[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4254 Introduced in House (IH)]







105th CONGRESS
  2d Session
                                H. R. 4254

  To amend the Community Services Block Grant Act to provide for the 
   establishment of demonstration projects designed to determine the 
  social, civic, psychological, and economic effects of providing to 
individuals and families with limited means an incentive to accumulate 
 assets and to determine the extent to which an asset-based policy may 
   be used to enable individuals and families with limited means to 
               increase their economic self-sufficiency.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 16, 1998

Mr. Hall of Ohio (for himself and Mr. Kasich) introduced the following 
  bill; which was referred to the Committee on Ways and Means, and in 
addition to the Committee on Education and the Workforce, for a period 
    to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

_______________________________________________________________________

                                 A BILL


 
  To amend the Community Services Block Grant Act to provide for the 
   establishment of demonstration projects designed to determine the 
  social, civic, psychological, and economic effects of providing to 
individuals and families with limited means an incentive to accumulate 
 assets and to determine the extent to which an asset-based policy may 
   be used to enable individuals and families with limited means to 
               increase their economic self-sufficiency.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. AMENDMENTS.

    The Community Services Block Grant Act (42 U.S.C. 9901-9912)is 
amended--
            (1) by striking ``This subtitle'' each place it appears 
        (other than in section 671) and inserting ``This subtitle'',
            (2) by striking ``this subtitle' each place it appears 
        (other than in section 671) and inserting ``this subtitle'',
            (3) by inserting the following after section 671:

               ``Part A--Community Services Grants'', and

            (4) by adding at the end the following:

                   ``Part B-- Assets for Independence

``SEC. 685. SHORT TITLE.

    ``This part may be cited as the `Assets for Independence Act'.

``SEC. 686. FINDINGS.

    ``Congress makes the following findings:
            ``(1) Economic well-being does not come solely from income, 
        spending, and consumption, but also requires savings, 
        investment, and accumulation of assets because assets can 
        improve economic independence and stability, connect 
        individuals with a viable and hopeful future, stimulate 
        development of human and other capital, and enhance the welfare 
        of offspring.
            ``(2) Fully \1/2\ of all Americans have either no, 
        negligible, or negative assets available for investment, just 
        as the price of entry to the economic mainstream, the cost of a 
        house, an adequate education, and starting a business, is 
        increasing. Further, the household savings rate of the United 
        States lags far behind other industrial nations presenting a 
        barrier to economic growth.
            ``(3) In the current tight fiscal environment, the United 
        States should invest existing resources in high-yield 
        initiatives. There is reason to believe that the financial 
        returns, including increased income, tax revenue, and decreased 
        welfare cash assistance, resulting from individual development 
        accounts will far exceed the cost of investment in those 
        accounts.
            ``(4) Traditional public assistance programs concentrating 
        on income and consumption have rarely been successful in 
        promoting and supporting the transition to increased economic 
        self-sufficiency. Income-based domestic policy should be 
        complemented with asset-based policy because, while income-
        based policies ensure that consumption needs (including food, 
        child care, rent, clothing, and health care) are met, asset-
        based policies provide the means to achieve greater 
independence and economic well-being.

``SEC. 687. PURPOSES.

    ``The purposes of this part are to provide for the establishment of 
demonstration projects designed to determine--
            ``(1) the social, civic, psychological, and economic 
        effects of providing to individuals and families with limited 
        means an incentive to accumulate assets by saving a portion of 
        their earned income;
            ``(2) the extent to which an asset-based policy that 
        promotes saving for postsecondary education, homeownership, and 
        microenterprise development may be used to enable individuals 
        and families with limited means to increase their economic 
        self-sufficiency; and
            ``(3) the extent to which an asset-based policy stabilizes 
        and improves families and the community in which they live.

``SEC. 688. DEFINITIONS.

