II

105TH CONGRESS

1ST SESSION S. 1255

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

OCTOBER 6, 1997

Mr. COATS (for himself and Mr. HARKIN) introduced the following bill; which

was read twice and referred to the Committee on Labor and Human Resources

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) PROJECT YEAR.—The term ‘‘project year’’

13 means, with respect to a demonstration project, any

14 of the 4 consecutive 12-month periods beginning on

15 the date the project is originally authorized to be

16 conducted.

17 (6) QUALIFIED ENTITY.—

18 (A) IN GENERAL.—The term ‘‘qualified en19 tity’’ means—

20 (i) one or more not-for-profit organi21 zations described in section 501(c)(3) of

22 the Internal Revenue Code of 1986 and ex23 empt from taxation under section 501(a)

24 of such Code; or
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1 (ii) a State or local government agen2 cy submitting an application under section

3 5 jointly with an organization described in

4 clause (i).

5 (B) RULE OF CONSTRUCTION.—Nothing in

6 this paragraph shall be construed as preventing

7 an organization described in subparagraph

8 (A)(i) from collaborating with a financial insti9 tution or for-profit community development cor10 poration to carry out the purposes of this Act.

11 (7) QUALIFIED EXPENSES.—The term ‘‘quali12 fied expenses’’ means 1 or more of the following, as

13 provided by the qualified entity:

14 (A) POSTSECONDARY EDUCATIONAL EX15 PENSES.—Postsecondary educational expenses

16 paid from an individual development account di17 rectly to an eligible educational institution. In

18 this subparagraph:

19 (i) POST-SECONDARY EDUCATIONAL

20 EXPENSES.—The term ‘‘post-secondary

21 educational expenses’’ means the following:

22 (I) TUITION AND FEES.—Tuition

23 and fees required for the enrollment

24 or attendance of a student at an eligi25 ble educational institution.
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1 (II) FEES, BOOKS, SUPPLIES,

2 AND EQUIPMENT.—Fees, books, sup3 plies, and equipment required for

4 courses of instruction at an eligible

5 educational institution.

6 (ii) ELIGIBLE EDUCATIONAL INSTITU7 TION.—The term ‘‘eligible educational in8 stitution’’ means the following:

9 (I) INSTITUTION OF HIGHER

10 EDUCATION.—An institution described

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

12 Higher Education Act of 1965 (20

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

14 such sections are in effect on the date

15 of enactment of this Act.

16 (II) POSTSECONDARY VOCA17 TIONAL EDUCATION SCHOOL.—An

18 area vocational education school (as

19 defined in subparagraph (C) or (D) of

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

21 Vocational and Applied Technology

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

23 which is in any State (as defined in

24 section 521(33) of such Act), as such
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1 sections are in effect on the date of

2 enactment of this Act.

3 (B) FIRST-HOME PURCHASE.—Qualified

4 acquisition costs with respect to a qualified

5 principal residence for a qualified first-time

6 homebuyer, if paid from an individual develop7 ment account directly to the persons to whom

8 the amounts are due. In this subparagraph:

9 (i) QUALIFIED ACQUISITION COSTS.—

10 The term ‘‘qualified acquisition costs’’

11 means the costs of acquiring, constructing,

12 or reconstructing a residence. The term in13 cludes any usual or reasonable settlement,

14 financing, or other closing costs.

15 (ii) QUALIFIED PRINCIPAL RESI16 DENCE.—The term ‘‘qualified principal

17 residence’’ means a principal residence

18 (within the meaning of section 1034 of the

19 Internal Revenue Code of 1986), the quali20 fied acquisition costs of which do not ex21 ceed 100 percent of the average area pur22 chase price applicable to such residence

23 (determined in accordance with paragraphs

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

25 Code).
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1 (iii) QUALIFIED FIRST-TIME HOME2 BUYER.—

3 (I) IN GENERAL.—The term

4 ‘‘qualified first-time homebuyer’’

5 means an individual participating in

6 the project (and, if married, the indi7 vidual’s spouse) who has no present

8 ownership interest in a principal resi9 dence during the 3-year period ending

10 on the date of acquisition of the prin11 cipal residence to which this subpara12 graph applies.

13 (II) DATE OF ACQUISITION.—

14 The term ‘‘date of acquisition’’ means

15 the date on which a binding contract

16 to acquire, construct, or reconstruct

17 the principal residence to which this

18 subparagraph applies is entered into.

