Notes on 42 U.S.C. § 604 : US Code - Notes

Search Notes on 42 U.S.C. § 604 : US Code - Notes

(Aug. 14, 1935, ch. 531, title IV, Sec. 404, as added Pub. L. 104-
193, title I, Sec. 103(a)(1), Aug. 22, 1996, 110 Stat. 2124;
amended Pub. L. 105-33, title V, Secs. 5002(a), 5503, 5514(c), Aug.
5, 1997, 111 Stat. 593, 609, 620; Pub. L. 105-178, title VIII, Sec.
8401(b), June 9, 1998, 112 Stat. 499; Pub. L. 105-200, title IV,
Sec. 403(a), July 16, 1998, 112 Stat. 670; Pub. L. 106-113, div. B,
Sec. 1000(a)(4) [title VIII, Sec. 801(d)], Nov. 29, 1999, 113 Stat.
1535, 1501A-283; Pub. L. 106-169, title IV, Sec. 401(l), Dec. 14,
1999, 113 Stat. 1858.)
REFERENCES IN TEXT
Part F of this subchapter, referred to in subsec. (a)(2), was
classified to section 681 et seq. of this title, prior to repeal by
Pub. L. 104-193, title I, Sec. 108(e), Aug. 22, 1996, 110 Stat.
2167.
The Child Care and Development Block Grant Act of 1990, referred
to in subsec. (d)(1)(B), is subchapter C (Sec. 658A et seq.) of
chapter 8 of subtitle A of title VI of Pub. L. 97-35, as added by
Pub. L. 101-508, title V, Sec. 5082(2), Nov. 5, 1990, 104 Stat.
1388-236, as amended, which is classified generally to subchapter
II-B (Sec. 9858 et seq.) of chapter 105 of this title. For complete
classification of this Act to the Code, see Short Title note set
out under section 9801 of this title and Tables.
The Internal Revenue Code of 1986, referred to in subsec.
(h)(2)(C), (3)(B)(i), (4), (5)(I), is classified generally to Title
26, Internal Revenue Code.
Section 1088(a) of title 20, referred to in subsec. (h)(5)(A)(i),
was repealed and section 1088(d) was redesignated section 1088(a),
by Pub. L. 105-244, title I, Sec. 101(c), Oct. 7, 1998, 112 Stat.
1617. Provisions similar to those in former section 1088(a)(1) are
now contained in section 1002(a)(1) of Title 20, Education.
Section 1141(a) of title 20, referred to in subsec. (h)(5)(A)(i),
was repealed by Pub. L. 105-244, Sec. 3, title I, Sec. 101(b),
title VII, Sec. 702, Oct. 7, 1998, 112 Stat. 1585, 1616, 1803,
effective Oct. 1, 1998.
Section 2471 of title 20, referred to in subsec. (h)(5)(A)(ii),
was omitted in the general amendment of chapter 44 (Sec. 2301 et
seq.) of Title 20, Education, by Pub. L. 105-332, Sec. 1(b), Oct.
31, 1998, 112 Stat. 3076.
Section 3037 of the Transportation Equity Act for the 21st
Century, referred to in subsec. (k)(1), (3), is section 3037 of
Pub. L. 105-178, title III, June 9, 1998, 112 Stat. 387, which is
set out as a note under section 5309 of Title 49, Transportation.
PRIOR PROVISIONS
A prior section 604, acts Aug. 14, 1935, ch. 531, title IV, Sec.
404, 49 Stat. 628; Aug. 28, 1950, ch. 809, title III, pt. 6, Sec.
361(c), (d), 64 Stat. 558; May 8, 1961, Pub. L. 87-31, Sec. 4, 75
Stat. 77; July 25, 1962, Pub. L. 87-543, title I, Secs.
104(a)(5)(B), 107(b), 76 Stat. 185, 189; Jan. 2, 1968, Pub. L. 90-
248, title II, Secs. 241(b)(4), 245, 81 Stat. 916, 918; Jan. 4,
1975, Pub. L. 93-647, Sec. 101(c)(6)(B), 88 Stat. 2360; July 18,
1984, Pub. L. 98-369, title VI, Sec. 2663(l)(1), 98 Stat. 1171,
related to deviation from State plan, prior to repeal by Pub. L.
104-193, Sec. 103(a)(1), as amended by Pub. L. 105-33, title V,
Sec. 5514(c), Aug. 5, 1997, 111 Stat. 620.
AMENDMENTS
1999 - Subsec. (e). Pub. L. 106-169 inserted "or tribe" after "A
State" and "to the State" and inserted "or tribal" after "under the
State".
Subsec. (k)(1)(C)(iii). Pub. L. 106-113 substituted "section
603(a)(5)(C)(iii) of this title" for "item (aa) or (bb) of section
603(a)(5)(C)(ii)(II) of this title".
