[Congressional Record Volume 143, Number 111 (Thursday, July 31, 1997)]
[Senate]
[Pages S8567-S8571]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. COATS:
  S. 1106. A bill 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 opportunity 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 achieve economic self-sufficiency; to 
the Committee on Finance.


                     THE ASSETS OF INDEPENDENCE ACT

  Mr. COATS. Mr. President, I am pleased to introduce for Independence 
Act, bipartisan legislation designed to help poor and working-poor 
Americans build the productive assets they need to get out of poverty 
and invest in their future.
  Just as people can't borrow their way out of debt, they can't spend 
their way out of poverty. To move forward, America's struggling 
families need assets. For assets are ``hope in concrete form.'' While 
our Nation has wisely recognized this fact for our middle- and upper-
income families by subsidizing, through the Tax Code, the acquisition 
of homes and retirement accounts, we have not extended these very 
sensible policies to our lower-income citizens. In fact, they are often 
penalized if they try to save.
  My legislation will change that, and set them on a path to economic 
independence. And, by increasing our national savings rate, it will 
help set America on a path to greater productivity and prosperity. I 
truly believe that IDA's can be to the 21st century what the Homestead 
Act was to the 19th and what the GI Bill was to the 20th--an investment 
in the common genius of the American people. The truth, Mr. President, 
is that we have spent billions on the poor, but we have rarely invested 
in them. And I say emphatically that IDA's are not a give-away--they 
are an investment.
  The Assets for Independence Act authorizes the Department of Health 
and Human Services to establish community-based Individual Development 
Account [IDA] programs throughout the country. IDA's are matched 
savings accounts that can be used by low-income people to acquire a 
first home, a small business or post-secondary education or training. 
To help the poor save and to encourage work, their earned income would 
be matched by federal,

[[Page S8568]]

non-federal, and private dollars. All payments would go directly to the 
third-party vendors (for example, directly to the mortgage company for 
people using their IDA to buy their first home) and, like IRA's, there 
would be harsh penalties for misuse. Community-based non-profit 
organizations would have to compete and raise money to be an IDA 
demonstration site. The legislation authorizes $25 million a year for 4 
years for the demonstration.
  Mr. President, IDA's are not new to America. In fact, they're 
spreading rapidly; in part as a result of legislation I proposed, and 
the Congress passed, last year in connection with the welfare reform 
bill.
  Over 40 private, community-based IDA's programs are operating around 
the country. I am pleased to say that one of the oldest and most 
successful IDA programs in the country, at Eastside Community 
Investments, is located in Indianapolis.
  Fourteen States have already included IDA's in their State welfare 
reform plans, as permitted by the passage of last year's legislation.
  Twenty States have sponsored their own IDA programs, some through 
refundable tax credits, others through direct appropriation. For 
example, Pennsylvania has allocated $1.25 million for IDA's through a 
``Family Savings Accounts'' program for low-income families.
  Over 200 community-based groups in 43 States signified their 
intention to develop IDA's in response to a large, privately-funded IDA 
demonstration, slated to begin later this summer.
  When I talk about IDA's, people often say to me that the poor cannot 
save. Well they're wrong. The poor can and do save. As of 1995, some 
171,000 low-income families saved more than $250 million through 
community development credit unions in many of America's poorest 
neighborhoods. Also, I believe that the savings rate of the poor will 
rise tremendously once we start supporting saving, both institutionally 
and culturally. And finally, I doubt that all this IDA activity in the 
country would be going on--all the millions of dollars being committed 
by major foundations, corporations, and States to IDA's--if there 
wasn't a core belief in the ability and willingness of the poor to save 
for long-term, productive assets.
  In closing, Mr. President, I would strongly encourage my colleagues 
to cosponsor this legislation. Just as the private sector and several 
State have invested in America's poor through IDA's, we--the Federal 
Government should invest too. Our commitment to IDA's could leverage 
millions more in private and State contributions--and thereby help move 
millions of hardworking low-income families from poverty to economic 
independence.
  I ask unanimous consent that the text of the bill as introduced be 
printed in the Record at this point.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1106

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Assets for 
     Independence Act''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
Sec. 3. Purposes.
Sec. 4. Definitions.
Sec. 5. Applications.
Sec. 6. Demonstration authority; annual grants.
Sec. 7. Reserve fund.
Sec. 8. Eligibility for participation.
Sec. 9. Selection of individuals to participate.
Sec. 10. Deposits by qualified entities.
Sec. 11. Local control over demonstration projects.
Sec. 12. Annual progress reports.
Sec. 13. Sanctions.
Sec. 14. Evaluations.
Sec. 15. Authorizations of appropriations.
Sec. 16. Funds in individual development accounts of demonstration 
              project participants disregarded for purposes of all 
              means-tested Federal programs.