    ``In this part:
            ``(1) Applicable period.--The term ``applicable period'' 
        means, with respect to amounts to be paid from a grant made for 
        a project year, the calendar year immediately preceding the 
        calendar year in which the grant is made.
            ``(2) Eligible individual.--The term ``eligible 
        individual'' means an individual who is selected to participate 
        by a qualified entity under section 693.
            ``(3) Emergency withdrawal.--The term ``emergency 
        withdrawal'' means a withdrawal by an eligible individual 
        that--
                    ``(A) is a withdrawal of only those funds, or a 
                portion of those funds, deposited by the individual in 
                the individual development account of the individual;
                    ``(B) is permitted by a qualified entity on a case-
                by-case basis; and
                    ``(C) is made for--
                            ``(i) expenses for medical care or 
                        necessary to obtain medical care, for the 
                        individual or a spouse or dependent of the 
                        individual described in paragraph (8)(D);
                            ``(ii) payments necessary to prevent the 
                        eviction of the individual from the residence 
                        of the individual, or foreclosure on the 
                        mortgage for the principal residence of the 
                        individual, as defined in paragraph (8)(B); or
                            ``(iii) payments necessary to enable the 
                        individual to meet necessary living expenses 
                        following loss of employment.
            ``(4) Household.--The term ``household'' means all 
        individuals who share use of a dwelling unit as primary 
        quarters for living and eating separate from other individuals.
            ``(5) Individual development account.--
                    ``(A) In general.--The term ``individual 
                development account'' means a trust created or 
                organized in the United States exclusively for the 
                purpose of paying the qualified expenses of an eligible 
                individual, or enabling the eligible individual to make 
                an emergency withdrawal, but only if the written 
                governing instrument creating the trust meets the 
                following requirements:
                            ``(i) No contribution will be accepted 
                        unless it is in cash or by check.
                            ``(ii) The trustee is a federally insured 
                        financial institution, or a State insured 
                        financial institution if no federally insured 
                        financial institution is available.
                            ``(iii) The assets of the trust will be 
                        invested in accordance with the direction of 
                        the eligible individual after consultation with 
                        the qualified entity providing deposits for the 
                        individual under section 694.
                            ``(iv) The assets of the trust will not be 
                        commingled with other property except in a 
                        common trust fund or common investment fund.
                            ``(v) Except as provided in clause (vi), 
                        any amount in the trust which is attributable 
                        to a deposit provided under section 694 may be 
                        paid or distributed out of the trust only for 
                        the purpose of paying the qualified expenses of 
                        the eligible individual, or enabling the 
                        eligible individual to make an emergency 
                        withdrawal.
                            ``(vi) Any balance in the trust on the day 
                        after the date on which the individual for 
                        whose benefit the trust is established dies 
                        shall be distributed within 30 days of that 
                        date as directed by that individual to another 
                        individual development account established for 
                        the benefit of an eligible individual.
                    ``(B) Custodial accounts.--For purposes of 
                subparagraph (A), a custodial account shall be treated 
                as a trust if the assets of the custodial account are 
                held by a bank (as defined in section 408(n) of the 
                Internal Revenue Code of 1986) or another person who 
                demonstrates, to the satisfaction of the Secretary, 
                that the manner in which such person will administer 
                the custodial account will be consistent with the 
                requirements of this part, and if the custodial account 
                would, except for the fact that it is not a trust, 
                constitute an individual development account described 
                in subparagraph (A). For purposes of this part, in the 
                case of a custodial account treated as a trust by 
                reason of the preceding sentence, the custodian of that 
                custodial account shall be treated as the trustee 
                thereof.
            ``(6) Project year.--The term ``project year'' means, with 
        respect to a demonstration project, any of the 5 consecutive 
        12-month periods beginning on the date the project is 
        originally authorized to be conducted.
            ``(7) Qualified entity.--
                    ``(A) In general.--The term ``qualified entity'' 
                means--
                            ``(i) one or more not-for-profit 
                        organizations described in section 501(c)(3) of 
                        the Internal Revenue Code of 1986 and exempt 
                        from taxation under section 501(a) of such 
                        Code; or
                            ``(ii) a State or local government agency, 
                        or a tribal government, submitting an 
                        application under section 689 jointly with an 
                        organization described in clause (i).
                    ``(B) Rule of construction.--Nothing in this 
                paragraph shall be construed as preventing an 
                organization described in subparagraph (A)(i) from 
                collaborating with a financial institution or for-
                profit community development corporation to carry out 
                the purposes of this part.
            ``(8) Qualified expenses.--The term ``qualified expenses'' 
        means 1 or more of the following, as provided by the qualified 
        entity:
                    ``(A) Postsecondary educational expenses.--
                Postsecondary educational expenses paid from an 
                individual development account directly to an eligible 
                educational institution. In this subparagraph:
                            ``(i) Postsecondary educational expenses.--
                        The term ``postsecondary educational expenses'' 
                        means the following:
                                    ``(I) Tuition and fees.--Tuition 
                                and fees required for the enrollment or 
                                attendance of a student at an eligible 
                                educational institution.