1998 - Subsec. (d)(2). Pub. L. 105-178 amended heading and text
of par. (2) generally. Prior to amendment, text read as follows: "A
State may use not more than 10 percent of the amount of any grant
made to the State under section 603(a) of this title for a fiscal
year to carry out State programs pursuant to subchapter XX of this
chapter."
Subsec. (k). Pub. L. 105-200 added subsec. (k).
1997 - Pub. L. 105-33, Sec. 5514(c), made technical amendment to
directory language of Pub. L. 104-193, Sec. 103(a)(1), which
enacted this section.
Subsec. (a)(2). Pub. L. 105-33, Sec. 5503, inserted ", or (at the
option of the State) August 21, 1996" before period.
Subsec. (d)(1). Pub. L. 105-33, Sec. 5002(a)(1), substituted
"Subject to paragraph (2), a State may" for "A State may".
Subsec. (d)(2). Pub. L. 105-33, Sec. 5002(a)(2), amended heading
and text of par. (2) generally. Prior to amendment, text read as
follows: "Notwithstanding paragraph (1), not more than 1/3 of the
total amount paid to a State under this part for a fiscal year that
is used to carry out State programs pursuant to provisions of law
specified in paragraph (1) may be used to carry out State programs
pursuant to subchapter XX of this chapter."
EFFECTIVE DATE OF 1999 AMENDMENTS
Pub. L. 106-169, title IV, Sec. 401(l), Dec. 14, 1999, 113 Stat.
1858, provided that the amendment made by section 401(l) is
effective Dec. 14, 1999.
For effective date of amendment by Pub. L. 106-113, see section
1000(a)(4) [title VIII, Sec. 801(e)] of Pub. L. 106-113, set out as
a note under section 603 of this title.
EFFECTIVE DATE OF 1998 AMENDMENT
Pub. L. 105-178, title VIII, Sec. 8401(c), June 9, 1998, 112
Stat. 499, provided that: "The amendments made by this section
[amending this section and section 1397b of this title] take effect
on October 1, 1998."
EFFECTIVE DATE OF 1997 AMENDMENT
Section 5002(b) of Pub. L. 105-33 provided that: "The amendments
made by subsection (a) of this section [amending this section]
shall take effect as if included in the enactment of section 103(a)
of the Personal Responsibility and Work Opportunity Reconciliation
Act of 1996 [Pub. L. 104-193]."
Amendment by section 5503 of Pub. L. 105-33 effective as if
included in section 103(a) of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996, Pub. L. 104-193, at the
time such section 103(a) became law, see section 5518(a) of Pub. L.
105-33, set out as a note under section 602 of this title.
Amendment by section 5514(c) of Pub. L. 105-33 effective as if
included in the provision of Pub. L. 104-193 amended at the time
the provision became law, see section 5518(d) of Pub. L. 105-33,
set out as a note under section 862a of Title 21, Food and Drugs.
EFFECTIVE DATE
Section effective July 1, 1997, with transition rules relating to
State options to accelerate such date, rules relating to claims,
actions, and proceedings commenced before such date, rules relating
to closing out of accounts for terminated or substantially modified
programs and continuance in office of Assistant Secretary for
Family Support, and provisions relating to termination of
entitlement under AFDC program, see section 116 of Pub. L. 104-193,
as amended, set out as a note under section 601 of this title.
ASSETS FOR INDEPENDENCE
Pub. L. 105-285, title IV, Oct. 27, 1998, 112 Stat. 2759, as
amended by Pub. L. 106-554, Sec. 1(a)(1) [title VI, Secs. 602-
607(a), 608(a), 609, 610], Dec. 21, 2000, 114 Stat. 2763, 2763A-74
to 2763A-76; Pub. L. 107-110, title VII, Sec. 702(h), Jan. 8, 2002,
115 Stat. 1947, provided that:
"SEC. 401. SHORT TITLE.
"This title may be cited as the 'Assets for Independence Act'.
"SEC. 402. FINDINGS.
"Congress makes the following findings:
"(1) Economic well-being does not come solely from income,
spending, and consumption, but also requires savings, investment,
and accumulation of assets because assets can improve economic
independence and stability, connect individuals with a viable and
hopeful future, stimulate development of human and other capital,
and enhance the welfare of offspring.
"(2) Fully 1/2 of all Americans have either no, negligible,
or negative assets available for investment, just as the price of
entry to the economic mainstream, the cost of a house, an
adequate education, and starting a business, is increasing.
Further, the household savings rate of the United States lags far
behind other industrial nations, presenting a barrier to economic
growth.
"(3) In the current tight fiscal environment, the United States
should invest existing resources in high-yield initiatives. There
is reason to believe that the financial returns, including
increased income, tax revenue, and decreased welfare cash
assistance, resulting from individual development accounts will
far exceed the cost of investment in those accounts.
"(4) Traditional public assistance programs concentrating on
income and consumption have rarely been successful in promoting
and supporting the transition to increased economic self-
sufficiency. Income-based domestic policy should be complemented
with asset-based policy because, while income-based policies
ensure that consumption needs (including food, child care, rent,
clothing, and health care) are met, asset-based policies provide
the means to achieve greater independence and economic well-
being.
