95500. An individual development account program, to be known as
the California Savings and Asset Project, is hereby established. The
program shall be administered by the Employment Development
Department.
95501. This title shall become operative upon an appropriation of
funds by the Legislature, or the allocation of existing discretionary
funds by the Governor pursuant to Section 128(a) of the Workforce
Investment Act of 1998 (29 U.S.C. Sec. 2853(a)), for the specific
stated purpose of establishing the California Savings and Asset
Project. This title shall be implemented to the extent that funding
is appropriated in the annual Budget Act or any future act by the
Legislature, or allocated by the Governor.
95502. For purposes of this title, the following definitions apply:
(a) "Community development credit union" means any credit union
chartered under federal or state law.
(b) "Community development financial institution" means any
community development financial institution certified by the
Community 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-Determination
Act of 1996 (25 U.S.C. Sec. 4103(12)), and includes any tribal
subsidiary, subdivision, or other wholly owned tribal entity.
(e) "Individual development account" means a matched savings
account held in a financial institution, created or organized for an
individual as part of an individual development account program
earmarked for specific asset-building purposes.
(f) "Nonprofit facilitator" means the nonprofit organization
exempt from taxation under Section 501(c)(3) of the Internal Revenue
Code that contracts with the department for the project.
(g) "Participant" means any individual who has contracted with a
service provider to participate in the California Savings and Asset
Project.
(h) "Project" means the California Savings and Asset Project.
(i) "Qualified business capitalization" means qualified business
expenditures for the capitalization of a qualified business pursuant
to a qualified plan.
(j) "Qualified business expenditures" means expenditures included
in a qualified plan, including capital, plant, equipment, working
capital, and inventory expenses.
(k) "Qualified plan" means a business plan or a plan to use a
business 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 marketing
plan, and a projected financial statement; and requires the eligible
individual to obtain the assistance of an experienced entrepreneurial
adviser to review the plan for quality and completeness.
(l) "Service providers" means entities that contract with the
nonprofit facilitator, and that are nonprofit organizations exempt
from taxation under Section 501(c)(3) of the Internal Revenue Code,
community development credit unions, community development financial
institutions, or Indian tribes that are eligible to receive funds
appropriated or allocated for the project.
95503. (a) The department shall issue by July 1, 2003, a request
for proposals to entities that may apply to become the nonprofit
facilitator of the project. Applications shall include, but need not
be 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 the
project.
(3) A business plan, including a market assessment, to be
developed and used during the planning process, describing a target
group or target area and the needs to be served, and cultural
considerations.
(4) A marketing plan, including a description of the outreach and
recruitment of participants for the project that uses information
developed in the planning and market assessments.
(5) A description of project operations, including a description
of the fiscal management plan, staffing pattern, arrangements with
financial institutions, data management plan, and partnerships with
other organizations.
(6) A description of the accounting methods to be used and
evidence that the entity has the capacity to monitor pooled matching
funds and project funding.
(7) A financial projection, including a proposed budget and fund
development strategies.
(8) An annual audit.
(9) A description of primary project policies and procedures.
(10) A description and plan for delivery of personal financial
management training and asset-specific training.
(b) The department shall, with the cooperation of the nonprofit
facilitator, submit an annual report to the Legislature on the first
day of January, commencing in 2004. The report shall include, but is
not 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 financial
education.
(6) A minimum of two participant profiles.
(7) A financial report, including the use of state funds, other
leveraged 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 read
and score proposals by interested nonprofit facilitators in response
to the request for proposals. The review committee shall include a
staff member from the department and other experienced individual
development account practitioners from diverse communities.
(2) The review committee shall score the proposals according to
the components required in Section 95504, as well as best practice
standards agreed upon by the asset-building field and a demonstrated
capacity to conduct statewide activities and subcontract with service
providers around the state.
(d) The department shall select a nonprofit facilitator to
participate in the project based on the proposals submitted and
scored pursuant to this section.
(e) The department shall allocate funding to the nonprofit
facilitator for the project, subject to the requirements and
limitations of the funding source.