                                    ``(II) Fees, books, supplies, and 
                                equipment.--Fees, books, supplies, and 
                                equipment required for courses of 
                                instruction at an eligible educational 
                                institution.
                            ``(ii) Eligible educational institution.--
                        The term ``eligible educational institution'' 
                        means the following:
                                    ``(I) Institution of higher 
                                education.--An institution described in 
                                section 481(a)(1) or 1201(a) of the 
                                Higher Education Act of 1965 (20 U.S.C. 
                                1088(a)(1) or 1141(a)), as such 
                                sections are in effect on the date of 
                                enactment of this part.
                                    ``(II) Postsecondary vocational 
                                education school.--An area vocational 
                                education school (as defined in 
                                subparagraph (C) or (D) of section 
                                521(4) of the Carl D. Perkins 
                                Vocational and Applied Technology 
                                Education Act (20 U.S.C. 2471(4))) 
                                which is in any State (as defined in 
                                section 521(33) of such Act), as such 
                                sections are in effect on the date of 
                                enactment of this part.
                    ``(B) First-home purchase.--Qualified acquisition 
                costs with respect to a principal residence for a 
                qualified first-time homebuyer, if paid from an 
                individual development account directly to the persons 
                to whom the amounts are due. In this subparagraph:
                            ``(i) Principal residence.--The term 
                        ``principal residence'' means a principal 
                        residence, the qualified acquisition costs of 
                        which do not exceed 100 percent of the average 
                        area purchase price applicable to such 
                        residence.
                            ``(ii) Qualified acquisition costs.--The 
                        term ``qualified acquisition costs'' means the 
costs of acquiring, constructing, or reconstructing a residence. The 
term includes any usual or reasonable settlement, financing, or other 
closing costs.
                            ``(iii) Qualified first-time homebuyer.--
                                    ``(I) In general.--The term 
                                ``qualified first-time homebuyer'' 
                                means an individual participating in 
                                the project (and, if married, the 
                                individual's spouse) who has no present 
                                ownership interest in a principal 
                                residence during the 3-year period 
                                ending on the date of acquisition of 
                                the principal residence to which this 
                                subparagraph applies.
                                    ``(II) Date of acquisition.--The 
                                term ``date of acquisition'' means the 
                                date on which a binding contract to 
                                acquire, construct, or reconstruct the 
                                principal residence to which this 
                                subparagraph applies is entered into.
                    ``(C) Business capitalization.--Amounts paid from 
                an individual development account directly to a 
                business capitalization account which is established in 
                a federally insured financial institution (or in a 
                State insured financial institution if no federally 
                insured financial institution is available) and is 
                restricted to use solely for qualified business 
                capitalization expenses. In this subparagraph:
                            ``(i) Qualified business capitalization 
                        expenses.--The term ``qualified business 
                        capitalization expenses'' means qualified 
                        expenditures for the capitalization of a 
                        qualified business pursuant to a qualified 
                        plan.
                            ``(ii) Qualified expenditures.--The term 
                        ``qualified expenditures'' means expenditures 
                        included in a qualified plan, including 
                        capital, plant, equipment, working capital, and 
                        inventory expenses.
                            ``(iii) Qualified business.--The term 
                        ``qualified business'' means any business that 
                        does not contravene any law or public policy 
                        (as determined by the Secretary).
                            ``(iv) Qualified plan.--The term 
                        ``qualified plan'' means a business plan, or a 
                        plan to use a business asset purchased, which--
                                    ``(I) is approved by a financial 
                                institution, a microenterprise 
                                development organization, or a 
                                nonprofit loan fund having demonstrated 
                                fiduciary integrity;
                                    ``(II) includes a description of 
                                services or goods to be sold, a 
                                marketing plan, and projected financial 
                                statements; and
                                    ``(III) may require the eligible 
                                individual to obtain the assistance of 
                                an experienced entrepreneurial adviser.
                    ``(D) Transfers to idas of family members.--Amounts 
                paid from an individual development account directly 
                into another such account established for the benefit 
                of an eligible individual who is--
                            ``(i) the individual's spouse; or
                            ``(ii) any dependent of the individual with 
                        respect to whom the individual is allowed a 
                        deduction under section 151 of the Internal 
                        Revenue Code of 1986.
            ``(9) Qualified savings of the individual for the period.--
        The term ``qualified savings of the individual for the period'' 
        means the aggregate of the amounts contributed by the 
        individual to the individual development account of the 
        individual during the period.
            ``(10) Secretary.--The term ``Secretary'' means the 
        Secretary of Health and Human Services.
            ``(11) Tribal government.--The term ``tribal government'' 
        means a tribal organization, as defined in section 4 of the 
        Indian Self-Determination and Education Assistance Act (25 
        U.S.C. 450b) or a Native Hawaiian organization, as defined in 
        section 9212 of the Native Hawaiian Education Act (20 U.S.C. 
        7912).