"SEC. 403. PURPOSES.
"The purposes of this title are to provide for the establishment
of demonstration projects designed to determine -
"(1) the social, civic, psychological, and economic effects of
providing to individuals and families with limited means an
incentive to accumulate assets by saving a portion of their
earned income;
"(2) the extent to which an asset-based policy that promotes
saving for postsecondary education, homeownership, and
microenterprise development may be used to enable individuals and
families with limited means to increase their economic self-
sufficiency; and
"(3) the extent to which an asset-based policy stabilizes and
improves families and the community in which the families live.
"SEC. 404. DEFINITIONS.
"In this title:
"(1) Applicable period. - The term 'applicable period' means,
with respect to amounts to be paid from a grant made for a
project year, the calendar year immediately preceding the
calendar year in which the grant is made.
"(2) Eligible individual. - The term 'eligible individual'
means an individual who is selected to participate in a
demonstration project by a qualified entity under section 409.
"(3) Emergency withdrawal. - The term 'emergency withdrawal'
means a withdrawal by an eligible individual that -
"(A) is a withdrawal of only those funds, or a portion of
those funds, deposited by the individual in the individual
development account of the individual;
"(B) is permitted by a qualified entity on a case-by-case
basis; and
"(C) is made for -
"(i) expenses for medical care or necessary to obtain
medical care, for the individual or a spouse or dependent of
the individual described in paragraph (8)(D);
"(ii) payments necessary to prevent the eviction of the
individual from the residence of the individual, or
foreclosure on the mortgage for the principal residence of
the individual, as defined in paragraph (8)(B); or
"(iii) payments necessary to enable the individual to meet
necessary living expenses following loss of employment.
"(4) Household. - The term 'household' means all individuals
who share use of a dwelling unit as primary quarters for living
and eating separate from other individuals.
"(5) Individual development account. -
"(A) In general. - The term 'individual development account'
means a trust created or organized in the United States
exclusively for the purpose of paying the qualified expenses of
an eligible individual, or enabling the eligible individual to
make an emergency withdrawal, but only if the written governing
instrument creating the trust contains the following
requirements:
"(i) No contribution will be accepted unless the
contribution is in cash or by check.
"(ii) The trustee is a federally insured financial
institution, or a State insured financial institution if no
federally insured financial institution is available.
"(iii) The assets of the trust will be invested in
accordance with the direction of the eligible individual
after consultation with the qualified entity providing
deposits for the individual under section 410.
"(iv) The assets of the trust will not be commingled with
other property except in a common trust fund or common
investment fund.
"(v) Except as provided in clause (vi), any amount in the
trust that is attributable to a deposit provided under
section 410 may be paid or distributed out of the trust only
for the purpose of paying the qualified expenses of the
eligible individual.
"(vi) Any balance in the trust on the day after the date on
which the individual for whose benefit the trust is
established dies shall be distributed within 30 days of that
date as directed by that individual to another individual
development account established for the benefit of an
eligible individual.
"(B) Custodial accounts. - For purposes of subparagraph (A),
a custodial account shall be treated as a trust if the assets
of the custodial account are held by a bank (as defined in
section 408(n) of the Internal Revenue Code of 1986 [26 U.S.C.
408(n)]) or another person who demonstrates, to the
satisfaction of the Secretary, that the manner in which such
person will administer the custodial account will be consistent
with the requirements of this title, and if the custodial
account would, except for the fact that it is not a trust,
constitute an individual development account described in
subparagraph (A). For purposes of this title, in the case of a
custodial account treated as a trust by reason of the preceding
sentence, the custodian of that custodial account shall be
treated as the trustee of the account.
"(6) Project year. - The term 'project year' means, with
respect to a demonstration project, any of the 5 consecutive 12-
month periods beginning on the date the project is originally
authorized to be conducted.
"(7) Qualified entity. -
"(A) In general. - The term 'qualified entity' means -
"(i) one or more not-for-profit organizations described in
section 501(c)(3) of the Internal Revenue Code of 1986 [26
U.S.C. 501(c)(3)] and exempt from taxation under section
501(a) of such Code;
"(ii) a State or local government agency, or a tribal
government, submitting an application under section 405
jointly with an organization described in clause (i); or
(iii) an entity that -
(I) is -
(aa) a credit union designated as a low-income credit
union by the National Credit Union Administration (NCUA);
or
(bb) an organization designated as a community
development financial institution by the Secretary of the
Treasury (or the Community Development Financial
Institutions Fund); and
(II) can demonstrate a collaborative relationship with a local
community-based organization whose activities are designed to
address poverty in the community and the needs of community
members for economic independence and stability.
"(B) Rule of construction. - Nothing in this paragraph shall
be construed as preventing an organization described in
subparagraph (A)(i) from collaborating with a financial
institution or for-profit community development corporation to
carry out the purposes of this title.
