[Federal Register Volume 66, Number 186 (Tuesday, September 25, 2001)]
[Rules and Regulations]
[Pages 48970-48972]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-23892]



[[Page 48970]]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Administration for Children and Families

45 CFR Part 1000

RIN 0970-ACO8


Office of Community Services; Individual Development Accounts

AGENCY: Office of Community Services, ACF, HHS.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This regulation implements a statutory requirement in the 
Assets for Independence Act under title IV of the Community 
Opportunities, Accountability, and Training and Educational Services 
Act of 1998. The Act provides competitive demonstration grants for 
projects to establish, support, and evaluate individual development 
accounts for low income individuals and families. The purpose of the 
five-year Assets for Independence Program is to encourage low-income 
individuals to accumulate assets by matching an individual's savings 
with Federal and private funds in order to determine the effects of 
asset accumulation incentives on the well-being, savings behavior, and 
stability of low-income families and their communities.
    The statute requires the Secretary of Health and Human Services to 
prescribe regulations that grantees must follow in accounting for 
amounts grantees deposit in the reserve fund. This final rule 
implements that provision of the legislation, and includes two changes 
from the Interim Final Rule published on February 25, 2000. Other 
factors in the legislation have been, or will be, addressed 
administratively, through other administrative policy issuances.

DATES: These regulations are effective September 25, 2001.

FOR FURTHER INFORMATION CONTACT: Sheldon Shalit, Office of Community 
Services, (202) 401-4807, or Richard Saul, Office of Community 
Services, (202) 401-9341. Hearing impaired individuals may call the 
Federal Dual Party Relay Service at 800-877-8339 between 8:00 a.m. and 
7:00 p.m. eastern time.

SUPPLEMENTARY INFORMATION:

I. Statutory and Regulatory Authority

    These rules implement section 407(b)(2) of the Community 
Opportunities, Accountability, and Training and Educational Services 
Act of 1998 (Pub. L. 105-285). Under this provision, the Secretary of 
Health and Human Services is to prescribe by regulation the rules 
grantees must follow in accounting for monies in reserve funds, 
established under the Act, which are used for depositing grant funds; 
the non-Federal matching funds required for establishing individual 
development accounts; and the proceeds from any investment of such 
funds.

II. Background

    The Assets for Independence Act (the Act), or title IV of Pub. L. 
105-285, provides for the establishment of Individual Development 
Account (IDA) demonstration projects to determine how effective IDAs 
and ``asset-building'' strategies are in helping low-income people save 
earned income, acquire productive assets, and achieve economic self-
sufficiency. The Act authorizes the Department of Health and Human 
Services to conduct a five-year Individual Development Account 
demonstration, through which grants are made to non-profit 
organizations on a competitive basis.
    The statute provides specific and detailed requirements for 
establishing such programs and authorizes grants for projects to be 
awarded within 10 months of enactment of the Act (August 27, 1999). For 
these reasons, coupled with the Department's commitment to reduce 
regulatory burden, we have decided to limit regulating to the one area 
where the statute indicates regulations are required. Specifically, 
section 407(b)(2) of the Act requires grantees to maintain a reserve 
fund in accordance with accounting regulations prescribed by the 
Secretary. Responding to this legislative provision, these rules 
stipulate which Departmental uniform administrative requirements must 
be met in maintaining IDA reserve funds.
    The statute requires that amounts in the reserve funds be used as 
matching contributions to individual development accounts for project 
participants; for expenses related to collecting and reporting project 
data and information required for the evaluation; for administration of 
the project including skill training necessary to achieve economic 
self-sufficiency; and for other project related expenses. Federal funds 
can only be drawn down after the match funds have been deposited.
    With respect to provisions of the Act other than accounting for the 
amounts in the reserve fund, on January 27, 1999, the Department issued 
a Program Announcement in the Federal Register, ``Program Announcement 
No. OCS-99-04'' (64 FR 4258), announcing the availability of funds and 
requesting competitive applications. This Program Announcement, and 
subsequent guidance, addressed other requirements of the legislation. 
On March 29, 1999, the Department published guidance, ``Clarification 
of Program Announcement No. OCS 99-04'' (64 FR 14923), in the Federal 
Register to assist interested applicants in understanding the law and 
the requirements for eligibility. Also, on July 2, 1999, a Second Round 
of Applications was published, ``Program Announcement No. OCS-99-04'' 
(64 FR 36184). Further information is made available to the grantees as 
part of Terms and Conditions at the time of the grant award.
    An interim final rule was published in the Federal Register on 
February 25, 2000 (65 FR 10027). One set of comments was received. We 
have made a clarification in the final regulation after consideration 
of these comments.
    Additionally, on December 21, 2000, the Assets for Independence Act 
Amendments of 2000 were signed into law which included an expanded 
definition of ``qualified entities'' that may receive a grant from the 
Department. The expanded definition adds credit unions designated as 
low-income credit unions by the National Credit Union Administration, 
and organizations designated as community development financial 
institutions by the Secretary of the Treasury (or the Community 
Development Financial Institutions Fund) that collaborate with a local 
community-based organization. Because the amendments were enacted after 
the interim final rule was issued, we have revised the definition of 
``qualified entity'' in the final rule so that the definition is 
expanded consistent with the amendments. Since this revision is 
necessary in order that the rule is consistent with the amendment, a 
new interim final rule will not be issued. Rather, this regulation will 
proceed to final rule, incorporating the expanded definition, and 
applying the provisions of the rule to accounting amounts for all 
qualified entities as defined in the legislation. By proceeding with a 
final rule instead of a re-issuance of an interim final rule, we also 
are ensuring that current grantees will be bound by the final rule 
without further delay.