``SEC. 689. APPLICATIONS.

    ``(a) Announcement of Demonstration Projects.--Not later than 3 
months after the date of enactment of this part, the Secretary shall 
publicly announce the availability of funding under this part for 
demonstration projects and shall ensure that applications to conduct 
the demonstration projects are widely available to qualified entities.
    ``(b) Submission.--Not later than 6 months after the date of 
enactment of this part, a qualified entity may submit to the Secretary 
an application to conduct a demonstration project under this part.
    ``(c) Criteria.--In considering whether to approve an application 
to conduct a demonstration project under this part, the Secretary shall 
assess the following:
            ``(1) Sufficiency of project.--The degree to which the 
        project described in the application appears likely to aid 
        project participants in achieving economic self-sufficiency 
        through activities requiring qualified expenses. In making such 
        assessment, the Secretary shall consider the overall quality of 
        project activities in making any particular kind or combination 
        of qualified expenses to be an essential feature of any 
        project.
            ``(2) Administrative ability.--The experience and ability 
        of the applicant to responsibly administer the project.
            ``(3) Ability to assist participants.--The experience and 
        ability of the applicant in recruiting, educating, and 
        assisting project participants to increase their economic 
        independence and general well-being through the development of 
        assets.
            ``(4) Commitment of non-federal funds.--The aggregate 
        amount of direct funds from non-Federal public sector and from 
        private sources that are formally committed to the project as 
        matching contributions.
            ``(5) Adequacy of plan for providing information for 
        evaluation.--The adequacy of the plan for providing information 
        relevant to an evaluation of the project.
            ``(6) Other factors.--Such other factors relevant to the 
        purposes of this part as the Secretary may specify.
    ``(d) Preferences.--In considering an application to conduct a 
demonstration project under this part, the Secretary shall give 
preference to an application that--
            ``(1) demonstrates the willingness and ability to select 
        individuals described in section 692 who are predominantly from 
        households in which a child (or children) is living with the 
        child's biological or adoptive mother or father, or with the 
        child's legal guardian;
            ``(2) provides a commitment of non-Federal funds with a 
        proportionately greater amount of such funds committed by 
        private sector sources; and
            ``(3) targets such individuals residing within 1 or more 
        relatively well-defined neighborhoods or communities (including 
        rural communities) that experience high rates of poverty or 
        unemployment.
    ``(e) Approval.--Not later than 9 months after the date of 
enactment of this part, the Secretary shall, on a competitive basis, 
approve such applications to conduct demonstration projects under this 
part as the Secretary deems appropriate, taking into account the 
assessments required by subsections (c) and (d). The Secretary is 
encouraged to ensure that the applications that are approved involve a 
range of communities (both rural and urban) and diverse populations.
    ``(f) Contracts With Nonprofit Entities.--The Secretary may 
contract with an entity described in section 501(c)(3) of the Internal 
Revenue Code of 1986 and exempt from taxation under section 501(a) of 
such Code to conduct any responsibility of the Secretary under this 
section or section 696 if--
            ``(1) such entity demonstrates the ability to conduct such 
        responsibility; and
            ``(2) the Secretary can demonstrate that such 
        responsibility would not be conducted by the Secretary at a 
        lower cost.