(f) The department shall annually pay the nonprofit facilitator up
to 10 percent of the project's total annual allocation for the
purpose described in Section 95504, and may reserve up to 5 percent
of the project's total annual allocation for its own administrative
purposes.
95504. (a) The nonprofit facilitator shall subcontract with service
providers to implement the project around the state. The nonprofit
facilitator shall make an attempt to select service providers for
programs of different size, geographical distribution, and target
population to be served. Additionally, the nonprofit facilitator may
consider giving special consideration to service providers that
demonstrate partnerships with local public agencies.
(b) The service providers shall perform all of the following
duties in implementing the project:
(1) Recruit and select participants who meet the following
criteria:
(A) The individual is at least 18 years of age.
(B) The individual is a member of a household with an income of
not more than 80 percent of the area median income based on United
States Department of Housing and Urban Development guidelines at the
time of program enrollment.
(C) The individual is not a dependent of another person for
federal income tax purposes.
(D) The individual is not a debtor for a judgment resulting from
nonpayment of a court-ordered child support obligation.
(E) The individual meets eligibility criteria as defined by the
funding source for the program created under this title.
(2) Develop and sign contracts with each participant, to include
all program requirements and policies governing the participant's
account.
(3) Assist participants in opening individual development
accounts. CalWORKs recipients participating in the project may
consider using a restricted account as described in Section 11155.2
of the Welfare and Institutions Code. Otherwise, the accounts shall
be established using a parallel account structure that meets both of
the following requirements:
(A) One separate account shall be established for each participant
in a federally or state insured financial institution, community
development financial institution, any financial institution eligible
to hold an individual retirement account, or community development
credit union, in which each participant's savings are deposited and
maintained. The program participant may withdraw his or her own
savings at any time.
(B) Another separate, parallel account shall be established and
maintained by service providers in which the matching funds from
state, federal, and private donations are kept. The parallel account
may contain all matching funds for a pool of any service provider's
participants.
(4) Help individuals receive their matching funds at the
conclusion of the program.
(5) Provide participants with a minimum of 12 hours of financial
education and training. The education and training shall include, but
need 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 do
not fulfill program participation requirements, and seek to ensure
that matching funds are used for their intended purposes.
(7) Collect and maintain information about their programs, in a
manner that provides the capacity to report semiannually all of the
following information to the department:
(A) The number and demographic characteristics of participants
enrolled 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 amount
of 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 service
provider shall, within six months of being selected to act as a
service provider, provide written documentation to the department
that it has secured matching funds from nonstate sources to match
each state dollar provided under this title.
(b) Service providers shall recruit and select participants who
meet 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 of
not more than 80 percent of the area median income based on United
States Department of Housing and Urban Development guidelines at the
time of program enrollment.
(3) The individual is not a dependent or another person for
federal income tax purposes.
(4) The individual is not a debtor for a judgment resulting from
nonpayment of a court-ordered child support obligation.
(c) Service providers shall develop and sign contracts with each
participant, to include all program requirements and policies
governing the participant's account.
(d) Service providers shall assist participants in opening
individual development accounts. The accounts shall be established
using a parallel account structure that meets both of the following
requirements:
(1) One separate account is established for each participant in a
federally or state insured financial institution, community
development financial institution, any financial institution eligible
to hold an individual retirement account, or community development
credit union, in which each participant's savings are deposited and
maintained. The program participant may withdraw his or her own
savings at any time.
(2) Another separate, parallel account is established and
maintained by service providers in which the matching funds from
state, federal, and private donations are kept. The parallel account
may contain all matching funds for a pool of any service provider's
participants.
(e) Service providers shall help individuals receive their
matching funds at the conclusion of the program. All state matching
funds shall be paid directly to the vendor as specified by the
program participant.
(f) Service providers shall provide participants with a minimum of
12 hours of financial education and training. The education and
training 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 process
for participants who do not fulfill program participation
requirements, and seek to ensure that matching funds are used for
their intended purposes.
(h) Service providers shall collect and maintain information about
their programs, and participants shall do so in a manner that
provides the capacity to report all of the following information,
semiannually, to the department:
(1) The number and demographic characteristics of participants
enrolled 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 amount
of 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 of
effort requirements.