III. Description of Regulatory Provisions

    We are adding a new Part 1000 in title 45 of the Code of Federal 
Regulations.

[[Page 48971]]

New Part 1000 of Chapter X, Title 45 of the CFR--Individual Development 
Account--Reserve Funds Established Pursuant to Grants for Assets for 
Independence

    We are establishing requirements under new 45 CFR part 1000 
regarding reserve funds established pursuant to the Assets for 
Independence Program. We are confirming that Departmental 
administrative requirements found in 45 CFR part 74 are applicable to 
reserve funds established by grantees that are not-for-profit 
organizations as defined by section 501(c)(3) of the Internal Revenue 
Code of 1986. We are also confirming that the Departmental 
administrative requirements found in 45 CFR part 92 are applicable to 
reserve funds established by State or local government agencies or 
tribal governments.
    New Sec. 1000.1 provides that this part applies to the Community 
Services Assets for Independence Program.
    We are adding a definition of Individual Development Account at 
Sec. 1000.2(a) to read:
    Individual Development Account means a trust or custodial account 
created or organized in the United States exclusively for the purpose 
of paying the qualified expenses of an eligible individual, as defined 
in section 404(2) of Pub. L. 105-285, or enabling the eligible 
individual to make an emergency withdrawal, as prescribed in section 
404(3) of Pub. L. 105-285. The written governing instrument creating 
the trust or custodial account must meet the requirements of Section 
404(5) of Pub. L. 105-285, (section 404(5)(A)) and of the Project 
Eligibility Requirements set forth in the Program Announcement No. OCS-
99-04 and any future announcements that may be issued.
    We are adding a definition of qualified entity (which reflects the 
expanded definition of the Assets for Independence Act Amendments 
enacted on Dec. 15, 2000) at Sec. 1000.2(b) to read:
    Qualified Entity means 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 a State or 
local government agency; or a tribal government which has submitted an 
application under section 405 of Pub. L. 105-285 jointly with a 
501(c)(3) organization that is exempt from taxation under 501(a) of the 
Internal Revenue Code of 1986; or an entity that is a credit union 
designated as a low-income credit union by the National Credit Union 
Administration (NCUA), or an organization designated as a community 
development financial institution by the Secretary of the Treasury (or 
Community Development Financial Institutions Fund), and can demonstrate 
a collaborative relationship with a local community-based organization 
whose activities are designed to address poverty in the community and 
the needs of community members for economic independence and stability.
    We are adding a definition of reserve fund at Sec. 1000.2(c) to 
read:
    (c) Reserve Fund means a fund, established by a qualified entity, 
that shall include all funds provided to the qualified entity from any 
public or private source in connection with the demonstration project 
and the proceeds from any investment made with such funds. The fund 
shall be maintained in accordance with section 407 of Pub. L. 105-285. 
At least 90.5% of the Federal grant funds in the Reserve Fund must be 
used as matching contributions for Individual Development Accounts.
    In the last sentence of the definition, we have added the words 
``Federal grant'' in response to a comment asking that we clarify the 
definition regarding the administrative cap and the use of funds.
    Under Sec. 1000.3(a), we are confirming that Reserve Funds under 
the Assets for Independence Program established by qualified entities, 
other than State or local government agencies or tribal governments, 
are subject to the Department of Health and Human Services' uniform 
administrative requirements under 45 CFR Part 74.
    Under Sec. 1000.3(b), we are confirming which requirements are 
applicable to Reserve Funds by a qualified entity that is a State or 
local government agency or tribal government. While these entities are 
not required to establish reserve funds, reserve funds that are 
established by these entities are subject to the Department of Health 
and Human Services' uniform administrative requirements under 45 CFR 
part 92.