19 (C) BUSINESS CAPITALIZATION.—Amounts

20 paid from an individual development account di21 rectly to a business capitalization account which

22 is established in a federally insured financial in23 stitution and is restricted to use solely for

24 qualified business capitalization expenses. In

25 this subparagraph:
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1 (i) QUALIFIED BUSINESS CAPITALIZA2 TION EXPENSES.—The term ‘‘qualified

3 business capitalization expenses’’ means

4 qualified expenditures for the capitalization

5 of a qualified business pursuant to a quali6 fied plan.

7 (ii) QUALIFIED EXPENDITURES.—The

8 term ‘‘qualified expenditures’’ means ex9 penditures included in a qualified plan, in10 cluding capital, plant, equipment, working

11 capital, and inventory expenses.

12 (iii) QUALIFIED BUSINESS.—The term

13 ‘‘qualified business’’ means any business

14 that does not contravene any law or public

15 policy (as determined by the Secretary).

16 (iv) QUALIFIED PLAN.—The term

17 ‘‘qualified plan’’ means a business plan, or

18 a plan to use a business asset purchased,

19 which—

20 (I) is approved by a financial in21 stitution, a microenterprise develop22 ment organization, or a nonprofit loan

23 fund having demonstrated fiduciary

24 integrity;
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1 (II) includes a description of

2 services or goods to be sold, a market3 ing plan, and projected financial

4 statements; and

5 (III) may require the eligible in6 dividual to obtain the assistance of an

7 experienced entrepreneurial adviser.

8 (D) TRANSFERS TO IDAS OF FAMILY MEM9 BERS.—Amounts paid from an individual devel10 opment account directly into another such ac11 count established for the benefit of an eligible

12 individual who is—

13 (i) the individual’s spouse; or

14 (ii) any dependent of the individual

15 with respect to whom the individual is al16 lowed a deduction under section 151 of the

17 Internal Revenue Code of 1986.

18 (8) QUALIFIED SAVINGS OF THE INDIVIDUAL

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

20 the individual for the period’’ means the aggregate

21 of the amounts contributed by the individual to the

22 individual development account of the individual

23 during the period.

24 (9) SECRETARY.—The term ‘‘Secretary’’ means

25 the Secretary of Health and Human Services.
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1 SEC. 5. APPLICATIONS.

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

3 date of enactment of this Act, a qualified entity may sub4 mit to the Secretary an application to conduct a dem5 onstration project under this Act.

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

7 application to conduct a demonstration project under this

8 Act, the Secretary shall assess the following:

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

10 which the project described in the application ap11 pears likely to aid project participants in achieving

12 economic self-sufficiency through activities requiring

13 qualified expenses. In making such assessment, the

14 Secretary shall consider the overall quality of project

15 activities in making any particular kind or combina16 tion of qualified expenses to be an essential feature

17 of any project.

18 (2) ADMINISTRATIVE ABILITY.—The experience

19 and ability of the applicant to responsibly administer

20 the project.

21 (3) ABILITY TO ASSIST PARTICIPANTS.—The

22 experience and ability of the applicant in recruiting,

23 educating, and assisting project participants to in24 crease their economic independence and general well25 being through the development of assets.
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1 (4) COMMITMENT OF NON-FEDERAL FUNDS.—

2 The aggregate amount of direct funds from non3 Federal public sector and from private sources that

4 are formally committed to the project as matching

5 contributions.

6 (5) ADEQUACY OF PLAN FOR PROVIDING IN7 FORMATION FOR EVALUATION.—The adequacy of

8 the plan for providing information relevant to an

9 evaluation of the project.

10 (6) OTHER FACTORS.—Such other factors rel11 evant to the purposes of this Act as the Secretary

12 may specify.

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

14 conduct a demonstration project under this Act, the Sec15 retary shall give preference to an application that—

16 (1) demonstrates the willingness and ability to

17 select individuals described in section 8 who are pre18 dominantly from households in which a child (or

19 children) is living with the child’s biological or adop20 tive mother or father, or with the child’s legal guard21 ian;

22 (2) provides a commitment of non-Federal

23 funds with a proportionately greater amount of such

24 funds committed by private sector sources; and
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1 (3) targets such individuals residing within 1 or

2 more relatively well-defined neighborhoods or com3 munities (including rural communities) that experi4 ence low rates of income or employment.

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

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

7 competitive basis, approve such applications to conduct

8 demonstration projects under this Act as the Secretary

9 deems appropriate, taking into account the assessments

10 required by subsections (b) and (c). The Secretary is en11 couraged to ensure that the applications that are approved

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

13 diverse populations.