``SEC. 690. DEMONSTRATION AUTHORITY; ANNUAL GRANTS.

    ``(a) Demonstration Authority.--If the Secretary approves an 
application to conduct a demonstration project under this part, the 
Secretary shall, not later than 10 months after the date of enactment 
of this part, authorize the applicant to conduct the project for 5 
project years in accordance with the approved application and the 
requirements of this part.
    ``(b) Grant Authority.--For each project year of a demonstration 
project conducted under this part, the Secretary may make a grant to 
the qualified entity authorized to conduct the project. In making such 
a grant, the Secretary shall make the grant on the first day of the 
project year in an amount not to exceed the lesser of--
            ``(1) the aggregate amount of funds committed as matching 
        contributions by non-Federal public or private sector sources; 
        or
            ``(2) $1,000,000.

``SEC. 691. RESERVE FUND.

    ``(a) Establishment.--A qualified entity under this part, other 
than a State or local government agency, or a tribal government, shall 
establish a Reserve Fund which shall be maintained in accordance with 
this section.
    ``(b) Amounts in Reserve Fund.--
            ``(1) In general.--As soon after receipt as is practicable, 
        a qualified entity shall deposit in the Reserve Fund 
        established under subsection (a)--
                    ``(A) all funds provided to the qualified entity by 
                any public or private source in connection with the 
                demonstration project; and
                    ``(B) the proceeds from any investment made under 
                subsection (c)(2).
            ``(2) Uniform accounting regulations.--The Secretary shall 
        prescribe regulations with respect to accounting for amounts in 
        the Reserve Fund established under subsection (a).
    ``(c) Use of Amounts in the Reserve Fund.--
            ``(1) In general.--A qualified entity shall use the amounts 
        in the Reserve Fund established under subsection (a) to--
                    ``(A) assist participants in the demonstration 
                project in obtaining the skills (including economic 
                literacy, budgeting, credit, and counseling) and 
                information necessary to achieve economic self-
                sufficiency through activities requiring qualified 
                expenses;
                    ``(B) provide deposits in accordance with section 
                694 for individuals selected by the qualified entity to 
                participate in the demonstration project;
                    ``(C) administer the demonstration project; and
                    ``(D) provide the research organization evaluating 
                the demonstration project under section 698 with such 
                information with respect to the demonstration project 
                as may be required for the evaluation.
            ``(2) Authority to invest funds.--
                    ``(A) Guidelines.--The Secretary shall establish 
                guidelines for investing amounts in the Reserve Fund 
                established under subsection (a) in a manner that 
                provides an appropriate balance between return, 
                liquidity, and risk.
                    ``(B) Investment.--A qualified entity shall invest 
                the amounts in its Reserve Fund that are not 
                immediately needed to carry out the provisions of 
                paragraph (1), in accordance with the guidelines 
                established under subparagraph (A).
            ``(3) Limitation on uses.--Not more than 9.5 percent of the 
        amounts provided to a qualified entity under section 698(b) 
        shall be used by the qualified entity for the purposes 
        described in subparagraphs (A), (C), and (D) of paragraph (1), 
        of which not less than 2 percent of the amounts shall be used 
        by the qualified entity for the purposes described in paragraph 
        (1)(D). If 2 or more qualified entities are jointly 
        administering a project, no qualified entity shall use more 
        than its proportional share for the purposes described in 
        subparagraphs (A), (C), and (D) of paragraph (1).
    ``(d) Unused Federal Grant Funds Transferred to the Secretary When 
Project Terminates.--Notwithstanding subsection (c), upon the 
termination of any demonstration project authorized under this section, 
the qualified entity conducting the project shall transfer to the 
Secretary an amount equal to--
            ``(1) the amounts in its Reserve Fund at time of the 
        termination; multiplied by
            ``(2) a percentage equal to--
                    ``(A) the aggregate amount of grants made to the 
                qualified entity under section 698(b); divided by
                    ``(B) the aggregate amount of all funds provided to 
                the qualified entity by all sources to conduct the 
                project.