"(8) Qualified expenses. - The term 'qualified expenses' means
one or more of the following, as provided by a qualified entity:
"(A) Postsecondary educational expenses. - Postsecondary
educational expenses paid from an individual development
account directly to an eligible educational institution. In
this subparagraph:
"(i) Postsecondary educational expenses. - The term
'postsecondary educational expenses' means the following:
"(I) Tuition and fees. - Tuition and fees required for the
enrollment or attendance of a student at an eligible
educational institution.
"(II) Fees, books, supplies, and equipment. - Fees, books,
supplies, and equipment required for courses of instruction
at an eligible educational institution.
"(ii) Eligible educational institution. - The term
'eligible educational institution' means the following:
"(I) Institution of higher education. - An institution
described in section 101 or 102 of the Higher Education Act
of 1965 [20 U.S.C. 1001, 1002].
"(II) Postsecondary vocational education school. - An area
vocational education school (as defined in subparagraph (C)
or (D) of section 521(4) of the Carl D. Perkins Vocational
and Applied Technology Education Act (20 U.S.C. 2471(4)))
which is in any State (as defined in section 521(33) of such
Act), as such sections are in effect on the date of enactment
of this title [Oct. 27, 1998].
"(B) First-home purchase. - Qualified acquisition costs with
respect to a principal residence for a qualified first-time
homebuyer, if paid from an individual development account
directly to the persons to whom the amounts are due. In this
subparagraph:
"(i) Principal residence. - The term 'principal residence'
means a main residence, the qualified acquisition costs of
which do not exceed 120 percent of the average area purchase
price applicable to such residence.
"(ii) Qualified acquisition costs. - The term 'qualified
acquisition costs' means the costs of acquiring,
constructing, or reconstructing a residence. The term
includes any usual or reasonable settlement, financing, or
other closing costs.
"(iii) Qualified first-time homebuyer. -
"(I) In general. - The term 'qualified first-time homebuyer'
means an individual participating in the project involved
(and, if married, the individual's spouse) who has no present
ownership interest in a principal residence during the 3-year
period ending on the date of acquisition of the principal
residence to which this subparagraph applies.
"(II) Date of acquisition. - The term 'date of acquisition'
means the date on which a binding contract to acquire,
construct, or reconstruct the principal residence to which
this subparagraph applies is entered into.
"(C) Business capitalization. - Amounts paid from an
individual development account directly to a business
capitalization account that is established in a federally
insured financial institution (or in a State insured financial
institution if no federally insured financial institution is
available) and is restricted to use solely for qualified
business capitalization expenses. In this subparagraph:
"(i) Qualified business capitalization expenses. - The term
'qualified business capitalization expenses' means qualified
expenditures for the capitalization of a qualified business
pursuant to a qualified plan.
"(ii) Qualified expenditures. - The term 'qualified
expenditures' means expenditures included in a qualified
plan, including capital, plant, equipment, working capital,
and inventory expenses.
"(iii) Qualified business. - The term 'qualified business'
means any business that does not contravene any law or public
policy (as determined by the Secretary).
"(iv) Qualified plan. - The term 'qualified plan' means a
business plan, or a plan to use a business asset purchased,
which -
"(I) is approved by a financial institution, a microenterprise
development organization, or a nonprofit loan fund having
demonstrated fiduciary integrity;
"(II) includes a description of services or goods to be sold,
a marketing plan, and projected financial statements; and
"(III) may require the eligible individual to obtain the
assistance of an experienced entrepreneurial adviser.
"(D) Transfers to idas of family members. - Amounts paid from
an individual development account directly into another such
account established for the benefit of an eligible individual
who is -
"(i) the individual's spouse; or
"(ii) any dependent of the individual with respect to whom
the individual is allowed a deduction under section 151 of
the Internal Revenue Code of 1986 [26 U.S.C. 151].
"(9) Qualified savings of the individual for the period. - The
term 'qualified savings of the individual for the period' means
the aggregate of the amounts contributed by an individual to the
individual development account of the individual during the
period.
"(10) Secretary. - The term 'Secretary' means the Secretary of
Health and Human Services, acting through the Director of
Community Services.
"(11) Tribal government. - The term 'tribal government' means a
tribal organization, as defined in section 4 of the Indian Self-
Determination and Education Assistance Act (25 U.S.C. 450b) or a
Native Hawaiian organization, as defined in section 7207 of the
Native Hawaiian Education Act [20 U.S.C. 7517].
"SEC. 405. APPLICATIONS.
"(a) Announcement of Demonstration Projects. - Not later than 3
months after the date of enactment of this title [Oct. 27, 1998],
the Secretary shall publicly announce the availability of funding
under this title for demonstration projects and shall ensure that
applications to conduct the demonstration projects are widely
available to qualified entities.
"(b) Submission. - Not later than 6 months after the date of
enactment of this title, a qualified entity may submit to the
Secretary an application to conduct a demonstration project under
this title.