14 (e) CONTRACTS WITH NONPROFIT ENTITIES.—The

15 Secretary may contract with an entity described in section

16 501(c)(3) of the Internal Revenue Code of 1986 and ex17 empt from taxation under section 501(a) of such Code to

18 conduct any responsibility of the Secretary under this sec19 tion or section 12 if—

20 (1) such entity demonstrates the ability to con21 duct such responsibility; and

22 (2) the Secretary can demonstrate that such re23 sponsibility would not be conducted by the Secretary

24 at a lower cost.
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1 SEC. 6. DEMONSTRATION AUTHORITY; ANNUAL GRANTS.

2 (a) DEMONSTRATION AUTHORITY.—If the Secretary

3 approves an application to conduct a demonstration

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

5 10 months after the date of enactment of this Act, author6 ize the applicant to conduct the project for 4 project years

7 in accordance with the approved application and the re8 quirements of this Act.

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

10 demonstration project conducted under this Act, the Sec11 retary shall make a grant to the qualified entity author12 ized to conduct the project on the first day of the project

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

14 (1) the aggregate amount of funds committed

15 as matching contributions by non-Federal public or

16 private sector sources; or

17 (2) $1,000,000.

18 SEC. 7. RESERVE FUND.

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

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

21 establish a Reserve Fund which shall be maintained in ac22 cordance with this section.

23 (b) AMOUNTS IN RESERVE FUND.—

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

25 practicable, a qualified entity shall deposit in the Re26 serve Fund established under subsection (a)—
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1 (A) all funds provided to the qualified en2 tity by any public or private source in connec3 tion with the demonstration project; and

4 (B) the proceeds from any investment

5 made under subsection (c)(2).

6 (2) UNIFORM ACCOUNTING REGULATIONS.—

7 The Secretary shall prescribe regulations with re8 spect to accounting for amounts in the Reserve

9 Fund established under subsection (a).

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

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

12 the amounts in the Reserve Fund established under

13 subsection (a) to—

14 (A) assist participants in the demonstra15 tion project in obtaining the skills (including

16 economic literacy, budgeting, credit, and coun17 seling) and information necessary to achieve

18 economic self-sufficiency through activities re19 quiring qualified expenses;

20 (B) provide deposits in accordance with

21 section 10 for individuals selected by the quali22 fied entity to participate in the demonstration

23 project;

24 (C) administer the demonstration project;

25 and
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1 (D) provide the research organization eval2 uating the demonstration project under section

3 14 with such information with respect to the

4 demonstration project as may be required for

5 the evaluation.

6 (2) AUTHORITY TO INVEST FUNDS.—

7 (A) GUIDELINES.—The Secretary shall es8 tablish guidelines for investing amounts in the

9 Reserve Fund established under subsection (a)

10 in a manner that provides an appropriate bal11 ance between return, liquidity, and risk.

12 (B) INVESTMENT.—A qualified entity shall

13 invest the amounts in its Reserve Fund that are

14 not immediately needed to carry out the provi15 sions of paragraph (1), in accordance with the

16 guidelines established under subparagraph (A).

17 (3) LIMITATION ON USES.—Not more than 7.5

18 percent of the amounts provided to a qualified entity

19 under section 6(b) shall be used by the qualified en20 tity for the purposes described in subparagraphs

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

22 2 or more qualified entities are jointly administering

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

24 proportional share for such purposes.
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1 (d) UNUSED FEDERAL GRANT FUNDS TRANS2 FERRED TO THE SECRETARY WHEN PROJECT TERMI3 NATES.—Notwithstanding subsection (c), upon the termi4 nation of any demonstration project authorized under this

5 section, the qualified entity conducting the project shall

6 transfer to the Secretary an amount equal to—

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

8 the termination; multiplied by

9 (2) a percentage equal to—

10 (A) the aggregate amount of grants made

11 to the qualified entity under section 6(b); di12 vided by

13 (B) the aggregate amount of all funds pro14 vided to the qualified entity by all sources to

15 conduct the project.

16 SEC. 8. ELIGIBILITY FOR PARTICIPATION.

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

18 of a household that is eligible for assistance under the

19 State temporary assistance for needy families program es20 tablished under part A of title IV of the Social Security

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

22 requirements shall be eligible to participate in a dem23 onstration project conducted under this Act:

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

25 of the household does not exceed the income limits
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1 established under section 32(b)(2) of the Internal

2 Revenue Code of 1986.

3 (2) NET WORTH TEST.—

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

5 household, as of the end of the calendar year

6 preceding the determination of eligibility, does

7 not exceed $10,000.