(i) Each participant may save up to a maximum of three thousand
dollars ($3,000) in total, over the life of his or her individual
development account.
95506. Individuals selected to participate in the project shall do
all of the following:
(a) Contract with his or her service provider.
(b) Regularly deposit funds into the individual development
account. Participants may contribute to the individual development
account 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 development
accounts for any of the following purposes:
(1) Postsecondary and vocational education expenses, including
tuition, 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 disabled
participants when used to access employment, education, or training.
(5) Purchase of a vehicle to be used for employment, education, or
training purposes.
(6) Qualified business capitalization.
(d) Communicate regularly with the service provider regarding the
account.
(e) Participate in a minimum of 12 hours of training and education
provided by the service provider.
(f) Maintain savings in the individual development account for a
minimum of six months from the time the account was established.
95507. Pursuant to Internal Revenue Service Ruling 99-44, interest
earned on funds deposited in the individual development account by
the participant is taxable to the participant in the year it is
earned, and funds matched to an individual development account are
considered a gift at the time they are paid and, therefore, are not
considered taxable income to the participant.
95508. The financial institution in which an individual development
account is established shall:
(a) Have no greater duties or responsibilities as to an individual
development account than it has to any other savings account.
(b) Have no duty or responsibility to any withdrawal restriction
established in the contract between the participant and the service
provider.
95500. An individual development account program, to be known as
the California Savings and Asset Project, is hereby established. The
program shall be administered by the Employment Development
Department.
95501. This title shall become operative upon an appropriation of
funds by the Legislature, or the allocation of existing discretionary
funds by the Governor pursuant to Section 128(a) of the Workforce
Investment Act of 1998 (29 U.S.C. Sec. 2853(a)), for the specific
stated purpose of establishing the California Savings and Asset
Project. This title shall be implemented to the extent that funding
is appropriated in the annual Budget Act or any future act by the
Legislature, or allocated by the Governor.
95502. For purposes of this title, the following definitions apply:
(a) "Community development credit union" means any credit union
chartered under federal or state law.
(b) "Community development financial institution" means any
community development financial institution certified by the
Community 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-Determination
Act of 1996 (25 U.S.C. Sec. 4103(12)), and includes any tribal
subsidiary, subdivision, or other wholly owned tribal entity.
(e) "Individual development account" means a matched savings
account held in a financial institution, created or organized for an
individual as part of an individual development account program
earmarked for specific asset-building purposes.
(f) "Nonprofit facilitator" means the nonprofit organization
exempt from taxation under Section 501(c)(3) of the Internal Revenue
Code that contracts with the department for the project.
(g) "Participant" means any individual who has contracted with a
service provider to participate in the California Savings and Asset
Project.
(h) "Project" means the California Savings and Asset Project.
(i) "Qualified business capitalization" means qualified business
expenditures for the capitalization of a qualified business pursuant
to a qualified plan.
(j) "Qualified business expenditures" means expenditures included
in a qualified plan, including capital, plant, equipment, working
capital, and inventory expenses.
(k) "Qualified plan" means a business plan or a plan to use a
business 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 marketing
plan, and a projected financial statement; and requires the eligible
individual to obtain the assistance of an experienced entrepreneurial
adviser to review the plan for quality and completeness.
(l) "Service providers" means entities that contract with the
nonprofit facilitator, and that are nonprofit organizations exempt
from taxation under Section 501(c)(3) of the Internal Revenue Code,
community development credit unions, community development financial
institutions, or Indian tribes that are eligible to receive funds
appropriated or allocated for the project.
95503. (a) The department shall issue by July 1, 2003, a request
for proposals to entities that may apply to become the nonprofit
facilitator of the project. Applications shall include, but need not
be 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 the
project.
(3) A business plan, including a market assessment, to be
developed and used during the planning process, describing a target
group or target area and the needs to be served, and cultural
considerations.
(4) A marketing plan, including a description of the outreach and
recruitment of participants for the project that uses information
developed in the planning and market assessments.
(5) A description of project operations, including a description
of the fiscal management plan, staffing pattern, arrangements with
financial institutions, data management plan, and partnerships with
other organizations.
