SECTIONS 95500-95508

95500.  An individual development account program, to be known asthe California Savings and Asset Project, is hereby established. Theprogram shall be administered by the Employment DevelopmentDepartment.95501.  This title shall become operative upon an appropriation offunds by the Legislature, or the allocation of existing discretionaryfunds by the Governor pursuant to Section 128(a) of the WorkforceInvestment Act of 1998 (29 U.S.C. Sec. 2853(a)), for the specificstated purpose of establishing the California Savings and AssetProject. This title shall be implemented to the extent that fundingis appropriated in the annual Budget Act or any future act by theLegislature, or allocated by the Governor.95502.  For purposes of this title, the following definitions apply: (a) "Community development credit union" means any credit unionchartered under federal or state law. (b) "Community development financial institution" means anycommunity development financial institution certified by theCommunity Development Financial Institution Fund. (c) "Department" means the Employment Development Department. (d) "Indian tribe" means any Indian tribe, as defined in Section 4(12) of the Native American Housing Assistance and Self-DeterminationAct of 1996 (25 U.S.C. Sec. 4103(12)), and includes any tribalsubsidiary, subdivision, or other wholly owned tribal entity. (e) "Individual development account" means a matched savingsaccount held in a financial institution, created or organized for anindividual as part of an individual development account programearmarked for specific asset-building purposes. (f) "Nonprofit facilitator" means the nonprofit organizationexempt from taxation under Section 501(c)(3) of the Internal RevenueCode that contracts with the department for the project. (g) "Participant" means any individual who has contracted with aservice provider to participate in the California Savings and AssetProject. (h) "Project" means the California Savings and Asset Project. (i) "Qualified business capitalization" means qualified businessexpenditures for the capitalization of a qualified business pursuantto a qualified plan. (j) "Qualified business expenditures" means expenditures includedin a qualified plan, including capital, plant, equipment, workingcapital, and inventory expenses. (k) "Qualified plan" means a business plan or a plan to use abusiness asset purchase that is approved by a financial institution,a business development training or technical assistance organization,or a nonprofit loan fund having demonstrated fiduciary integrity;contains a description of services, or goods to be sold, a marketingplan, and a projected financial statement; and requires the eligibleindividual to obtain the assistance of an experienced entrepreneurialadviser to review the plan for quality and completeness. (l) "Service providers" means entities that contract with thenonprofit facilitator, and that are nonprofit organizations exemptfrom taxation under Section 501(c)(3) of the Internal Revenue Code,community development credit unions, community development financialinstitutions, or Indian tribes that are eligible to receive fundsappropriated or allocated for the project.95503.  (a) The department shall issue by July 1, 2003, a requestfor proposals to entities that may apply to become the nonprofitfacilitator of the project. Applications shall include, but need notbe limited to, all of the following components: (1) A description of the organization submitting the proposal. (2) A description of the planning process used to design theproject. (3) A business plan, including a market assessment, to bedeveloped and used during the planning process, describing a targetgroup or target area and the needs to be served, and culturalconsiderations. (4) A marketing plan, including a description of the outreach andrecruitment of participants for the project that uses informationdeveloped in the planning and market assessments. (5) A description of project operations, including a descriptionof the fiscal management plan, staffing pattern, arrangements withfinancial institutions, data management plan, and partnerships withother organizations. (6) A description of the accounting methods to be used andevidence that the entity has the capacity to monitor pooled matchingfunds and project funding. (7) A financial projection, including a proposed budget and funddevelopment strategies. (8) An annual audit. (9) A description of primary project policies and procedures. (10) A description and plan for delivery of personal financialmanagement training and asset-specific training. (b) The department shall, with the cooperation of the nonprofitfacilitator, submit an annual report to the Legislature on the firstday of January, commencing in 2004. The report shall include, but isnot limited to, all of the following: (1) The number of enrolled participants. (2) The number of individual development accounts established. (3) The aggregate savings achievements. (4) The number of participants who have completed the program. (5) The number of participants who have completed financialeducation. (6) A minimum of two participant profiles. (7) A financial report, including the use of state funds, otherleveraged funds, and the status of other committed funds. (8) A summary of program achievements and