8 (B) DETERMINATION OF NET WORTH.—

9 For purposes of subparagraph (A), the net

10 worth of a household is the amount equal to—

11 (i) the aggregate market value of all

12 assets that are owned in whole or in part

13 by any member of the household; minus

14 (ii) the obligations or debts of any

15 member of the household.

16 (C) EXCLUSIONS.—For purposes of deter17 mining the net worth of a household, a house18 hold’s assets shall not be considered to include

19 the primary dwelling unit and 1 motor vehicle

20 owned by the household.

21 (b) INDIVIDUALS UNABLE TO COMPLETE THE

22 PROJECT.—The Secretary shall establish such regulations

23 as are necessary, including prohibiting future eligibility to

24 participate in any other demonstration project conducted

25 under this Act, to ensure compliance with this Act if an
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1 individual participating in the demonstration project

2 moves from the community in which the project is con3 ducted or is otherwise unable to continue participating in

4 that project.

5 SEC. 9. SELECTION OF INDIVIDUALS TO PARTICIPATE.

6 From among the individuals eligible to participate in

7 a demonstration project conducted under this Act, each

8 qualified entity shall select the individuals—

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

10 suited to participate; and

11 (2) to whom the qualified entity will provide de12 posits in accordance with section 10.

13 SEC. 10. DEPOSITS BY QUALIFIED ENTITIES.

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

15 during each project year, each qualified entity under this

16 Act shall deposit in the individual development account of

17 each individual participating in the project, or into a par18 allel account maintained by the qualified entity—

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

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

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

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

23 the Internal Revenue Code of 1986) deposited in the

24 account by a project participant during that period;
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1 (2) from the grant made under section 6(b), an

2 amount equal to the matching contribution made

3 under paragraph (1); and

4 (3) any interest that has accrued on amounts

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

6 that individual into the individual development ac7 count of the individual or into a parallel account

8 maintained by the qualified entity.

9 (b) LIMITATION ON DEPOSITS FOR AN INDIVID10 UAL.—Not more than $2,000 from a grant made under

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

12 course of the demonstration project.

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

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

15 6(b) shall be provided to any 1 household over the course

16 of the demonstration project.

17 (d) WITHDRAWAL OF FUNDS.—The Secretary shall

18 establish such guidelines as may be necessary to ensure

19 that funds held in an individual development account are

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

21 Such guidelines shall include a requirement that a respon22 sible official of the qualified entity conducting a project

23 approve such withdrawal in writing.
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1 SEC. 11. LOCAL CONTROL OVER DEMONSTRATION

2 PROJECTS.

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

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

5 of section 13, have sole authority over the administration

6 of the project. The Secretary may prescribe only such reg7 ulations or guidelines with respect to demonstration

8 projects conducted under this Act as are necessary to en9 sure compliance with the approved applications and the

10 requirements of this Act.

11 SEC. 12. ANNUAL PROGRESS REPORTS.

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

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

14 demonstration project. Each report shall specify for the

15 period covered by the report the following information:

16 (1) The number of individuals making a deposit

17 into an individual development account.

18 (2) The amounts in the Reserve Fund estab19 lished with respect to the project.

20 (3) The amounts deposited in the individual de21 velopment accounts.

22 (4) The amounts withdrawn from the individual

23 development accounts and the purposes for which

24 such amounts were withdrawn.

25 (5) The balances remaining in the individual

26 development accounts.
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1 (6) Such other information as the Secretary

2 may require to evaluate the demonstration project.

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

4 shall submit each report required to be prepared under

5 subsection (a) to—

6 (1) the Secretary; and

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

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

9 or a local government committed funds to the dem10 onstration project.

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

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

13 end of the calendar year in which the Secretary authorized

14 the qualified entity to conduct the demonstration project,

15 and subsequent reports shall be submitted every 12

16 months thereafter, until the conclusion of the project.

17 SEC. 13. SANCTIONS.

18 (a) AUTHORITY TO TERMINATE DEMONSTRATION

19 PROJECT.—If the Secretary determines that a qualified

20 entity under this Act is not operating the demonstration

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

22 requirements of this Act (and has not implemented any

23 corrective recommendations directed by the Secretary),

24 the Secretary shall terminate such entity’s authority to

25 conduct the demonstration project.
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1 (b) ACTIONS REQUIRED UPON TERMINATION.—If

2 the Secretary terminates the authority to conduct a dem3 onstration project, the Secretary—

4 (1) shall suspend the demonstration project;

5 (2) shall take control of the Reserve Fund es6 tablished pursuant to section 7;