(6) A description of the accounting methods to be used and
evidence that the entity has the capacity to monitor pooled matching
funds and project funding.
(7) A financial projection, including a proposed budget and fund
development strategies.
(8) An annual audit.
(9) A description of primary project policies and procedures.
(10) A description and plan for delivery of personal financial
management training and asset-specific training.
(b) The department shall, with the cooperation of the nonprofit
facilitator, submit an annual report to the Legislature on the first
day of January, commencing in 2004. The report shall include, but is
not 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 financial
education.
(6) A minimum of two participant profiles.
(7) A financial report, including the use of state funds, other
leveraged 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 read
and score proposals by interested nonprofit facilitators in response
to the request for proposals. The review committee shall include a
staff member from the department and other experienced individual
development account practitioners from diverse communities.
(2) The review committee shall score the proposals according to
the components required in Section 95504, as well as best practice
standards agreed upon by the asset-building field and a demonstrated
capacity to conduct statewide activities and subcontract with service
providers around the state.
(d) The department shall select a nonprofit facilitator to
participate in the project based on the proposals submitted and
scored pursuant to this section.
(e) The department shall allocate funding to the nonprofit
facilitator for the project, subject to the requirements and
limitations of the funding source.
(f) The department shall annually pay the nonprofit facilitator up
to 10 percent of the project's total annual allocation for the
purpose described in Section 95504, and may reserve up to 5 percent
of the project's total annual allocation for its own administrative
purposes.
95504. (a) The nonprofit facilitator shall subcontract with service
providers to implement the project around the state. The nonprofit
facilitator shall make an attempt to select service providers for
programs of different size, geographical distribution, and target
population to be served. Additionally, the nonprofit facilitator may
consider giving special consideration to service providers that
demonstrate partnerships with local public agencies.
(b) The service providers shall perform all of the following
duties in implementing the project:
(1) Recruit and select participants who meet the following
criteria:
(A) The individual is at least 18 years of age.
(B) The individual is a member of a household with an income of
not more than 80 percent of the area median income based on United
States Department of Housing and Urban Development guidelines at the
time of program enrollment.
(C) The individual is not a dependent of another person for
federal income tax purposes.
(D) The individual is not a debtor for a judgment resulting from
nonpayment of a court-ordered child support obligation.
(E) The individual meets eligibility criteria as defined by the
funding source for the program created under this title.
(2) Develop and sign contracts with each participant, to include
all program requirements and policies governing the participant's
account.
(3) Assist participants in opening individual development
accounts. CalWORKs recipients participating in the project may
consider using a restricted account as described in Section 11155.2
of the Welfare and Institutions Code. Otherwise, the accounts shall
be established using a parallel account structure that meets both of
the following requirements:
(A) One separate account shall be established for each participant
in a federally or state insured financial institution, community
development financial institution, any financial institution eligible
to hold an individual retirement account, or community development
credit union, in which each participant's savings are deposited and
maintained. The program participant may withdraw his or her own
savings at any time.
(B) Another separate, parallel account shall be established and
maintained by service providers in which the matching funds from
state, federal, and private donations are kept. The parallel account
may contain all matching funds for a pool of any service provider's
participants.
(4) Help individuals receive their matching funds at the
conclusion of the program.
(5) Provide participants with a minimum of 12 hours of financial
education and training. The education and training shall include, but
need 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 do
not fulfill program participation requirements, and seek to ensure
that matching funds are used for their intended purposes.
(7) Collect and maintain information about their programs, in a
manner that provides the capacity to report semiannually all of the
following information to the department:
(A) The number and demographic characteristics of participants
enrolled 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 amount
of 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 service
provider shall, within six months of being selected to act as a
service provider, provide written documentation to the department
that it has secured matching funds from nonstate sources to match
each state dollar provided under this title.
(b) Service providers shall recruit and select participants who
meet 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 of
not more than 80 percent of the area median income based on United
States Department of Housing and Urban Development guidelines at the
time of program enrollment.
(3) The individual is not a dependent or another person for
federal income tax purposes.
