Session of 2000
HOUSE BILL No. 2942
By Representatives Haley, Barnes, Gilbert, Henderson, Kirk,
Ruff,
Spangler, Toelkes and Wells
2-9
10 AN ACT
concerning indigent persons; establishing the family develop-
11 ment account program
and family development account reserve fund.
12
13 Be it enacted by the Legislature of the
State of Kansas:
14 Section
1. This act shall be known and may be cited as the family
15 development account program.
16 Sec. 2. As
used in this act:
17 (a) "Account
holder" means a person who is the owner of a family
18 development account.
19
(b) "Community-based organization" means any religious or
chari-
20 table association that is approved by the
secretary of commerce and hous-
21 ing to implement the family development
account reserve fund.
22 (c) "Department"
means the department of commerce and housing.
23 (d) "Family
development account" means a financial instrument es-
24 tablished in section 3, and amendments
thereto.
25 (e) "Family
development account reserve fund" means the fund cre-
26 ated by an approved community-based
organization for the purposes of
27 funding the costs incurred in the
administration of the program by the
28 financial institutions and the
community-based organizations and for pro-
29 viding matching funds for moneys in family
development accounts.
30 (f) "Federal
poverty level" means the most recent poverty income
31 guidelines published in the calendar year
by the United States depart-
32 ment of health and human services.
33 (g) "Financial
institution" means any bank, trust company, savings
34 bank, credit union or savings and loan
association or any other financial
35 institution regulated by the state of
Kansas, any agency of the United
36 States or other state with an office in
Kansas which is approved by the
37 secretary to create and manage the
necessary financial instruments setting
38 up family development accounts for eligible
families or individuals to
39 implement this program.
40 (h) "Matching
funds" means the moneys contributed from a family
41 development account reserve fund to a
family development account by a
42 community-based organization at a
one-to-one ratio up to a three-to-one
43 ratio.
2
1
(i) "Program" means the Kansas family development account
pro-
2 gram established in sections 1
through 7, and amendments thereto.
3
(j) "Program contributor" means a person or entity who makes a
con-
4 tribution to a family development
account reserve fund.
5
(k) "Secretary" means the secretary of commerce and
housing.
6 Sec.
3. (a) There is hereby established within the department a
pro-
7 gram to be known as the family
development account program. The pro-
8 gram shall provide eligible families
and individuals with an opportunity
9 to establish special savings accounts
for moneys which may be used by
10 such families and individuals for
education, home ownership or small
11 business capitalization.
12 (b) The secretary
shall adopt rules and regulations and policies to
13 implement and administer the provisions of
sections 1 through 8, and
14 amendments thereto.
15 (c) The secretary
shall enter into contracts as deemed appropriate to
16 carry out the provisions of this act.
17 (d) The
department of commerce and housing shall prepare a request
18 for proposals from community-based
organizations seeking to administer
19 a family development account reserve fund
on a not-for-profit basis. The
20 community-based organization proposals
shall include:
21 (1) A requirement
that the community-based organization make
22 matching contributions to the development
account of an individual ac-
23 count holder's or family's contributions to
the family development
24 account;
25 (2) a process for
including account holders in decision making re-
26 garding the investment of funds in the
accounts;
27
(3) specifications of the population or populations targeted
for pri-
28 ority participation in the program;
29 (4) a requirement
that the individual account holder or the family of
30 the account holder attend economic literacy
seminars;
31 (5) a process for
including economic literacy seminars in the family
32 development account program; and
33 (6) a process for
regular evaluation and review of family development
34 accounts to ensure program compliance by
account holders.
35 (e) A notice of
the request for proposals shall be published once a
36 week for two consecutive weeks in a
newspaper having general circulation
37 in the community at least 30 days before
any action thereon. The request
38 for proposals shall also be posted on
readily accessible bulletin boards in
39 all offices of the department and sent
elsewhere as the secretary of com-
40 merce and housing deems best.
41 (f) In reviewing
the proposals of community-based organizations, the
42 department shall consider the following
factors:
43 (1) The
not-for-profit status of such organization;
3
1 (2) the
fiscal accountability of the community-based organization;
2 (3) the
ability of the community-based organization to provide or
3 raise moneys for matching
contributions;
4 (4) the
ability of the community-based organization to establish and
5 administer a reserve fund account
which shall receive all contributions
6 from program contributors; and
7 (5) the
significance and quality of proposed auxiliary services;
includ-
8 ing economic literacy seminars and
their relationship to the goals of the
9 family development account
program.
10 (g) No more than
20% of all funds in the reserve fund account may
11 be used for administrative costs of the
program in the first and second
12 years of the program, and no more than 15%
of such funds may be used
13 for administrative costs in any subsequent
year. Funds deposited by ac-
14 count holders shall not be used for
administrative costs.