``SEC. 692. ELIGIBILITY FOR PARTICIPATION.

    ``(a) In General.--Any individual who is a member of a household 
that is eligible for assistance under the State temporary assistance 
for needy families program established under part A of title IV of the 
Social Security Act (42 U.S.C. 601 et seq.), or that meets each of the 
following requirements shall be eligible to participate in a 
demonstration project conducted under this part:
            ``(1) Income test.--The adjusted gross income of the 
        household does not exceed the earned income amount described in 
        section 32 of the Internal Revenue Code of 1986 (taking into 
        account the size of the household).
            ``(2) Net worth test.--
                    ``(A) In general.--The net worth of the household, 
                as of the end of the calendar year preceding the 
                determination of eligibility, does not exceed $10,000.
                    ``(B) Determination of net worth.--For purposes of 
                subparagraph (A), the net worth of a household is the 
                amount equal to--
                            ``(i) the aggregate market value of all 
                        assets that are owned in whole or in part by 
                        any member of the household; minus
                            ``(ii) the obligations or debts of any 
                        member of the household.
                    ``(C) Exclusions.--For purposes of determining the 
                net worth of a household, a household's assets shall 
                not be considered to include the primary dwelling unit 
                and 1 motor vehicle owned by the household.
    ``(b) Individuals Unable To Complete the Project.--The Secretary 
shall establish such regulations as are necessary, including 
prohibiting future eligibility to participate in any other 
demonstration project conducted under this part, to ensure compliance 
with this part if an individual participating in the demonstration 
project moves from the community in which the project is conducted or 
is otherwise unable to continue participating in that project.

``SEC. 693. SELECTION OF INDIVIDUALS TO PARTICIPATE.

    ``From among the individuals eligible to participate in a 
demonstration project conducted under this part, each qualified entity 
shall select the individuals--
            ``(1) that the qualified entity deems to be best suited to 
        participate; and
            ``(2) to whom the qualified entity will provide deposits in 
        accordance with section 694.

``SEC. 694. DEPOSITS BY QUALIFIED ENTITIES.

    ``(a) In General.--Not less than once every 3 months during each 
project year, each qualified entity under this Act shall deposit in the 
individual development account of each individual participating in the 
project, or into a parallel account maintained by the qualified 
entity--
            ``(1) from the non-Federal funds described in section 
        689(c)(4), a matching contribution of not less than $0.50 and 
        not more than $4 for every $1 of earned income (as defined in 
        section 911(d)(2) of the Internal Revenue Code of 1986) 
        deposited in the account by a project participant during that 
        period;
            ``(2) from the grant made under section 690(b), an amount 
        equal to the matching contribution made under paragraph (1); 
        and
            ``(3) any interest that has accrued on amounts deposited 
        under paragraph (1) or (2) on behalf of that individual into 
        the individual development account of the individual or into a 
        parallel account maintained by the qualified entity.
    ``(b) Limitation on Deposits for an Individual.--Not more than 
$2,000 from a grant made under section 690(b) shall be provided to any 
1 individual over the course of the demonstration project.
    ``(c) Limitation on Deposits for a Household.--Not more than $4,000 
from a grant made under section 690(b) shall be provided to any 1 
household over the course of the demonstration project.
    ``(d) Withdrawal of Funds.--The Secretary shall establish such 
guidelines as may be necessary to ensure that funds held in an 
individual development account are not withdrawn, except for 1 or more 
qualified expenses, or for an emergency withdrawal. Such guidelines 
shall include a requirement that a responsible official of the 
qualified entity conducting a project approve such withdrawal in 
writing. The guidelines shall provide that no individual may withdraw 
funds from an individual development account earlier than 6 months 
after the date on which the individual first deposits funds in the 
account.
    ``(e) Reimbursement.--An individual shall reimburse an individual 
development account for any funds withdrawn from the account for an 
emergency withdrawal, not later than 12 months after the date of the 
withdrawal. If the individual fails to make the reimbursement, the 
qualified entity administering the account shall transfer the funds 
deposited into the account or a parallel account under section 694 to 
the Reserve Fund of the qualified entity, and use the funds to benefit 
other individuals participating in the demonstration project involved.