(4) The individual is not a debtor for a judgment resulting from
nonpayment of a court-ordered child support obligation.
(c) Service providers shall develop and sign contracts with each
participant, to include all program requirements and policies
governing the participant's account.
(d) Service providers shall assist participants in opening
individual development accounts. The accounts shall be established
using a parallel account structure that meets both of the following
requirements:
(1) One separate account is established for each participant in a
federally or state insured financial institution, community
development financial institution, any financial institution eligible
to hold an individual retirement account, or community development
credit union, in which each participant's savings are deposited and
maintained. The program participant may withdraw his or her own
savings at any time.
(2) Another separate, parallel account is established and
maintained by service providers in which the matching funds from
state, federal, and private donations are kept. The parallel account
may contain all matching funds for a pool of any service provider's
participants.
(e) Service providers shall help individuals receive their
matching funds at the conclusion of the program. All state matching
funds shall be paid directly to the vendor as specified by the
program participant.
(f) Service providers shall provide participants with a minimum of
12 hours of financial education and training. The education and
training 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 process
for participants who do not fulfill program participation
requirements, and seek to ensure that matching funds are used for
their intended purposes.
(h) Service providers shall collect and maintain information about
their programs, and participants shall do so in a manner that
provides the capacity to report all of the following information,
semiannually, to the department:
(1) The number and demographic characteristics of participants
enrolled 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 amount
of 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 of
effort requirements.
(i) Each participant may save up to a maximum of three thousand
dollars ($3,000) in total, over the life of his or her individual
development account.
95506. Individuals selected to participate in the project shall do
all of the following:
(a) Contract with his or her service provider.
(b) Regularly deposit funds into the individual development
account. Participants may contribute to the individual development
account 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 development
accounts for any of the following purposes:
(1) Postsecondary and vocational education expenses, including
tuition, 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 disabled
participants when used to access employment, education, or training.
(5) Purchase of a vehicle to be used for employment, education, or
training purposes.
(6) Qualified business capitalization.
(d) Communicate regularly with the service provider regarding the
account.
(e) Participate in a minimum of 12 hours of training and education
provided by the service provider.
(f) Maintain savings in the individual development account for a
minimum of six months from the time the account was established.
95507. Pursuant to Internal Revenue Service Ruling 99-44, interest
earned on funds deposited in the individual development account by
the participant is taxable to the participant in the year it is
earned, and funds matched to an individual development account are
considered a gift at the time they are paid and, therefore, are not
considered taxable income to the participant.
95508. The financial institution in which an individual development
account is established shall:
(a) Have no greater duties or responsibilities as to an individual
development account than it has to any other savings account.
(b) Have no duty or responsibility to any withdrawal restriction
established in the contract between the participant and the service
provider.
95500. An individual development account program, to be known as
the California Savings and Asset Project, is hereby established. The
program shall be administered by the Employment Development
Department.
95501. This title shall become operative upon an appropriation of
funds by the Legislature, or the allocation of existing discretionary
funds by the Governor pursuant to Section 128(a) of the Workforce
Investment Act of 1998 (29 U.S.C. Sec. 2853(a)), for the specific
stated purpose of establishing the California Savings and Asset
Project. This title shall be implemented to the extent that funding
is appropriated in the annual Budget Act or any future act by the
Legislature, or allocated by the Governor.
95502. For purposes of this title, the following definitions apply:
(a) "Community development credit union" means any credit union
chartered under federal or state law.
(b) "Community development financial institution" means any
community development financial institution certified by the
Community 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-Determination
Act of 1996 (25 U.S.C. Sec. 4103(12)), and includes any tribal
subsidiary, subdivision, or other wholly owned tribal entity.
(e) "Individual development account" means a matched savings
account held in a financial institution, created or organized for an
individual as part of an individual development account program
earmarked for specific asset-building purposes.
(f) "Nonprofit facilitator" means the nonprofit organization
exempt from taxation under Section 501(c)(3) of the Internal Revenue
Code that contracts with the department for the project.
(g) "Participant" means any individual who has contracted with a
service provider to participate in the California Savings and Asset
Project.
