualified entity will provide de22 posits in accordance with section 10.

23 SEC. 10. DEPOSITS BY QUALIFIED ENTITIES.

24 (a) IN GENERAL.—Not less than once every 3 months

25 during each project year, each qualified entity under this
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1 Act shall deposit in the individual development account of

2 each individual participating in the project, or into a par3 allel account maintained by the qualified entity—

4 (1) from the non-Federal funds described in

5 section 5(b)(4), a matching contribution of not less

6 than $0.50 and not more than $4 for every $1 of

7 earned income (as defined in section 911(d)(2) of

8 the Internal Revenue Code of 1986) deposited in the

9 account by a project participant during that period;

10 (2) from the grant made under section 6(b), an

11 amount equal to the matching contribution made

12 under paragraph (1); and

13 (3) any interest that has accrued on amounts

14 deposited under paragraph (1) or (2) on behalf of

15 that individual into the individual development ac16 count of the individual or into a parallel account

17 maintained by the qualified entity.

18 (b) LIMITATION ON DEPOSITS FOR AN INDIVID19 UAL.—Not more than $2,000 from a grant made under

20 section 6(b) shall be provided to any 1 individual over the

21 course of the demonstration project.

22 (c) LIMITATION ON DEPOSITS FOR A HOUSEHOLD.—

23 Not more than $4,000 from a grant made under section

24 6(b) shall be provided to any 1 household over the course

25 of the demonstration project.
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1 (d) WITHDRAWAL OF FUNDS.—The Secretary shall

2 establish such guidelines as may be necessary to ensure

3 that funds held in an individual development account are

4 not withdrawn, except for 1 or more qualified expenses.

5 Such guidelines shall include a requirement that a respon6 sible official of the qualified entity conducting a project

7 approve such withdrawal in writing.

8 SEC. 11. LOCAL CONTROL OVER DEMONSTRATION

9 PROJECTS.

10 A qualified entity under this Act, other than a State

11 or local government agency, shall, subject to the provisions

12 of section 13, have sole authority over the administration

13 of the project. The Secretary may prescribe only such reg14 ulations or guidelines with respect to demonstration

15 projects conducted under this Act as are necessary to en16 sure compliance with the approved applications and the

17 requirements of this Act.

18 SEC. 12. ANNUAL PROGRESS REPORTS.

19 (a) IN GENERAL.—Each qualified entity under this

20 Act shall prepare an annual report on the progress of the

21 demonstration project. Each report shall specify for the

22 period covered by the report the following information:

23 (1) The number of individuals making a deposit

24 into an individual development account.
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1 (2) The amounts in the Reserve Fund estab2 lished with respect to the project.

3 (3) The amounts deposited in the individual de4 velopment accounts.

5 (4) The amounts withdrawn from the individual

6 development accounts and the purposes for which

7 such amounts were withdrawn.

8 (5) The balances remaining in the individual

9 development accounts.

10 (6) Such other information as the Secretary

11 may require to evaluate the demonstration project.

12 (b) SUBMISSION OF REPORTS.—The qualified entity

13 shall submit each report required to be prepared under

14 subsection (a) to—

15 (1) the Secretary; and

16 (2) the Treasurer (or equivalent official) of the

17 State in which the project is conducted, if the State

18 or a local government committed funds to the dem19 onstration project.

20 (c) TIMING.—The first report required by subsection

21 (a) shall be submitted not later than 60 days after the

22 end of the calendar year in which the Secretary authorized

23 the qualified entity to conduct the demonstration project,

24 and subsequent reports shall be submitted every 12

25 months thereafter, until the conclusion of the project.
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1 SEC. 13. SANCTIONS.

2 (a) AUTHORITY TO TERMINATE DEMONSTRATION

3 PROJECT.—If the Secretary determines that a qualified

4 entity under this Act is not operating the demonstration

5 project in accordance with the entity’s application or the

6 requirements of this Act (and has not implemented any

7 corrective recommendations directed by the Secretary),

8 the Secretary shall terminate such entity’s authority to

9 conduct the demonstration project.

10 (b) ACTIONS REQUIRED UPON TERMINATION.—If

11 the Secretary terminates the authority to conduct a dem12 onstration project, the Secretary—

13 (1) shall suspend the demonstration project;

14 (2) shall take control of the Reserve Fund es15 tablished pursuant to section 7;

16 (3) shall make every effort to identify another

17 qualified entity (or entities) willing and able to con18 duct the project in accordance with the approved ap19 plication (or, as modified, if necessary to incorporate

20 the recommendations) and the requirements of this

21 Act;

22 (4) shall, if the Secretary identifies an entity

23 (or entities) described in paragraph (3)—

24 (A) authorize the entity (or entities) to

25 conduct the project in accordance with the ap26 proved application (or, as modified, if nec-
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1 essary, to incorporate the recommendations)

2 and the requirements of this Act;

3 (B) transfer to the entity (or entities) con4 trol over the Reserve Fund established pursuant