     SEC. 2. 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. 3. PURPOSES.

       The purposes of this Act 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 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. 4. DEFINITIONS.

       In this Act:
       (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 9 of this Act.
       (3) 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.
       (4) 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, 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.
       (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 10 of this Act.
       (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 10 of this Act may be paid or distributed out of the 
     trust only for the purpose of paying the qualified expenses 
     of the eligible individual.
       (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 Act, 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 Act, 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.
       (5) Non-federal public sector funds.--The term ``non-
     Federal public sector funds'' includes any non-Federal funds 
     disbursed from a source pursuant to a program operated under 
     the temporary assistance for needy families program under 
     part A of title IV of the Social Security Act (42 U.S.C. 601 
     et seq.).
       (6) Project year.--The term ``project year'' means, with 
     respect to a demonstration project, any of the 4 consecutive 
     12-

[[Page S8569]]

     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 submitting an 
     application under section 5 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 Act.
       (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) Post-secondary educational expenses.--The term ``post-
     secondary 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 
     Act.
       (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 Act.

       (B) First-home purchase.--Qualified acquisition costs with 
     respect to a qualified 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) 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.
       (ii) Qualified principal residence.--The term ``qualified 
     principal residence'' means a principal residence (within the 
     meaning of section 1034 of the Internal Revenue Code of 
     1986), the qualified acquisition costs of which do not exceed 
     100 percent of the average area purchase price applicable to 
     such residence (determined in accordance with paragraphs (2) 
     and (3) of section 143(e) of such Code).
       (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 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.

     SEC. 5. APPLICATIONS.

       (a) Submission.--Not later than 6 months after the date of 
     enactment of this Act, a qualified entity may submit to the 
     Secretary an application to conduct a demonstration project 
     under this Act.
       (b) Criteria.--In considering whether to approve an 
     application to conduct a demonstration project under this 
     Act, 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 Act as the Secretary may specify.
       (c) Preferences.--In considering an application to conduct 
     a demonstration project under this Act, the Secretary shall 
     give preference to an application that--
       (1) demonstrates the willingness and ability to select 
     individuals described in section 8 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 low rates of 
     income or employment.
       (d) Approval.--Not later than 9 months after the date of 
     enactment of this Act, the Secretary shall, on a competitive 
     basis, approve such applications to conduct demonstration 
     projects under this Act as the Secretary deems appropriate, 
     taking into account the assessments required by subsections 
     (b) and (c). The Secretary is encouraged to ensure that the 
     applications that are approved involve a range of communities 
     (both rural and urban) and diverse populations.
       (e) 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 12 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. 6. DEMONSTRATION AUTHORITY; ANNUAL GRANTS.

       (a) Demonstration Authority.--If the Secretary approves an 
     application to conduct a demonstration project under this 
     Act, the Secretary shall, not later than 10 months after the 
     date of enactment of this Act, authorize the applicant to 
     conduct the project for 4 project years in accordance with 
     the approved application and the requirements of this Act.
       (b) Grant Authority.--For each project year of a 
     demonstration project conducted under this Act, the Secretary 
     shall make a grant to the qualified entity authorized to 
     conduct the project 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. 7. RESERVE FUND.

       (a) Establishment.--A qualified entity under this Act, 
     other than a State or local government agency, 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

[[Page S8570]]

     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 10 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 14 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 7.5 percent of the 
     amounts provided to a qualified entity under section 6(b) 
     shall be used by the qualified entity for the purposes 
     described in subparagraphs (A), (C), and (D) of paragraph 
     (1), except that if 2 or more qualified entities are jointly 
     administering a project, no qualified entity shall use more 
     than its proportional share for such purposes.
       (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 6(b); divided by
       (B) the aggregate amount of all funds provided to the 
     qualified entity by all sources to conduct the project.