(h) "Project" means the California Savings and Asset Project.
(i) "Qualified business capitalization" means qualified business
expenditures for the capitalization of a qualified business pursuant
to a qualified plan.
(j) "Qualified business expenditures" means expenditures included
in a qualified plan, including capital, plant, equipment, working
capital, and inventory expenses.
(k) "Qualified plan" means a business plan or a plan to use a
business 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 marketing
plan, and a projected financial statement; and requires the eligible
individual to obtain the assistance of an experienced entrepreneurial
adviser to review the plan for quality and completeness.
(l) "Service providers" means entities that contract with the
nonprofit facilitator, and that are nonprofit organizations exempt
from taxation under Section 501(c)(3) of the Internal Revenue Code,
community development credit unions, community development financial
institutions, or Indian tribes that are eligible to receive funds
appropriated or allocated for the project.
95503. (a) The department shall issue by July 1, 2003, a request
for proposals to entities that may apply to become the nonprofit
facilitator of the project. Applications shall include, but need not
be 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 the
project.
(3) A business plan, including a market assessment, to be
developed and used during the planning process, describing a target
group or target area and the needs to be served, and cultural
considerations.
(4) A marketing plan, including a description of the outreach and
recruitment of participants for the project that uses information
developed in the planning and market assessments.
(5) A description of project operations, including a description
of the fiscal management plan, staffing pattern, arrangements with
financial institutions, data management plan, and partnerships with
other organizations.
(6) A description of the accounting methods to be used and
evidence that the entity has the capacity to monitor pooled matching
funds and project funding.
(7) A financial projection, including a proposed budget and fund
development strategies.
(8) An annual audit.
(9) A description of primary project policies and procedures.
(10) A description and plan for delivery of personal financial
management training and asset-specific training.
(b) The department shall, with the cooperation of the nonprofit
facilitator, submit an annual report to the Legislature on the first
day of January, commencing in 2004. The report shall include, but is
not 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 financial
education.
(6) A minimum of two participant profiles.
(7) A financial report, including the use of state funds, other
leveraged 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 read
and score proposals by interested nonprofit facilitators in response
to the request for proposals. The review committee shall include a
staff member from the department and other experienced individual
development account practitioners from diverse communities.
(2) The review committee shall score the proposals according to
the components required in Section 95504, as well as best practice
standards agreed upon by the asset-building field and a demonstrated
capacity to conduct statewide activities and subcontract with service
providers around the state.
(d) The department shall select a nonprofit facilitator to
participate in the project based on the proposals submitted and
scored pursuant to this section.
(e) The department shall allocate funding to the nonprofit
facilitator for the project, subject to the requirements and
limitations of the funding source.
(f) The department shall annually pay the nonprofit facilitator up
to 10 percent of the project's total annual allocation for the
purpose described in Section 95504, and may reserve up to 5 percent
of the project's total annual allocation for its own administrative
purposes.
95504. (a) The nonprofit facilitator shall subcontract with service
providers to implement the project around the state. The nonprofit
facilitator shall make an attempt to select service providers for
programs of different size, geographical distribution, and target
population to be served. Additionally, the nonprofit facilitator may
consider giving special consideration to service providers that
demonstrate partnerships with local public agencies.
(b) The service providers shall perform all of the following
duties in implementing the project:
(1) Recruit and select participants who meet the following
criteria:
(A) The individual is at least 18 years of age.
(B) The individual is a member of a household with an income of
not more than 80 percent of the area median income based on United
States Department of Housing and Urban Development guidelines at the
time of program enrollment.
(C) The individual is not a dependent of another person for
federal income tax purposes.
(D) The individual is not a debtor for a judgment resulting from
nonpayment of a court-ordered child support obligation.
(E) The individual meets eligibility criteria as defined by the
funding source for the program created under this title.
(2) Develop and sign contracts with each participant, to include
all program requirements and policies governing the participant's
account.