``SEC. 695. LOCAL CONTROL OVER DEMONSTRATION PROJECTS.

    ``A qualified entity under this part, other than a State or local 
government agency or a tribal government, shall, subject to the 
provisions of section 697, have sole authority over the administration 
of the project. The Secretary may prescribe only such regulations or 
guidelines with respect to demonstration projects conducted under this 
part as are necessary to ensure compliance with the approved 
applications and the requirements of this part.

``SEC. 696. ANNUAL PROGRESS REPORTS.

    ``(a) In General.--Each qualified entity under this part shall 
prepare an annual report on the progress of the demonstration project. 
Each report shall include both program and participant information and 
shall specify for the period covered by the report the following 
information:
            ``(1) The number and characteristics of individuals making 
        a deposit into an individual development account.
            ``(2) The amounts in the Reserve Fund established with 
        respect to the project.
            ``(3) The amounts deposited in the individual development 
        accounts.
            ``(4) The amounts withdrawn from the individual development 
        accounts and the purposes for which such amounts were 
        withdrawn.
            ``(5) The balances remaining in the individual development 
        accounts.
            ``(6) The savings account characteristics (such as 
        threshold amounts and match rates) required to stimulate 
        participation in the demonstration project, and how such 
        characteristics vary among different populations or 
        communities.
            ``(7) What service configurations of the qualified entity 
        (such as peer support, structured planning exercises, 
        mentoring, and case management) increased the rate and 
        consistency of participation in the demonstration project and 
        how such configurations varied among different populations or 
        communities.
            ``(8) Such other information as the Secretary may require 
        to evaluate the demonstration project.
    ``(b) Submission of Reports.--The qualified entity shall submit 
each report required to be prepared under subsection (a) to--
            ``(1) the Secretary; and
            ``(2) the Treasurer (or equivalent official) of the State 
        in which the project is conducted, if the State or a local 
        government or a tribal government committed funds to the 
        demonstration project.
    ``(c) Timing.--The first report required by subsection (a) shall be 
submitted not later than 60 days after the end of the calendar year in 
which the Secretary authorized the qualified entity to conduct the 
demonstration project, and subsequent reports shall be submitted every 
12 months thereafter, until the conclusion of the project.

``SEC. 697. SANCTIONS.

    ``(a) Authority To Terminate Demonstration Project.--If the 
Secretary determines that a qualified entity under this part is not 
operating the demonstration project in accordance with the entity's 
application or the requirements of this part (and has not implemented 
any corrective recommendations directed by the Secretary), the 
Secretary shall terminate such entity's authority to conduct the 
demonstration project.
    ``(b) Actions Required Upon Termination.--If the Secretary 
terminates the authority to conduct a demonstration project, the 
Secretary--
            ``(1) shall suspend the demonstration project;
            ``(2) shall take control of the Reserve Fund established 
        pursuant to section 691;
            ``(3) shall make every effort to identify another qualified 
        entity (or entities) willing and able to conduct the project in 
        accordance with the approved application (or, as modified, if 
        necessary to incorporate the recommendations) and the 
        requirements of this part;
            ``(4) shall, if the Secretary identifies an entity (or 
        entities) described in paragraph (3)--
                    ``(A) authorize the entity (or entities) to conduct 
                the project in accordance with the approved application 
                (or, as modified, if necessary, to incorporate the 
                recommendations) and the requirements of this part;
                    ``(B) transfer to the entity (or entities) control 
                over the Reserve Fund established pursuant to section 
                691; and
                    ``(C) consider, for purposes of this part--
                            ``(i) such other entity (or entities) to be 
                        the qualified entity (or entities) originally 
                        authorized to conduct the demonstration 
                        project; and
                            ``(ii) the date of such authorization to be 
                        the date of the original authorization; and
            ``(5) if, by the end of the 1-year period beginning on the 
        date of the termination, the Secretary has not found a 
        qualified entity (or entities) described in paragraph (3), 
        shall--
                    ``(A) terminate the project; and
                    ``(B) from the amount remaining in the Reserve Fund 
                established as part of the project, remit to each 
                source that provided funds under section 689(c)(4) to 
                the entity originally authorized to conduct the 
                project, an amount that bears the same ratio to the 
                amount so remaining as the amount provided by the 
                source under section 689(c)(4) bears to the amount 
                provided by all such sources under that section.