     SEC. 8. 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 the following requirements 
     shall be eligible to participate in a demonstration project 
     conducted under this Act:
       (1) Income test.--The adjusted gross income of the 
     household does not exceed the income limits established under 
     section 32(b)(2) of the Internal Revenue Code of 1986.
       (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 Act, to 
     ensure compliance with this Act 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. 9. SELECTION OF INDIVIDUALS TO PARTICIPATE.

       From among the individuals eligible to participate in a 
     demonstration project conducted under this Act, 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 10.

     SEC. 10. 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 
     5(b)(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 6(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 6(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 6(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. Such guidelines 
     shall include a requirement that a responsible official of 
     the qualified entity conducting a project approve such 
     withdrawal in writing.

     SEC. 11. LOCAL CONTROL OVER DEMONSTRATION PROJECTS.

       A qualified entity under this Act, other than a State or 
     local government agency, shall, subject to the provisions of 
     section 13, 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 Act as are necessary to ensure 
     compliance with the approved applications and the 
     requirements of this Act.

     SEC. 12. ANNUAL PROGRESS REPORTS.

       (a) In General.--Each qualified entity under this Act shall 
     prepare an annual report on the progress of the demonstration 
     project. Each report shall specify for the period covered by 
     the report the following information:
       (1) The number 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) 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 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. 13. SANCTIONS.

       (a) Authority to Terminate Demonstration Project.--If the 
     Secretary determines that a qualified entity under this Act 
     is not operating the demonstration project in accordance with 
     the entity's application or the requirements of this Act (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 7;
       (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 Act;
       (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 Act;
       (B) transfer to the entity (or entities) control over the 
     Reserve Fund established pursuant to section 7; and
       (C) consider, for purposes of this Act--
       (i) such other entity (or entities) to be the qualified 
     entity (or entities) originally authorized to conduct the 
     demonstration project; and

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       (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 5(b)(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 5(b)(4) bears to the amount 
     provided by all such sources under that section.

     SEC. 14. EVALUATIONS.

       (a) In General.--Not later than 10 months after the date of 
     enactment of this Act, 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 Act.
       (b) Factors to Evaluate.--In evaluating any demonstration 
     project conducted under this Act, the research organization 
     shall address the following factors:
       (1) 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.
       (2) What service configurations of the qualified entity 
     (such as peer support, structured planning exercises, 
     mentoring, and case management) increase the rate and 
     consistency of participation in the demonstration project and 
     how such configurations vary among different populations or 
     communities.
       (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 
     savings rates, homeownership, level of 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 Act 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 Act, the research 
     organization shall--
       (1) to the extent possible, 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 Act, and every 12 months thereafter until all 
     demonstration projects conducted under this Act are 
     completed, the Secretary shall submit to Congress an interim 
     report setting forth the results of the reports submitted 
     pursuant to section 12(b).
       (2) Final reports.--Not later than 12 months after the 
     conclusion of all demonstration projects conducted under this 
     Act, the Secretary shall submit to Congress a final report 
     setting forth the results and findings of all reports and 
     evaluations conducted pursuant to this Act.
       (e) Evaluation Expenses.--The Secretary shall expend such 
     sums as may be necessary to carry out the purposes of this 
     section.

     SEC. 15. AUTHORIZATIONS OF APPROPRIATIONS.

       There is authorized to be appropriated to carry out this 
     Act, $25,000,000 for each of fiscal years 1998, 1999, 2000, 
     and 2001, to remain available until expended.

     SEC. 16. FUNDS IN INDIVIDUAL DEVELOPMENT ACCOUNTS OF 
                   DEMONSTRATION PROJECT PARTICIPANTS DISREGARDED 
                   FOR PURPOSES OF ALL MEANS-TESTED FEDERAL 
                   PROGRAMS.

       Notwithstanding any other provision of law that requires 
     consideration of 1 or more financial circumstances of an 
     individual, for the purpose of determining eligibility to 
     receive, or the amount of, any assistance or benefit 
     authorized by such law to be provided to or for the benefit 
     of such individual, funds (including interest accruing) in an 
     individual development account (as defined in section 4(4)) 
     shall be disregarded for such purpose with respect to any 
     period during which the individual participates in a 
     demonstration project conducted under this Act (or would be 
     participating in such a project but for the suspension of the 
     project).
                                 ______