5 to section 7; and

6 (C) consider, for purposes of this Act—

7 (i) such other entity (or entities) to be

8 the qualified entity (or entities) originally

9 authorized to conduct the demonstration

10 project; and

11 (ii) the date of such authorization to

12 be the date of the original authorization;

13 and

14 (5) if, by the end of the 1-year period beginning

15 on the date of the termination, the Secretary has not

16 found a qualified entity (or entities) described in

17 paragraph (3), shall—

18 (A) terminate the project; and

19 (B) from the amount remaining in the Re20 serve Fund established as part of the project,

21 remit to each source that provided funds under

22 section 5(b)(4) to the entity originally author23 ized to conduct the project, an amount that

24 bears the same ratio to the amount so remain25 ing as the amount provided by the source under
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1 section 5(b)(4) bears to the amount provided by

2 all such sources under that section.

3 SEC. 14. EVALUATIONS.

4 (a) IN GENERAL.—Not later than 10 months after

5 the date of enactment of this Act, the Secretary shall enter

6 into a contract with an independent research organization

7 to evaluate, individually and as a group, all qualified enti8 ties and sources participating in the demonstration

9 projects conducted under this Act.

10 (b) FACTORS TO EVALUATE.—In evaluating any

11 demonstration project conducted under this Act, the re12 search organization shall address the following factors:

13 (1) The savings account characteristics (such as

14 threshold amounts and match rates) required to

15 stimulate participation in the demonstration project,

16 and how such characteristics vary among different

17 populations or communities.

18 (2) What service configurations of the qualified

19 entity (such as peer support, structured planning ex20 ercises, mentoring, and case management) increase

21 the rate and consistency of participation in the dem22 onstration project and how such configurations vary

23 among different populations or communities.

24 (3) The economic, civic, psychological, and so25 cial effects of asset accumulation, and how such ef-
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1 fects vary among different populations or commu2 nities.

3 (4) The effects of individual development ac4 counts on savings rates, homeownership, level of

5 education attained, and self-employment, and how

6 such effects vary among different populations or

7 communities.

8 (5) The potential financial returns to the Fed9 eral Government and to other public sector and pri10 vate sector investors in individual development ac11 counts over a 5-year and 10-year period of time.

12 (6) The lessons to be learned from the dem13 onstration projects conducted under this Act and if

14 a permanent program of individual development ac15 counts should be established.

16 (7) Such other factors as may be prescribed by

17 the Secretary.

18 (c) METHODOLOGICAL REQUIREMENTS.—In evaluat19 ing any demonstration project conducted under this Act,

20 the research organization shall—

21 (1) to the extent possible, use control groups to

22 compare participants with nonparticipants;

23 (2) before, during, and after the project, obtain

24 such quantitative data as are necessary to evaluate

25 the project thoroughly; and
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1 (3) develop a qualitative assessment, derived

2 from sources such as in-depth interviews, of how

3 asset accumulation affects individuals and families.

4 (d) REPORTS BY THE SECRETARY.—

5 (1) INTERIM REPORTS.—Not later than 90 days

6 after the end of the calendar year in which the Sec7 retary first authorizes a qualified entity to conduct

8 a demonstration project under this Act, and every

9 12 months thereafter until all demonstration

10 projects conducted under this Act are completed, the

11 Secretary shall submit to Congress an interim report

12 setting forth the results of the reports submitted

13 pursuant to section 12(b).

14 (2) FINAL REPORTS.—Not later than 12

15 months after the conclusion of all demonstration

16 projects conducted under this Act, the Secretary

17 shall submit to Congress a final report setting forth

18 the results and findings of all reports and evalua19 tions conducted pursuant to this Act.

20 (e) EVALUATION EXPENSES.—The Secretary shall

21 expend such sums as may be necessary to carry out the

22 purposes of this section.
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1 SEC. 15. AUTHORIZATIONS OF APPROPRIATIONS.

2 There is authorized to be appropriated to carry out

3 this Act, $25,000,000 for each of fiscal years 1998, 1999,

4 2000, and 2001, to remain available until expended.

5 SEC. 16. FUNDS IN INDIVIDUAL DEVELOPMENT ACCOUNTS

6 OF DEMONSTRATION PROJECT PARTICI7 PANTS DISREGARDED FOR PURPOSES OF ALL

8 MEANS-TESTED FEDERAL PROGRAMS.

9 Notwithstanding any other provision of law that re10 quires consideration of 1 or more financial circumstances

11 of an individual, for the purpose of determining eligibility

12 to receive, or the amount of, any assistance or benefit au13 thorized by such law to be provided to or for the benefit

14 of such individual, funds (including interest accruing) in

15 an individual development account (as defined in section

16 4(4)) shall be disregarded for such purpose with respect

17 to any period during which the individual participates in

18 a demonstration project conducted under this Act (or

19 would be participating in such a project but for the sus20 pension of the project).

Æ