``SEC. 698. EVALUATIONS.

    ``(a) In General.--Not later than 10 months after the date of 
enactment of this part, the Secretary shall enter into a contract with 
an independent research organization to evaluate, individually and as a 
group, all qualified entities and sources participating in the 
demonstration projects conducted under this part.
    ``(b) Factors To Evaluate.--In evaluating any demonstration project 
conducted under this part, the research organization shall address the 
following factors:
            ``(1) The effects of incentives and organizational or 
        institutional support on savings behavior in the demonstration 
        project.
            ``(2) The savings rates of individuals in the demonstration 
        project based on demographic characteristics including gender, 
        age, family size, race or ethnic background, and income.
            ``(3) The economic, civic, psychological, and social 
        effects of asset accumulation, and how such effects vary among 
        different populations or communities.
            ``(4) The effects of individual development accounts on 
        homeownership, level of postsecondary education attained, and 
        self-employment, and how such effects vary among different 
        populations or communities.
            ``(5) The potential financial returns to the Federal 
        Government and to other public sector and private sector 
        investors in individual development accounts over a 5-year and 
        10-year period of time.
            ``(6) The lessons to be learned from the demonstration 
        projects conducted under this part and if a permanent program 
        of individual development accounts should be established.
            ``(7) Such other factors as may be prescribed by the 
        Secretary.
    ``(c) Methodological Requirements.--In evaluating any demonstration 
project conducted under this part, the research organization shall--
            ``(1) for at least 1 site, use control groups to compare 
        participants with nonparticipants;
            ``(2) before, during, and after the project, obtain such 
        quantitative data as are necessary to evaluate the project 
        thoroughly; and
            ``(3) develop a qualitative assessment, derived from 
        sources such as in-depth interviews, of how asset accumulation 
        affects individuals and families.
    ``(d) Reports by the Secretary.--
            ``(1) Interim reports.--Not later than 90 days after the 
        end of the calendar year in which the Secretary first 
        authorizes a qualified entity to conduct a demonstration 
        project under this part, and every 12 months thereafter until 
        all demonstration projects conducted under this part are 
        completed, the Secretary shall submit to Congress an interim 
        report setting forth the results of the reports submitted 
        pursuant to section 696(b).
            ``(2) Final reports.--Not later than 12 months after the 
        conclusion of all demonstration projects conducted under this 
        part, the Secretary shall submit to Congress a final report 
        setting forth the results and findings of all reports and 
        evaluations conducted pursuant to this part.
    ``(e) Evaluation Expenses.--The Secretary shall expend such sums as 
may be necessary, but not less than 2 percent of the amount 
appropriated under section 699A for a fiscal year, to carry out the 
purposes of this section.

``SEC. 699. TREATMENT OF FUNDS.

    ``Funds (including interest accruing) deposited in individual 
development accounts shall not be considered to be income or assets for 
purposes of determining eligibility for, or the amount of assistance 
furnished under, any Federal or federally assisted program based on 
need.

``SEC. 699A. AUTHORIZATION OF APPROPRIATIONS.

    ``There is authorized to be appropriated to carry out this part, 
$25,000,000 for each of fiscal years 1999, 2000, 2001, 2002, and 2003 
to remain available until expended.''.
                                 <all>