"(c) Criteria. - In considering whether to approve an application
to conduct a demonstration project under this title, the Secretary
shall assess the following:
"(1) Sufficiency of project. - The degree to which the project
described in the application appears likely to aid project
participants in achieving economic self-sufficiency through
activities requiring one or more qualified expenses.
"(2) Administrative ability. - The experience and ability of
the applicant to responsibly administer the project.
"(3) Ability to assist participants. - The experience and
ability of the applicant in recruiting, educating, and assisting
project participants to increase their economic independence and
general well-being through the development of assets.
"(4) Commitment of non-federal funds. - The aggregate amount of
direct funds from non-Federal public sector and from private
sources that are formally committed to the project as matching
contributions.
"(5) Adequacy of plan for providing information for evaluation.
- The adequacy of the plan for providing information relevant to
an evaluation of the project.
"(6) Other factors. - Such other factors relevant to the
purposes of this title as the Secretary may specify.
"(d) Preferences. - In considering an application to conduct a
demonstration project under this title, the Secretary shall give
preference to an application that -
"(1) demonstrates the willingness and ability to select
individuals described in section 408 who are predominantly from
households in which a child (or children) is living with the
child's biological or adoptive mother or father, or with the
child's legal guardian;
"(2) provides a commitment of non-Federal funds with a
proportionately greater amount of such funds committed from
private sector sources; and
"(3) targets such individuals residing within one or more
relatively well-defined neighborhoods or communities (including
rural communities) that experience high rates of poverty or
unemployment.
"(e) Approval. - Not later than 9 months after the date of
enactment of this title [Oct. 27, 1998], the Secretary shall, on a
competitive basis, approve such applications to conduct
demonstration projects under this title as the Secretary considers
to be appropriate, taking into account the assessments required by
subsections (c) and (d). The Secretary shall ensure, to the maximum
extent practicable, that the applications that are approved involve
a range of communities (both rural and urban) and diverse
populations.
"(f) Contracts With Nonprofit Entities. - The Secretary may
contract with an entity described in section 501(c)(3) of the
Internal Revenue Code of 1986 [26 U.S.C. 501(c)(3)] and exempt from
taxation under section 501(a) of such Code to carry out any
responsibility of the Secretary under this section or section 412
if -
"(1) such entity demonstrates the ability to carry out such
responsibility; and
"(2) the Secretary can demonstrate that such responsibility
would not be carried out by the Secretary at a lower cost.
"(g) Grandfathering of Existing Statewide Programs. - Any
statewide individual asset-building program that is carried out in
a manner consistent with the purposes of this title, that is
established under State law as of the date of enactment of this Act
[Oct. 27, 1998], and that as of such date is operating with an
annual State appropriation of not less than $1,000,000 in non-
Federal funds, shall be deemed to meet the eligibility
requirements of this subtitle [title], and the entity carrying out
the program shall be deemed to be a qualified entity. The Secretary
shall consider funding the statewide program as a demonstration
project described in this subtitle [title]. In considering the
statewide program for funding, the Secretary shall review an
application submitted by the entity carrying out such statewide
program under this section, notwithstanding the preference
requirements listed in subsection (d). Any program requirements
under sections 407 through 411 that are inconsistent with State
statutory requirements in effect on the date of enactment of this
Act, governing such statewide program, shall not apply to the
program.
"SEC. 406. DEMONSTRATION AUTHORITY; ANNUAL GRANTS.
"(a) Demonstration Authority. - If the Secretary approves an
application to conduct a demonstration project under this title,
the Secretary shall, not later than 10 months after the date of
enactment of this title [Oct. 27, 1998], authorize the applicant to
conduct the project for 5 project years in accordance with the
approved application and the requirements of this title.
"(b) Grant Authority. - For each project year of a demonstration
project conducted under this title, the Secretary may make a grant
to the qualified entity authorized to conduct the project. In
making such a grant, the Secretary shall make the grant on the
first day of the project year in an amount not to exceed the lesser
of -
"(1) the aggregate amount of funds committed as matching
contributions from non-Federal public or private sector sources;
or
"(2) $1,000,000.
"SEC. 407. RESERVE FUND.
"(a) Establishment. - A qualified entity under this title, other
than a State or local government agency or a tribal government,
shall establish a Reserve Fund that shall be maintained in
accordance with this section.
"(b) Amounts in Reserve Fund. -
"(1) In general. - As soon after receipt as is practicable, a
qualified entity shall deposit in the Reserve Fund established
under subsection (a) -
"(A) all funds provided to the qualified entity from any
public or private source in connection with the demonstration
project; and
"(B) the proceeds from any investment made under subsection
(c)(2).
"(2) Uniform accounting regulations. - The Secretary shall
prescribe regulations with respect to accounting for amounts in
the Reserve Fund established under subsection (a).