IV. Comments Received on the Proposal

    The comment period for the February 25, 2000 interim final rule 
expired on April 21, 2000. HHS received two comments from a State 
government commission addressing this proposal. Both comments addressed 
the definition of Reserve Fund. Below are the comments and our 
responses:
    1. Comment: In order to be consistent with the Act, the definition 
of Reserve Fund should provide that the 9.5% limit on funds that can be 
used for purposes other than matching contributions, as specified in 
section 407(c)(3), applies to Federal grant funds only.
     Response: We agree that this revision is necessary in 
order for the definition to be consistent with section 407(c)(3). 
Therefore, the regulation is being revised to read, ``At least 90.5 
percent of the Federal grant funds deposited in the Reserve Fund must 
be used as matching contributions for Individual Development 
Accounts.''
    2. Comment: Revise the definition of the Reserve Fund to include 
only the Federal grant funds and the required non-Federal matching 
contributions for individuals' accounts.
     Response: We disagree that the Reserve Fund is limited to 
the Federal Grant funds and non-Federal matching contributions for 
individuals' accounts. The statute states that the Reserve Fund is to 
include all Federal and non-Federal funds in connection with the 
demonstration project (section 407(b)(1)(A) of the Act) and any 
investment proceeds (407(b)(1)(B) of the Act). Therefore, we are not 
amending the regulation to address this comment.

VI. Regulatory Flexibility Analysis

    The Secretary certifies, under 5 U.S.C. 605(b), the Regulatory 
Flexibility Act (Pub. L. 96-354), that this regulation does not result 
in a significant impact on a substantial number of small entities. The 
primary impact is on a limited number of grantees and the impact is not 
significant.

VII. Executive Order 12866

    Executive Order 12866 requires that regulations be reviewed to 
ensure that they are consistent with the priorities and principles set 
forth in the Executive Order. The Department has determined that this 
rule is consistent with these priorities and principles. The rule 
implements the statutory provisions by specifying applicable rules 
grantees are subject to in meeting accounting requirements for reserve 
funds established for purposes of carrying out demonstration projects 
under the Assets for Independence Act. This rule has been reviewed by 
the Office of Management and Budget.

VIII. Unfunded Mandates Act

    Section 202 of the Unfunded Mandates Reform Act of 1995 (Unfunded 
Mandates Act) requires that a covered agency prepare a budgetary impact 
statement before promulgating a rule that includes any Federal mandate 
that may result in the expenditure by State, local and Tribal 
governments, in the aggregate, or by the private sector, of $100 
million or more in any one year.
    If a covered agency must prepare a budgetary impact statement, 
section 205 further requires that it select the most

[[Page 48972]]

cost-effective and least burdensome alternative that achieves the 
objectives of the rule and is consistent with the statutory 
requirements. In addition, section 203 requires a plan for informing 
and advising any small government that may be significantly or uniquely 
impacted by the proposed rule.
    We have determined that this rule does not result in the 
expenditure by State, local, and Tribal governments, in the aggregate, 
or by the private sector, of more than $100 million in any one year.