obstacles. (9) Program and fiscal projections for the next year. (c) (1) The department shall assemble a review committee to readand score proposals by interested nonprofit facilitators in responseto the request for proposals. The review committee shall include astaff member from the department and other experienced individualdevelopment account practitioners from diverse communities. (2) The review committee shall score the proposals according tothe components required in Section 95504, as well as best practicestandards agreed upon by the asset-building field and a demonstratedcapacity to conduct statewide activities and subcontract with serviceproviders around the state. (d) The department shall select a nonprofit facilitator toparticipate in the project based on the proposals submitted andscored pursuant to this section. (e) The department shall allocate funding to the nonprofitfacilitator for the project, subject to the requirements andlimitations of the funding source. (f) The department shall annually pay the nonprofit facilitator upto 10 percent of the project's total annual allocation for thepurpose described in Section 95504, and may reserve up to 5 percentof the project's total annual allocation for its own administrativepurposes.95504.  (a) The nonprofit facilitator shall subcontract with serviceproviders to implement the project around the state. The nonprofitfacilitator shall make an attempt to select service providers forprograms of different size, geographical distribution, and targetpopulation to be served. Additionally, the nonprofit facilitator mayconsider giving special consideration to service providers thatdemonstrate partnerships with local public agencies. (b) The service providers shall perform all of the followingduties in implementing the project: (1) Recruit and select participants who meet the followingcriteria: (A) The individual is at least 18 years of age. (B) The individual is a member of a household with an income ofnot more than 80 percent of the area median income based on UnitedStates Department of Housing and Urban Development guidelines at thetime of program enrollment. (C) The individual is not a dependent of another person forfederal income tax purposes. (D) The individual is not a debtor for a judgment resulting fromnonpayment of a court-ordered child support obligation. (E) The individual meets eligibility criteria as defined by thefunding source for the program created under this title. (2) Develop and sign contracts with each participant, to includeall program requirements and policies governing the participant'saccount. (3) Assist participants in opening individual developmentaccounts. CalWORKs recipients participating in the project mayconsider using a restricted account as described in Section 11155.2of the Welfare and Institutions Code. Otherwise, the accounts shallbe established using a parallel account structure that meets both ofthe following requirements: (A) One separate account shall be established for each participantin a federally or state insured financial institution, communitydevelopment financial institution, any financial institution eligibleto hold an individual retirement account, or community developmentcredit union, in which each participant's savings are deposited andmaintained. The program participant may withdraw his or her ownsavings at any time. (B) Another separate, parallel account shall be established andmaintained by service providers in which the matching funds fromstate, federal, and private donations are kept. The parallel accountmay contain all matching funds for a pool of any service provider'sparticipants. (4) Help individuals receive their matching funds at theconclusion of the program. (5) Provide participants with a minimum of 12 hours of financialeducation and training. The education and training shall include, butneed not be limited to, all of the following: (A) Household and personal budget management. (B) Economic literacy. (C) Credit repair. (6) Develop a program dismissal process for participants who donot fulfill program participation requirements, and seek to ensurethat matching funds are used for their intended purposes. (7) Collect and maintain information about their programs, in amanner that provides the capacity to report semiannually all of thefollowing information to the department: (A) The number and demographic characteristics of participantsenrolled in the program. (B) The number of accounts established. (C) The individual and aggregate savings level of participants. (D) The number of participants who closed accounts and the amountof associated savings. (E) The actual and proposed program budget. (F) The size and origin of matching pool funds received,obligated, and paid to participants. (G) The program achievements and obstacles. (H) Twelve-month program and financial projections. (I) At least one participant profile.95505.  (a) Prior to receiving funds under this title, each serviceprovider shall, within six months of being selected to act as aservice provider, provide written documentation to the departmentthat it has secured matching funds from nonstate sources to matcheach state dollar provided under this title. (b) Service providers shall recruit and select participants whomeet the following criteria: (1) The individual is at least 18 years of age. (2) The individual is a member of a household with an income ofnot more than 80 percent of the area median income based on UnitedStates Department of Housing and Urban Development guidelines at thetime of program enrollment. (3) The individual is not a dependent or another person forfederal income tax purposes. (4) The individual is not a debtor for a judgment resulting fromnonpayment of a court-ordered child support obligation. (c) Service providers shall develop and sign contracts with eachparticipant, to include all program requirements and policiesgoverning the participant's account. (d) Service providers shall assist participants in openingindividual development accounts. The accounts shall be establishedusing a parallel account structure that meets both of the followingrequirements: (1) One separate account is established for each participant in afederally or state insured financial institution, communitydevelopment financial institution, any financial institution eligibleto hold an individual retirement account, or community developmentcredit union, in which each participant's savings are deposited andmaintained. The program participant may withdraw his or her ownsavings at any time. (2) Another separate, parallel account is established andmaintained by service providers in which the matching funds fromstate, federal, and private donations are kept. The parallel accountmay contain all matching funds for a pool of any service provider'sparticipants. (e) Service providers shall help individuals receive theirmatching funds at the conclusion of the program. All state matchingfunds shall be paid directly to the vendor as specified by theprogram participant. (f) Service providers shall provide participants with a minimum of12 hours of financial education and training. The education andtraining shall include, but is not limited to, all of the following: (1) Household and personal budget management. (2) Economic literacy. (3) Credit repair. (g) Service providers shall develop a program dismissal processfor participants who do not fulfill program participationrequirements, and seek to ensure that matching funds are used fortheir intended purposes. (h) Service providers shall collect and maintain information abouttheir programs, and participants shall do so in a manner thatprovides the capacity to report all of the following information,semiannually, to the department: (1) The number and demographic characteristics of participantsenrolled in the program. (2) The number of accounts established. (3) The individual and aggregate savings level of participants. (4) The number of participants who closed accounts and the amountof associated savings. (5) The actual and proposed program budget. (6) The size and origin of matching pool funds received,obligated, and paid to participants. (7) The program achievements and obstacles. (8) Twelve-month program and financial projections. (9) At least one participant profile, and state maintenance ofeffort requirements. (i) Each participant may save up to a maximum of three thousanddollars ($3,000) in total, over the life of his or her individualdevelopment account.95506.  Individuals selected to participate in the project shall doall of the following: (a) Contract with his or her service provider. (b) Regularly deposit funds into the individual developmentaccount. Participants may contribute to the individual developmentaccount using resources generated from the following sources: (1) Earned income. (2) Federal Earned Income Tax Credit refunds. (3) Disability benefits. (4) Child support payments. (5) AmeriCorps stipends. (6) Wages earned through self-employment. (7) Job training program stipends. (c) Select purchase goals for which the savings will be used.Participants may use savings generated by individual developmentaccounts for any of the following purposes: (1) Postsecondary and vocational education expenses, includingtuition, fees, books, supplies, and equipment. (2) Home purchase costs with respect to a principal residence. (3) Major home repair. (4) Assistive technology equipment or services for disabledparticipants when used to access employment, education, or training. (5) Purchase of a vehicle to be used for employment, education, ortraining purposes. (6) Qualified business capitalization. (d) Communicate regularly with the service provider regarding theaccount. (e) Participate in a minimum of 12 hours of training and educationprovided by the service provider. (f) Maintain savings in the individual development account for aminimum of six months from the time the account was established.95507.  Pursuant to Internal Revenue Service Ruling 99-44, interestearned on funds deposited in the individual development account bythe participant is taxable to the participant in the year it isearned, and funds matched to an individual development account areconsidered a gift at the time they are paid and, therefore, are notconsidered taxable income to the participant.95508.  The financial institution in which an individual developmentaccount is established shall: (a) Have no greater duties or responsibilities as to an individualdevelopment account than it has to any other savings account. (b) Have no duty or responsibility to any withdrawal restrictionestablished in the contract between the participant and the serviceprovider.