"(c) Use of Amounts in the Reserve Fund. -
"(1) In general. - A qualified entity shall use the amounts in
the Reserve Fund established under subsection (a) to -
"(A) assist participants in the demonstration project in
obtaining the skills (including economic literacy, budgeting,
credit, and counseling skills) and information necessary to
achieve economic self-sufficiency through activities requiring
qualified expenses;
"(B) provide deposits in accordance with section 410 for
individuals selected by the qualified entity to participate in
the demonstration project;
"(C) administer the demonstration project; and
"(D) provide the research organization evaluating the
demonstration project under section 414 with such information
with respect to the demonstration project as may be required
for the evaluation.
"(2) Authority to invest funds. -
"(A) Guidelines. - The Secretary shall establish guidelines
for investing amounts in the Reserve Fund established under
subsection (a) in a manner that provides an appropriate balance
between return, liquidity, and risk.
"(B) Investment. - A qualified entity shall invest the
amounts in its Reserve Fund that are not immediately needed to
carry out the provisions of paragraph (1), in accordance with
the guidelines established under subparagraph (A).
"(3) Limitation on uses. - Not more than 15 percent of the
amounts provided to a qualified entity under section 406(b) shall
be used by the qualified entity for the purposes described in
subparagraphs (A), (C), and (D) of paragraph (1), of which not
less than 2 percent of the amounts shall be used by the qualified
entity for the purposes described in paragraph (1)(D). Of the
total amount specified in this paragraph, not more than 7.5
percent shall be used for administrative functions under
paragraph (1)(C), including program management, reporting
requirements, recruitment and enrollment of individuals, and
monitoring. The remainder of the total amount specified in this
paragraph (not including the amount specified for use for the
purposes described in paragraph (1)(D)) shall be used for
nonadministrative functions described in paragraph (1)(A),
including case management, budgeting, economic literacy, and
credit counseling. If the cost of nonadministrative functions
described in paragraph (1)(A) is less than 5.5 percent of the
total amount specified in this paragraph, such excess funds may
be used for administrative functions. If two or more qualified
entities are jointly administering a project, no qualified entity
shall use more than its proportional share for the purposes
described in subparagraphs (A), (C), and (D) of paragraph (1).
"(d) Unused Federal Grant Funds Transferred to the Secretary When
Project Terminates. - Notwithstanding subsection (c), upon the
termination of any demonstration project authorized under this
section, the qualified entity conducting the project shall transfer
to the Secretary an amount equal to -
"(1) the amounts in its Reserve Fund at the time of the
termination; multiplied by
"(2) a percentage equal to -
"(A) the aggregate amount of grants made to the qualified
entity under section 406(b); divided by
"(B) the aggregate amount of all funds provided to the
qualified entity from all sources to conduct the project.
"SEC. 408. ELIGIBILITY FOR PARTICIPATION.
"(a) In General. - Any individual who is a member of a household
that is eligible for assistance under the State temporary
assistance for needy families program established under part A of
title IV of the Social Security Act (42 U.S.C. 601 et seq.), or
that meets each of the following requirements shall be eligible to
participate in a demonstration project conducted under this title:
"(1) Income test. - The adjusted gross income of the household
is equal to or less than 200 percent of the poverty line (as
determined by the Office of Management and Budget) or the earned
income amount described in section 32 of the Internal Revenue
Code of 1986 [26 U.S.C. 32] (taking into account the size of the
household).
"(2) Net worth test. -
"(A) In general. - The net worth of the household, as of the
end of the calendar year preceding the determination of
eligibility, does not exceed $10,000.
"(B) Determination of net worth. - For purposes of
subparagraph (A), the net worth of a household is the amount
equal to -
"(i) the aggregate market value of all assets that are
owned in whole or in part by any member of the household;
minus
"(ii) the obligations or debts of any member of the
household.
"(C) Exclusions. - For purposes of determining the net worth
of a household, a household's assets shall not be considered to
include the primary dwelling unit and one motor vehicle owned
by a member of the household.
"(b) Individuals Unable To Complete the Project. - The Secretary
shall establish such regulations as are necessary to ensure
compliance with this title if an individual participating in the
demonstration project moves from the community in which the project
is conducted or is otherwise unable to continue participating in
that project, including regulations prohibiting future eligibility
to participate in any other demonstration project conducted under
this title.
"SEC. 409. SELECTION OF INDIVIDUALS TO PARTICIPATE.
"From among the individuals eligible to participate in a
demonstration project conducted under this title, each qualified
entity shall select the individuals -
"(1) that the qualified entity determines to be best suited to
participate; and
"(2) to whom the qualified entity will provide deposits in
accordance with section 410.
"SEC. 410. DEPOSITS BY QUALIFIED ENTITIES.
"(a) In General. - Not less than once every 3 months during each
project year, each qualified entity under this title shall deposit
in the individual development account of each individual
participating in the project, or into a parallel account maintained
by the qualified entity -
"(1) from the non-Federal funds described in section 405(c)(4),
a matching contribution of not less than $0.50 and not more than
$4 for every $1 of earned income (as defined in section 911(d)(2)
of the Internal Revenue Code of 1986 [26 U.S.C. 911(d)(2)])
deposited in the account by a project participant during that
period;
"(2) from the grant made under section 406(b), an amount equal
to the matching contribution made under paragraph (1); and
"(3) any interest that has accrued on amounts deposited under
paragraph (1) or (2) on behalf of that individual into the
individual development account of the individual or into a
parallel account maintained by the qualified entity.