IX. Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995, Pub. L. 104-13, all 
Departments are required to submit to the Office of Management and 
Budget (OMB) for review and approval any reporting or record keeping 
requirements inherent in a rule. This rule requires no new reporting or 
record keeping requirements.

X. Congressional Review

    This rule is not a major rule as defined in 5 U.S.C., Chapter 8.

XI. Assessment of Federal Regulations and Policies on Families

    Section 654 of the Treasury and General Government Appropriations 
Act of 1999 requires Federal agencies to determine whether a policy or 
regulation may affect family well-being. If the agency's conclusion is 
affirmative, then the agency must prepare an impact assessment 
addressing seven criteria specified in the law. These regulations do 
not have an impact on family well-being as defined in the legislation.

List of Subjects in 45 CFR Part 1000

    Grant Programs/Social Programs.

(Catalog of Federal Domestic Assistance Programs No. 93.602, 
Individual Development Account/Assets for Independence)


    Dated: May 9, 2001.
Diann Dawson,
Acting Principal Deputy, Assistant Secretary for Children and Families.

    Approved: June 28, 2001.
Tommy Thompson,
Secretary, Department of Health and Human Services.


    For the reasons set forth in the preamble, we are amending Chapter 
X of title 45 of the Code of Federal Regulations by revising part 1000 
to read as follows:

PART 1000--INDIVIDUAL DEVELOPMENT ACCOUNT RESERVE FUNDS ESTABLISHED 
PURSUANT TO GRANTS FOR ASSETS FOR INDEPENDENCE

Sec.
1000.1   Scope.
1000.2   Definitions.
1000.3   Requirements.

    Authority:  42 U.S.C. 604 nt.


Sec. 1000.1  Scope.

    This part applies to the Office of Community Services' Assets for 
Independence Program.


Sec. 1000.2  Definitions.

    Individual Development Account means a trust or custodial account 
created or organized in the United States exclusively for the purpose 
of paying the qualified expenses of an eligible individual, as defined 
in section 404(2) of Pub. L. 105-285, or enabling the eligible 
individual to make an emergency withdrawal as defined in section 404(3) 
of Pub. L. 105-385. The written governing instrument creating the trust 
or custodial account must meet the requirements of Section 404(5) of 
Pub. L. 105-285, and of the Project Eligibility Requirements set forth 
in Program Announcements.
    Qualified Entity means 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 a State or 
local government agency; or a tribal government which has submitted an 
application under section 405 of Pub. L. 105-285 jointly with a 
501(c)(3) organization that is exempt from taxation under 501(a) of the 
Internal Revenue Code of 1986; or an entity that is a credit union 
designated as a low-income credit union by the National Credit Union 
Administration (NCUA), or an organization designated as a community 
development financial institution by the Secretary of the Treasury (or 
Community Development Financial Institutions Fund), and can demonstrate 
a collaborative relationship with a local community-based organization 
whose activities are designed to address poverty in the community and 
the needs of community members for economic independence and stability.
    Reserve Fund means a fund, established by a qualified entity, that 
shall include all funds provided to the qualified entity from any 
public or private source in connection with the demonstration project 
and the proceeds from any investment made with such funds. The fund 
shall be maintained in accordance with section 407 of Pub. L. 105-285. 
At least 90.5% of the Federal grant funds in the Reserve Fund must be 
used as matching contributions for Individual Development Accounts.


Sec. 1000.3  Requirements.

    (a) A qualified entity, other than a State or local government 
agency or tribal government, shall establish a Reserve Fund for use in 
the Assets for Independence program. Each reserve fund established by a 
qualified entity, other than a State or local government agency or 
tribal government, is subject to the Department of Health and Human 
Services' uniform administrative requirements under 45 CFR part 74.
    (b) Any reserve fund established by a qualified entity that is a 
State or local government agency or tribal government is subject to the 
Department of Health and Human Services' uniform administrative 
requirements under 45 CFR part 92.
[FR Doc. 01-23892 Filed 9-24-01; 8:45 am]
BILLING CODE 4184-01-P