15 Sec. 4. A
family or individual whose household income is less than
16 or equal to 200% of the federal poverty
level may open a family devel-
17 opment account for the purpose of
accumulating and withdrawing mon-
18 eys for specified expenditures. The account
holder may withdraw moneys
19 from the account on the approval of the
financial institution, without
20 penalty, for any of the following
expenditures:
21 (a) Educational
costs for any family member at an accredited insti-
22 tution of higher education;
23 (b) job training
costs for any family member 18 years of age or older,
24 at an accredited or licensed training
program;
25 (c) purchase of a
primary residence;
26 (d) major repairs
or improvements to a primary residence; or
27 (e) start-up
capitalization of a small business for any family member
28 18 years of age or older.
29 Sec. 5. (a)
Financial institutions seeking to administer family devel-
30 opment accounts on a not-for-profit basis
approved by the department
31 shall be permitted to establish family
development accounts pursuant to
32 sections 1 through 7, and amendments
thereto. The financial institution
33 shall certify to the department, on forms
prescribed by the department
34 and accompanied by any documentation
required by the department, that
35 such accounts have been established
pursuant to this act and that deposits
36 have been made on behalf of the account
holder.
37 (b) A financial
institution establishing a family development account
38 shall:
39 (1) Keep the
account in the name of the account holder;
40 (2) permit
deposits to be made in the account by the following, sub-
41 ject to the indicated conditions:
42 (A) The account
holder; or
43 (B) a
community-based organization on behalf of the account holder.
4
1 Such a deposit may include moneys to
match the account holder's de-
2 posits, up to a three to one match
ratio;
3 (3) require
the account to earn at least the market rate of interest;
4 and
5 (4) permit
the account holder to withdraw moneys from the account
6 for any of the purposes listed in
subsections (a) through (e) of section 4,
7 and amendments thereto.
8 (c) The
total of all deposits by the account holder into a family de-
9 velopment account in a calendar year
shall not exceed $2,000. The total
10 balance in a family development account at
any time shall not exceed
11 $50,000.
12 Sec. 6. (a)
Account holders who withdraw moneys from a family de-
13 velopment account not in accordance with
subsections (a) through (e) of
14 section 4, and amendments thereto, shall
forfeit all matching moneys in
15 the account.
16 (b) All moneys
forfeited by an account holder pursuant to subsection
17 (a) shall be returned to the family
development account reserve fund of
18 the contributing community-based
organization.
19 (c) In the event
of an account holder's death, the account may be
20 transferred to the ownership of a
contingent beneficiary. An account
21 holder shall name contingent beneficiaries
at the time the account is
22 established and may change such
beneficiaries at any time. If the named
23 beneficiary is deceased or otherwise cannot
accept the transfer, the mon-
24 eys shall be transferred to the family
development account reserve fund
25 of the contributing community-based
organization.
26 Sec. 7. (a)
Moneys deposited in a family development account by an
27 account holder, pursuant to section 4, and
amendments thereto, shall be
28 exempt from income taxation imposed under
the Kansas income tax act
29 unless withdrawn for an unapproved use.
30 (b) Earnings by
any financial institution attributable to its family de-
31 velopment accounts shall be exempt from
privilege taxation imposed by
32 article 11 of chapter 79 of the Kansas
Statutes Annotated.
33 (c) Interest
earned by a family development account shall be exempt
34 from taxation under the Kansas income tax
act.
35 (d) Any funds in
a family development account, including accrued
36 interest, shall be disregarded when
determining eligibility to receive, or
37 the amount of, any public assistance or
benefits.
38 (e) A program
contributor shall be allowed a credit against state in-
39 come tax imposed under the Kansas income
tax act in an amount not to
40 exceed $50,000 per program contributor or
50% of the contribution
41 amount, whichever is less.
42 (f) The
department of commerce and housing shall verify all tax credit
43 claims by contributors. The administration
of the community-based or-
5
1 ganization, with the cooperation of
the participating financial institutions,
2 shall submit the names of
contributors and the total amount each con-
3 tributor contributes to the family
development account reserve fund for
4 the calendar year. The secretary
shall determine the date by which such
5 information shall be submitted to the
secretary by the local administrator.
6 The department shall submit
verification of qualified tax credits pursuant
7 to sections 1 through 7 and
amendments thereto to the department of
8 revenue.
9 (g) The
total tax credits authorized pursuant to this section shall not
10 exceed $4,000,000 in any fiscal year.
11 (h) The
provisions of this section shall be applicable to all taxable
12 years commencing after December 31,
1999.
13 Sec. 8. (a)
Subject to appropriations, the department shall award an-
14 nually up to $100,000 for an independent
evaluation of the program. The
15 secretary shall develop the necessary
criteria and prepare requests for
16 proposals to perform an independent
evaluation of the program. Notice
17 for the request for proposals shall be
performed as set out in subsection
18 (e) of section 3 and amendments
thereto.
19 (b) Based on the
independent evaluation, the department shall pro-
20 vide a comprehensive report on the program
to the legislature during
21 each legislative session, beginning in the
year 2001.
22 Sec. 9. This act shall
take effect and be in force from and after its
23 publication in the statute book.