7 (3) shall make every effort to identify another

8 qualified entity (or entities) willing and able to con9 duct the project in accordance with the approved ap10 plication (or, as modified, if necessary to incorporate

11 the recommendations) and the requirements of this

12 Act;

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

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

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

16 conduct the project in accordance with the ap17 proved application (or, as modified, if nec18 essary, to incorporate the recommendations)

19 and the requirements of this Act;

20 (B) transfer to the entity (or entities) con21 trol over the Reserve Fund established pursuant

22 to section 7; and

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

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

25 the qualified entity (or entities) originally
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1 authorized to conduct the demonstration

2 project; and

3 (ii) the date of such authorization to

4 be the date of the original authorization;

5 and

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

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

8 found a qualified entity (or entities) described in

9 paragraph (3), shall—

10 (A) terminate the project; and

11 (B) from the amount remaining in the Re12 serve Fund established as part of the project,

13 remit to each source that provided funds under

14 section 5(b)(4) to the entity originally author15 ized to conduct the project, an amount that

16 bears the same ratio to the amount so remain17 ing as the amount provided by the source under

18 section 5(b)(4) bears to the amount provided by

19 all such sources under that section.

20 SEC. 14. EVALUATIONS.

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

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

23 into a contract with an independent research organization

24 to evaluate, individually and as a group, all qualified enti-
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1 ties and sources participating in the demonstration

2 projects conducted under this Act.

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

4 demonstration project conducted under this Act, the re5 search organization shall address the following factors:

6 (1) The savings account characteristics (such as

7 threshold amounts and match rates) required to

8 stimulate participation in the demonstration project,

9 and how such characteristics vary among different

10 populations or communities.

11 (2) What service configurations of the qualified

12 entity (such as peer support, structured planning ex13 ercises, mentoring, and case management) increase

14 the rate and consistency of participation in the dem15 onstration project and how such configurations vary

16 among different populations or communities.

17 (3) The economic, civic, psychological, and so18 cial effects of asset accumulation, and how such ef19 fects vary among different populations or commu20 nities.

21 (4) The effects of individual development ac22 counts on savings rates, homeownership, level of

23 education attained, and self-employment, and how

24 such effects vary among different populations or

25 communities.
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1 (5) The potential financial returns to the Fed2 eral Government and to other public sector and pri3 vate sector investors in individual development ac4 counts over a 5-year and 10-year period of time.

5 (6) The lessons to be learned from the dem6 onstration projects conducted under this Act and if

7 a permanent program of individual development ac8 counts should be established.

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

10 the Secretary.

11 (c) METHODOLOGICAL REQUIREMENTS.—In evaluat12 ing any demonstration project conducted under this Act,

13 the research organization shall—

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

15 compare participants with nonparticipants;

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

17 such quantitative data as are necessary to evaluate

18 the project thoroughly; and

19 (3) develop a qualitative assessment, derived

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

21 asset accumulation affects individuals and families.

22 (d) REPORTS BY THE SECRETARY.—

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

24 after the end of the calendar year in which the Sec25 retary first authorizes a qualified entity to conduct
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1 a demonstration project under this Act, and every

2 12 months thereafter until all demonstration

3 projects conducted under this Act are completed, the

4 Secretary shall submit to Congress an interim report

5 setting forth the results of the reports submitted

6 pursuant to section 12(b).

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

8 months after the conclusion of all demonstration

9 projects conducted under this Act, the Secretary

10 shall submit to Congress a final report setting forth

11 the results and findings of all reports and evalua12 tions conducted pursuant to this Act.

13 (e) EVALUATION EXPENSES.—The Secretary shall

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

15 purposes of this section.

16 SEC. 15. AUTHORIZATIONS OF APPROPRIATIONS.

17 There is authorized to be appropriated to carry out

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

19 2000, and 2001, to remain available until expended.

20 SEC. 16. FUNDS IN INDIVIDUAL DEVELOPMENT ACCOUNTS

21 OF DEMONSTRATION PROJECT PARTICI22 PANTS DISREGARDED FOR PURPOSES OF ALL

23 MEANS-TESTED FEDERAL PROGRAMS.

24 Notwithstanding any other provision of law that re25 quires consideration of 1 or more financial circumstances
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1 of an individual, for the purpose of determining eligibility

2 to receive, or the amount of, any assistance or benefit au3 thorized by such law to be provided to or for the benefit

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

5 an individual development account (as defined in section

6 4(4)) shall be disregarded for such purpose with respect

7 to any period during which the individual participates in

8 a demonstration project conducted under this Act (or

9 would be participating in such a project but for the sus10 pension of the project).

Æ