BILL REQ. #:  S-0894.1 

Read first time 01/26/2005.   Referred to Committee on International Trade & Economic Development.

     AN ACT Relating to individual development accounts; reenacting and amending RCW 43.79A.040; adding new sections to chapter 43.31 RCW; creating a new section; and making an appropriation.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   This act shall be known as the saving, earning, and enabling dreams (SEED) act.

NEW SECTION.  Sec. 2   A new section is added to chapter 43.31 RCW to read as follows:
     The legislature finds that economic well-being encompasses not only income, spending, and consumption, but also savings, investment, and asset-building. The building of assets, in particular, can improve individuals' economic independence and stability. The legislature further finds that it is appropriate for the state to institute an asset-based strategy to assist low-income families. It is the purpose of this act to promote job training, home ownership, and business development among low-income individuals and to provide assistance in meeting the financial goals of low-income individuals.

NEW SECTION.  Sec. 3   A new section is added to chapter 43.31 RCW to read as follows:
     The definitions in this section apply throughout sections 2 through 7 of this act unless the context clearly requires otherwise.
     (1) "Department" means the department of community, trade, and economic development.
     (2) "Director" means the director of the department of community, trade, and economic development.
     (3) "Foster youth" means a person who is fifteen years of age or older who is a dependent of the department of social and health services; or a person who is at least fifteen years of age, but not more than twenty-three years of age, who was a dependent of the department of social and health services for at least twenty-four months after attaining thirteen years of age.
     (4) "Individual development account" or "account" means an account established by contract between a low-income individual and a sponsoring organization for the benefit of the low-income individual and funded through periodic contributions by the low-income individual which are matched with contributions by or through the sponsoring organization.
     (5) "Low-income individual" means a person whose household income is equal to or less than either:
     (a) Eighty percent of the median family income, adjusted for household size, for the county or metropolitan statistical area where the person resides; or
     (b) Two hundred percent of the federal poverty guidelines updated periodically in the federal register by the United States department of health and human services under the authority of 42 U.S.C. 9902(2).
     (6) "Program" means the individual development account program established pursuant to sections 2 through 7 of this act.
     (7) "Sponsoring organization" means: (a) A nonprofit, fund-raising organization that is exempt from taxation under section 501(c)(3) of the Internal Revenue Code as amended and in effect on January 1, 2005; (b) a housing authority established under RCW 35.82.030; or (c) a federally recognized Indian tribe.

NEW SECTION.  Sec. 4   A new section is added to chapter 43.31 RCW to read as follows:
     An individual development account program is hereby established within the department for the purpose of facilitating the creation by sponsoring organizations of individual development accounts for low-income individuals.
     (1) The department shall select sponsoring organizations to establish and monitor individual development accounts using the following criteria:
     (a) The ability of the sponsoring organization to implement and administer an individual development account program, including the ability to verify a low-income individual's eligibility, certify that matching deposits are used only for approved purposes, and exercise general fiscal accountability;
     (b) The capacity of the sponsoring organization to provide or raise funds to match the contributions made by low-income individuals to their individual development accounts;
     (c) The capacity of the sponsoring organization to provide or arrange for the provision of financial counseling and other related services to low-income individuals;
     (d) The links the sponsoring organization has to other activities and programs related to the purpose of this act; and
     (e) Such other criteria as the department determines are consistent with the purpose of this act and ease of administration.
     (2) An individual development account may be established by or on behalf of an eligible low-income individual to enable the individual to accumulate funds for the following purposes:
     (a) The acquisition of postsecondary education or job training;
     (b) The purchase of a primary residence, including any usual or reasonable settlement, financing, or other closing costs;
     (c) The capitalization of a small business. Account moneys may be used for capital, land, plant, equipment, and inventory expenses or for working capital pursuant to a business plan. The business plan must have been developed with a business counselor, trainer, or financial institution approved by the sponsoring organization. The business plan shall include a description of the services or goods to be sold, a marketing strategy, and projected financial statements;
     (d) The purchase of a computer, an automobile, or home improvements; or
     (e) The purchase of assistive technologies that will allow a person with a disability to participate in work-related activities.
     (3) An eligible low-income individual may contribute to an individual development account such amounts as are derived from earned income or other income, as provided by the department. Other income shall include child support payments, supplemental security income, and disability benefits.
     (4) A sponsoring organization may authorize a low-income individual for whom an individual development account has been established to withdraw all or part of the individual's deposits for the following emergencies:
     (a) Necessary medical expenses;
     (b) To avoid eviction of the individual from the individual's residence;
     (c) Necessary living expenses following loss of employment; or
     (d) Such other circumstances as the sponsoring organization determines merit emergency withdrawal.
     The low-income individual making an emergency withdrawal shall reimburse the account for the amount withdrawn within twelve months of the date of withdrawal or the individual development account shall be closed.
     (5) Funds held in an individual development account established under sections 2 through 7 of this act shall not be used in the determination of eligibility for, or the amount of, assistance in any state or federal means-tested program.
     (6) The department shall adopt rules as necessary to implement this act, including rules regulating the use of individual development accounts by eligible low-income individuals. The department's rules shall require that funds held in an individual development account are to be withdrawn only for the purposes specified in subsection (2) of this section or withdrawn as permitted for emergencies under subsection (4) of this section.
     (7) Nothing in this section shall be construed to create an entitlement to matching moneys.