(3) Assist participants in opening individual development
accounts. CalWORKs recipients participating in the project may
consider using a restricted account as described in Section 11155.2
of the Welfare and Institutions Code. Otherwise, the accounts shall
be established using a parallel account structure that meets both of
the following requirements:
(A) One separate account shall be established for each participant
in a federally or state insured financial institution, community
development financial institution, any financial institution eligible
to hold an individual retirement account, or community development
credit union, in which each participant's savings are deposited and
maintained. The program participant may withdraw his or her own
savings at any time.
(B) Another separate, parallel account shall be established and
maintained by service providers in which the matching funds from
state, federal, and private donations are kept. The parallel account
may contain all matching funds for a pool of any service provider's
participants.
(4) Help individuals receive their matching funds at the
conclusion of the program.
(5) Provide participants with a minimum of 12 hours of financial
education and training. The education and training shall include, but
need 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 do
not fulfill program participation requirements, and seek to ensure
that matching funds are used for their intended purposes.
(7) Collect and maintain information about their programs, in a
manner that provides the capacity to report semiannually all of the
following information to the department:
(A) The number and demographic characteristics of participants
enrolled 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 amount
of 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 service
provider shall, within six months of being selected to act as a
service provider, provide written documentation to the department
that it has secured matching funds from nonstate sources to match
each state dollar provided under this title.
(b) Service providers shall recruit and select participants who
meet 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 of
not more than 80 percent of the area median income based on United
States Department of Housing and Urban Development guidelines at the
time of program enrollment.
(3) The individual is not a dependent or another person for
federal income tax purposes.
(4) The individual is not a debtor for a judgment resulting from
nonpayment of a court-ordered child support obligation.
(c) Service providers shall develop and sign contracts with each
participant, to include all program requirements and policies
governing the participant's account.
(d) Service providers shall assist participants in opening
individual development accounts. The accounts shall be established
using a parallel account structure that meets both of the following
requirements:
(1) One separate account is established for each participant in a
federally or state insured financial institution, community
development financial institution, any financial institution eligible
to hold an individual retirement account, or community development
credit union, in which each participant's savings are deposited and
maintained. The program participant may withdraw his or her own
savings at any time.
(2) Another separate, parallel account is established and
maintained by service providers in which the matching funds from
state, federal, and private donations are kept. The parallel account
may contain all matching funds for a pool of any service provider's
participants.
(e) Service providers shall help individuals receive their
matching funds at the conclusion of the program. All state matching
funds shall be paid directly to the vendor as specified by the
program participant.
(f) Service providers shall provide participants with a minimum of
12 hours of financial education and training. The education and
training 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 process
for participants who do not fulfill program participation
requirements, and seek to ensure that matching funds are used for
their intended purposes.
(h) Service providers shall collect and maintain information about
their programs, and participants shall do so in a manner that
provides the capacity to report all of the following information,
semiannually, to the department:
(1) The number and demographic characteristics of participants
enrolled 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 amount
of 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 of
effort requirements.
(i) Each participant may save up to a maximum of three thousand
dollars ($3,000) in total, over the life of his or her individual
development account.
95506. Individuals selected to participate in the project shall do
all of the following:
(a) Contract with his or her service provider.
(b) Regularly deposit funds into the individual development
account. Participants may contribute to the individual development
account 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 development
accounts for any of the following purposes:
(1) Postsecondary and vocational education expenses, including
tuition, 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 disabled
participants when used to access employment, education, or training.
(5) Purchase of a vehicle to be used for employment, education, or
training purposes.
(6) Qualified business capitalization.
(d) Communicate regularly with the service provider regarding the
account.
(e) Participate in a minimum of 12 hours of training and education
provided by the service provider.
(f) Maintain savings in the individual development account for a
minimum of six months from the time the account was established.
95507. Pursuant to Internal Revenue Service Ruling 99-44, interest
earned on funds deposited in the individual development account by
the participant is taxable to the participant in the year it is
earned, and funds matched to an individual development account are
considered a gift at the time they are paid and, therefore, are not
considered taxable income to the participant.
95508. The financial institution in which an individual development
account is established shall:
(a) Have no greater duties or responsibilities as to an individual
development account than it has to any other savings account.
(b) Have no duty or responsibility to any withdrawal restriction
established in the contract between the participant and the service
provider.