"(b) Limitation on Deposits for an Individual. - Not more than
$2,000 from a grant made under section 406(b) shall be provided to
any one individual over the course of the demonstration project.
"(c) Limitation on Deposits for a Household. - Not more than
$4,000 from a grant made under section 406(b) shall be provided to
any one household over the course of the demonstration project.
"(d) Withdrawal of Funds. - The Secretary shall establish such
guidelines as may be necessary to ensure that funds held in an
individual development account are not withdrawn, except for one or
more qualified expenses, or for an emergency withdrawal. Such
guidelines shall include a requirement that a responsible official
of the qualified entity conducting a project approve a withdrawal
from such an account in writing. The guidelines shall provide that
no individual may withdraw funds from an individual development
account earlier than 6 months after the date on which the
individual first deposits funds in the account.
"(e) Reimbursement. - An individual shall reimburse an individual
development account for any funds withdrawn from the account for an
emergency withdrawal, not later than 12 months after the date of
the withdrawal. If the individual fails to make the reimbursement,
the qualified entity administering the account shall transfer the
funds deposited into the account or a parallel account under this
section to the Reserve Fund of the qualified entity, and use the
funds to benefit other individuals participating in the
demonstration project involved.
"SEC. 411. LOCAL CONTROL OVER DEMONSTRATION PROJECTS.
"A qualified entity under this title, other than a State or local
government agency or a tribal government, shall, subject to the
provisions of section 413, have sole authority over the
administration of the project. The Secretary may prescribe only
such regulations or guidelines with respect to demonstration
projects conducted under this title as are necessary to ensure
compliance with the approved applications and the requirements of
this title.
"SEC. 412. ANNUAL PROGRESS REPORTS.
"(a) In General. - Each qualified entity under this title shall
prepare an annual report on the progress of the demonstration
project. Each report shall include both program and participant
information and shall specify for the period covered by the report
the following information:
"(1) The number and characteristics of individuals making a
deposit into an individual development account.
"(2) The amounts in the Reserve Fund established with respect
to the project.
"(3) The amounts deposited in the individual development
accounts.
"(4) The amounts withdrawn from the individual development
accounts and the purposes for which such amounts were withdrawn.
"(5) The balances remaining in the individual development
accounts.
"(6) The savings account characteristics (such as threshold
amounts and match rates) required to stimulate participation in
the demonstration project, and how such characteristics vary
among different populations or communities.
"(7) What service configurations of the qualified entity (such
as configurations relating to peer support, structured planning
exercises, mentoring, and case management) increased the rate and
consistency of participation in the demonstration project and how
such configurations varied among different populations or
communities.
"(8) Such other information as the Secretary may require to
evaluate the demonstration project.
"(b) Submission of Reports. - The qualified entity shall submit
each report required to be prepared under subsection (a) to -
"(1) the Secretary; and
"(2) the Treasurer (or equivalent official) of the State in
which the project is conducted, if the State or a local
government or a tribal government committed funds to the
demonstration project.
"(c) Timing. - The first report required by subsection (a) shall
be submitted not later than 60 days after the end of the project
year in which the Secretary authorized the qualified entity to
conduct the demonstration project, and subsequent reports shall be
submitted every 12 months thereafter, until the conclusion of the
project.
"SEC. 413. SANCTIONS.
"(a) Authority To Terminate Demonstration Project. - If the
Secretary determines that a qualified entity under this title is
not operating a demonstration project in accordance with the
entity's approved application under section 405 or the requirements
of this title (and has not implemented any corrective
recommendations directed by the Secretary), the Secretary shall
terminate such entity's authority to conduct the demonstration
project.
"(b) Actions Required Upon Termination. - If the Secretary
terminates the authority to conduct a demonstration project, the
Secretary -
"(1) shall suspend the demonstration project;
"(2) shall take control of the Reserve Fund established
pursuant to section 407;
"(3) shall make every effort to identify another qualified
entity (or entities) willing and able to conduct the project in
accordance with the approved application (or, if modification is
necessary to incorporate the recommendations, the application as
modified) and the requirements of this title;
"(4) shall, if the Secretary identifies an entity (or entities)
described in paragraph (3) -
"(A) authorize the entity (or entities) to conduct the
project in accordance with the approved application (or, if
modification is necessary to incorporate the recommendations,
the application as modified) and the requirements of this
title;
"(B) transfer to the entity (or entities) control over the
Reserve Fund established pursuant to section 407; and
"(C) consider, for purposes of this title -
"(i) such other entity (or entities) to be the qualified
entity (or entities) originally authorized to conduct the
demonstration project; and
"(ii) the date of such authorization to be the date of the
original authorization; and
"(5) if, by the end of the 1-year period beginning on the date
of the termination, the Secretary has not found a qualified
entity (or entities) described in paragraph (3), shall -
"(A) terminate the project; and
"(B) from the amount remaining in the Reserve Fund
established as part of the project, remit to each source that
provided funds under section 405(c)(4) to the entity originally
authorized to conduct the project, an amount that bears the
same ratio to the amount so remaining as the amount provided
from the source under section 405(c)(4) bears to the amount
provided from all such sources under that section.
