HB302 - FAMILY DEVELOPMENT ACCOUNTS - Boucher, Bill
HB302 ESTABLISHES THE FAMILY DEVELOPMENT ACCOUNT PROGRAM.
Sponsor: Boucher, Bill (48) Effective Date:00/00/00
CoSponsor: LR Number:0741-01
Last Action: COMMITTEE: SOCIAL SERVICES, MEDICAID, AND THE ELDERLY
HCS HB 302
Next Hearing:Hearing not scheduled
Calendar:Bill currently not on calendar
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Available Bill Summaries for HB302
| Committee | Introduced |


Available Bill Text for HB302
| Committee | Introduced |

Available Fiscal Notes for HB302
| House Committee Substitute | Introduced |

BILL SUMMARIES

COMMITTEE

HCS HB 302 -- FAMILY DEVELOPMENT ACCOUNTS

CO-SPONSORS:  Gunn (Boucher)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Social
Services, Medicaid and the Elderly by a vote of 12 to 2.

This substitute establishes the Family Development Account
Program within the Department of Economic Development (DED) to
encourage individuals with a household income at or below 200%
of the federal poverty level to establish savings accounts.
Funds in the account may only be used for specified purposes,
including the costs of higher education, job training, start-up
capitalization of a small business, major repairs or
improvements to a primary residence, and purchase of a primary
residence.  Individual account holders and contributors may
deposit moneys in the account, but total annual deposits for an
account may not exceed $2,000 per year and may not exceed a
maximum of $50,000.

The DED is to solicit proposals from community development
organizations, defined as not-for-profit religious or charitable
associations, to implement the program.  Such proposals must
include the requirement that individual account holders
financially match the cash contributions made to their
accounts.  In addition, proposals must specify what eligible
groups of individuals the organization plans to target for
participation in the program.  These organizations are also
authorized to oversee the program's reserve fund, which is used
for administrative costs and for distributing matching funds to
individual accounts.  Administrative costs may not exceed 20% of
all moneys in the reserve fund.

Moneys deposited in the account, interest accruing to the
account, and moneys withdrawn from the account are exempted from
state income tax.  Contributors to the program's reserve fund
are eligible for a credit against state income tax liability for
up to $50,000 per contributor and up to 50% of the amount
contributed.  The total amount of tax credits authorized for the
program is limited to $4 million per fiscal year.  The DED is to
submit verification of qualified tax credits to the Department
of Revenue.

The DED is to approve financial institutions wishing to
participate in the program.  These institutions are required to
deposit at least the market rate of interest on earnings in the
accounts, and to allow withdrawals, after the cosignature of the
community development organization administrator is obtained.
If moneys are withdrawn for nonauthorized purposes, a penalty of
15% is assessed, all matching moneys are forfeited, and the
account is closed.  All moneys from penalties and forfeitures on
matching funds are deposited in the program's reserve fund.

The DED is authorized, subject to appropriation, to award up to
$100,000 for an independent program evaluation.  Based on this
evaluation, the DED is to submit a report on the program to the
General Assembly by March 1 of each year, beginning in 1999.

FISCAL NOTE:  Not available at time of printing.

PROPONENTS:  Supporters say that these accounts will encourage
needy families to plan and save for the future, and will help
eliminate the tradition of punishing welfare recipients for
accruing savings to meet their families' needs.

Testifying for the bill were Representative Boucher;

Will Rainford, Washington University;  Michael Sherraden,
Washington University; Missouri Association for Social Welfare;
and Reform Organization of Welfare.

OPPONENTS:  There was no opposition voiced to the committee.

Debra Cheshier, Research Analyst


INTRODUCED

HB 302 -- Family Development Accounts

Sponsor:  Boucher

This bill establishes the Family Development Account Program
within the Department of Economic Development (DED) to encourage
individuals with a household income at or below 200% of the
federal poverty level to establish savings accounts.  Funds in
the account may only be used for specified purposes, including
the costs of higher education, job training, start-up
capitalization of a small business, major repairs or
improvements to a primary residence, and purchase of a primary
residence.  Individual account holders and contributors may
deposit moneys in the account, but total annual deposits for an
account may not exceed $2,000 per year and may not exceed a
maximum of $50,000.

The DED is to solicit proposals from community development
organizations, defined as not-for-profit religious or charitable
associations, to implement the program.  Such proposals must
include the requirement that individual account holders match
financial contributions to their accounts through cash,
volunteer work, counseling, self-improvement, training, and
support services.  These organizations are also authorized to
oversee the program's reserve fund, which is used for
administrative costs and for distributing matching funds to
individual accounts.

Moneys deposited in the account, interest accruing to the
account, and moneys withdrawn from the account are exempted from
state income tax.  Contributors to the program's reserve fund
are eligible for a credit against state income tax liability,
for up to $50,000 per contributor and up to 50% of the amount
contributed.  The total amount of tax credits authorized for the
program is limited to $4 million per fiscal year.  The DED is to
submit verification of qualified tax credits to the Department
of Revenue.

The DED is to approve financial institutions wishing to
participate in the program.  These institutions are required to
deposit the market rate of interest on earnings in the accounts,
and to allow withdrawals, after the cosignature of the community
development organization administrator is obtained.  If moneys
are withdrawn for nonauthorized purposes, a penalty of 15% is
assessed, all matching moneys are forfeited, and the account is
closed.  All moneys from penalties and forfeitures on matching
funds are deposited in the program's reserve fund.

The DED is authorized, subject to appropriation, to award up to
$100,000 for an independent program evaluation.  Based on this
evaluation, the DED is to submit a report on the program to the
General Assembly by March 1 of each year, beginning in 1999.


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Last Updated August 11, 1997 at 4:11 pm