NEW SECTION.  Sec. 5   A new section is added to chapter 43.31 RCW to read as follows:
     (1) A foster youth individual development account program is hereby established within the individual development account program established pursuant to section 4 of this act for the purpose of facilitating the creation by sponsoring organizations of individual development accounts for foster youth.
     (2) The department shall select sponsoring organizations to establish and monitor individual development accounts for foster youth from those entities with whom the department of social and health services contracts for independent living services for youth who are or have been dependents of the department of social and health services.      (3) An individual development account may be established by or on behalf of a foster youth to enable the individual to accumulate funds for the following purposes:
     (a) The acquisition of postsecondary education or job training;
     (b) Housing needs, including rent, security deposit, and utilities costs;
     (c) The purchase of a computer if necessary for postsecondary education or job training;
     (d) The purchase of a car if necessary for employment; and
     (e) Payment of health insurance premiums.
     (4) A foster youth may contribute to an individual development account such amounts as are derived from earned income or other income, as provided by the department. Other income shall include financial incentives for educational achievement provided by entities contracted with the department of social and health services for independent living services for youth who are or have been dependents of the department of social and health services.

NEW SECTION.  Sec. 6   A new section is added to chapter 43.31 RCW to read as follows:
     (1) An account is created in the custody of the state treasurer to be known as the individual development account program account. The account shall consist of all moneys appropriated to the account by the legislature and any other federal, state, or private funds, appropriated or nonappropriated, as the department receives for the purpose of matching low-income individuals' contributions to their individual development accounts. Expenditures from the account may be used only for the following:
     (a) Grants to sponsoring organizations selected by the department to participate in the individual development account program to assist sponsoring organizations in providing or arranging for the provision of financial counseling and other related services to low-income individuals participating in the program and for program administration purposes;
     (b) A match to be determined by the department of up to four dollars for every dollar deposited by an individual into the individual's individual development account, except that the maximum amount provided as a match for each individual development account shall be four thousand dollars; and
     (c) The department's administrative expenses in carrying out the purposes of this act.
     (2) Only the director or the director's designee may authorize expenditures from the account.
     (3) The account is subject to allotment procedures under chapter 43.88 RCW, but an appropriation is not required for expenditures.

NEW SECTION.  Sec. 7   A new section is added to chapter 43.31 RCW to read as follows:
     Sponsoring organizations may seek additional funds to increase the match rate and the maximum annual match amount established pursuant to section 5 of this act. Such funds may also be used for purposes in addition to those provided in section 4(2) of this act.

Sec. 8   RCW 43.79A.040 and 2004 c 246 s 8 and 2004 c 58 s 10 are each reenacted and amended to read as follows:
     (1) Money in the treasurer's trust fund may be deposited, invested, and reinvested by the state treasurer in accordance with RCW 43.84.080 in the same manner and to the same extent as if the money were in the state treasury.
     (2) All income received from investment of the treasurer's trust fund shall be set aside in an account in the treasury trust fund to be known as the investment income account.
     (3) The investment income account may be utilized for the payment of purchased banking services on behalf of treasurer's trust funds including, but not limited to, depository, safekeeping, and disbursement functions for the state treasurer or affected state agencies. The investment income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for payments to financial institutions. Payments shall occur prior to distribution of earnings set forth in subsection (4) of this section.
     (4)(a) Monthly, the state treasurer shall distribute the earnings credited to the investment income account to the state general fund except under (b) and (c) of this subsection.
     (b) The following accounts and funds shall receive their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The Washington promise scholarship account, the college savings program account, the Washington advanced college tuition payment program account, the agricultural local fund, the American Indian scholarship endowment fund, the students with dependents grant account, the basic health plan self-insurance reserve account, the contract harvesting revolving account, the Washington state combined fund drive account, the Washington international exchange scholarship endowment fund, the developmental disabilities endowment trust fund, the energy account, the fair fund, the fruit and vegetable inspection account, the future teachers conditional scholarship account, the game farm alternative account, the grain inspection revolving fund, the juvenile accountability incentive account, the law enforcement officers' and fire fighters' plan 2 expense fund, the local tourism promotion account, the produce railcar pool account, the rural rehabilitation account, the stadium and exhibition center account, the youth athletic facility account, the self-insurance revolving fund, the sulfur dioxide abatement account, the children's trust fund, the Washington horse racing commission Washington bred owners' bonus fund account, the Washington horse racing commission class C purse fund account, the individual development account program account, and the Washington horse racing commission operating account (earnings from the Washington horse racing commission operating account must be credited to the Washington horse racing commission class C purse fund account). However, the earnings to be distributed shall first be reduced by the allocation to the state treasurer's service fund pursuant to RCW 43.08.190.
     (c) The following accounts and funds shall receive eighty percent of their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The advanced right of way revolving fund, the advanced environmental mitigation revolving account, the city and county advance right-of-way revolving fund, the federal narcotics asset forfeitures account, the high occupancy vehicle account, the local rail service assistance account, and the miscellaneous transportation programs account.
     (5) In conformance with Article II, section 37 of the state Constitution, no trust accounts or funds shall be allocated earnings without the specific affirmative directive of this section.

NEW SECTION.  Sec. 9   A new section is added to chapter 43.31 RCW to read as follows:
     The department shall annually report to the legislature and the governor on the individual development account program established pursuant to sections 2 through 7 of this act.

NEW SECTION.  Sec. 10   The sum of three million dollars, or as much thereof as may be necessary, is appropriated from the general fund to the individual development account program account for the biennium ending June 30, 2007, to carry out the purposes of this act.