"SEC. 414. EVALUATIONS.
"(a) In General. - Not later than 10 months after the date of
enactment of this title [Oct. 27, 1998], the Secretary shall enter
into a contract with an independent research organization to
evaluate the demonstration projects conducted under this title,
individually and as a group, including evaluating all qualified
entities participating in and sources providing funds for the
demonstration projects conducted under this title.
"(b) Factors To Evaluate. - In evaluating any demonstration
project conducted under this title, the research organization shall
address the following factors:
"(1) The effects of incentives and organizational or
institutional support on savings behavior in the demonstration
project.
"(2) The savings rates of individuals in the demonstration
project based on demographic characteristics including gender,
age, family size, race or ethnic background, and income.
"(3) The economic, civic, psychological, and social effects of
asset accumulation, and how such effects vary among different
populations or communities.
"(4) The effects of individual development accounts on savings
rates, homeownership, level of postsecondary education attained,
and self-employment, and how such effects vary among different
populations or communities.
"(5) The potential financial returns to the Federal Government
and to other public sector and private sector investors in
individual development accounts over a 5-year and 10-year period
of time.
"(6) The lessons to be learned from the demonstration projects
conducted under this title and if a permanent program of
individual development accounts should be established.
"(7) Such other factors as may be prescribed by the Secretary.
"(c) Methodological Requirements. - In evaluating any
demonstration project conducted under this title, the research
organization shall -
"(1) for at least one site, use control groups to compare
participants with nonparticipants;
"(2) before, during, and after the project, obtain such
quantitative data as are necessary to evaluate the project
thoroughly; and
"(3) develop a qualitative assessment, derived from sources
such as in-depth interviews, of how asset accumulation affects
individuals and families.
"(d) Reports by the Secretary. -
"(1) Interim reports. - Not later than 90 days after the end of
the project year in which the Secretary first authorizes a
qualified entity to conduct a demonstration project under this
title, and every 12 months thereafter until all demonstration
projects conducted under this title are completed, the Secretary
shall submit to Congress an interim report setting forth the
results of the reports submitted pursuant to section 412(b).
"(2) Final reports. - Not later than 12 months after the
conclusion of all demonstration projects conducted under this
title, the Secretary shall submit to Congress a final report
setting forth the results and findings of all reports and
evaluations conducted pursuant to this title.
"(e) Evaluation Expenses. - Of the amount appropriated under
section 416 for a fiscal year, the Secretary may expend not more
than $500,000 for such fiscal year to carry out the objectives of
this section.
"SEC. 415. NO REDUCTION IN BENEFITS.
"Notwithstanding any other provision of Federal law (other than
the Internal Revenue Code of 1986 [26 U.S.C. 1 et seq.]) that
requires consideration of one or more financial circumstances of an
individual, for the purpose of determining eligibility to receive,
or the amount of, any assistance or benefit authorized by such law
to be provided to or for the benefit of such individual, funds
(including interest accruing) in an individual development account
under this Act [see Short Title of 1998 Amendment note set out
under section 9801 of this title] shall be disregarded for such
purpose with respect to any period during which such individual
maintains or makes contributions into such an account.
"SEC. 416. AUTHORIZATION OF APPROPRIATIONS.
"There is authorized to be appropriated to carry out this title,
$25,000,000 for each of fiscal years 1999, 2000, 2001, 2002, and
2003, to remain available until expended."
[Pub. L. 106-554, Sec. 1(a)(1) [title VI, Sec. 607(b)], Dec. 21,
2000, 114 Stat. 2763, 2763A-76, provided that: "Notwithstanding the
amendment made by subsection (a) [amending section 412(c) of Pub.
L. 105-285, set out above], the submission of the initial report of
a qualified entity under section 412(c) [section 412(c) of Pub. L.
105-285, set out above] shall not be required prior to the date
that is 90 days after the date of enactment of this title [Dec. 21,
2000]."]
[Pub. L. 106-554, Sec. 1(a)(1) [title VI, Sec. 608(b)], Dec. 21,
2000, 114 Stat. 2763, 2763A-76, provided that: "Notwithstanding the
amendment made by subsection (a) [amending section 414(d)(1) of
Pub. L. 105-285, set out above], the submission of the initial
interim report of the Secretary under section 412(c) [section
412(c) of Pub. L. 105-285, set out above] shall not be required
prior to the date that is 90 days after the date of enactment of
this title [Dec. 21, 2000]."]