SB2837

SECTION 1. The legislature finds that economic stability does not arise solely from income; financial assets including cash savings, stocks, bonds, and home and business equity are all critical components of economic security. The accumulation of financial assets can offer individuals hope for the future, stimulate growth in all societal sectors, and enhance the welfare of families and children. For example, a home is often a primary asset for a family in Hawaii, and forms a large component of household net worth for most Americans. The legislature finds that saving for a down payment on a home is a formidable prospect for too many low- and moderate-income earners in Hawaii. While developing affordable housing properties is necessary, it is equally important to invest in additional strategies that can also expand a family’s ability to purchase a home. Individual development accounts are special savings accounts that match the deposits of low- and moderate-income accountholders to save towards certain qualified financial goals. These accounts have provided proven assistance to families who are saving to purchase a home, pay higher education expenses, and fulfill other asset-building goals. The purpose of this Act is to appropriate funds for individual development account programs to support asset building among low- and moderate-income families.

SECTION 2. Section 257-3, Hawaii Revised Statutes, is amended to read as follows:

"[[]§257-3[]] Fiduciary organizations. (a) Fiduciary organizations shall serve as an intermediary between individual development account holders and financial institutions holding accounts. The fiduciary organization's responsibilities may include:

(1) Marketing participation;

(2) Soliciting matching contributions;

(3) Counseling program participants; and

(4) Conducting verification and compliance activities.

(b) Locally-based organizations shall enter into a competitive process for the right to become fiduciary organizations for a portion of the state matching dollars [~~that would be authorized initially~~]. Fiduciary organization proposals shall be evaluated and participation rights awarded on the basis of such items as:

(1) Their ability to market the program to potential individual development account holders and potential matching fund contributors;

(2) Their ability to provide safe and secure investments for individual development accounts;

(3) Their overall administrative capacity, including:

(A) Certifications or verifications required to assure compliance with eligibility requirements;

(B) Authorized uses of the accounts matching contributions by individuals or businesses; and

(4) Their capacity to provide financial counseling and other related services to potential participants; and

(5) Their links to other activities designed to increase the independence of individuals and families through high return investments, including homeownership, education and training, and small business development.

The department of human services shall provide technical and administrative assistance to fiduciary organizations to meet the criteria described in this section. In order to provide this assistance, the department may contract with another agency, and shall identify and make use of available federal moneys wherever appropriate.

(c) If the [~~State~~] department of human services approves an application to fund an individual development account project under this section, the [~~State~~] department of human services shall[~~, not later than one month after June 28, 1999,~~] authorize the applicant to conduct the project with state funds [~~for five project years~~] in accordance with the approved application and this section; provided that an applicant may apply for funding during future fiscal years [~~for five project years if the State lacks the~~] if there are insufficient resources to fund an individual development account project pursuant to this subsection.

[(d) For each individual development account program approved under this section, the State shall make a grant to the qualified entity or collaboration of entities authorized to conduct the project on the first day of the project year in an amount not to exceed $100,000 per year for five years.

~~(e)~~] (d) From among the individuals eligible for assistance under the Hawaii individual development account program, each selected fiduciary organization shall select the individuals whom the fiduciary organization deems to be best suited to receive such assistance."

SECTION 3. Section 257-8, Hawaii Revised Statutes, is amended to read as follows:

"[[]§257-8[]] Matches. [~~(a)~~] The State shall match an amount of up to [~~$100,000 per calendar year for~~] 4:1 in state funds for deposit into an individual development [~~accounts.~~] account. The department of human services may adopt rules regarding specific match ratios pertaining to qualified expenditures of an individual development account.

[~~(b) Not more than a 2:1 match of state funds to account holder deposits shall be deposited into any individual development account in a given year.~~]"

SECTION 4. Section 257-11, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The fiduciary organization running an individual development account program shall have sole authority over the administration of the project. The [~~State~~] department of human services may [~~prescribe only such regulations~~] adopt rules with respect to demonstration projects under this chapter as are necessary to ensure compliance [~~pursuant to~~] with this chapter."

SECTION 5. Section 257-11, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

"(d) Selected fiduciary organizations may use no more than [~~ten~~] twenty-five per cent of state funds as appropriated under this [[]chapter[]] to cover [~~administrative~~] operating costs in any given year."

SECTION 6. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2008-2009 for fiduciary organizations defined in section 257-1, Hawaii Revised Statutes, to operate individual development account programs.

The sum appropriated shall be expended by the department of human services for the purposes of this Act.

SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 8. This Act shall take effect upon its approval; provided that section 6 shall take effect on July 1, 2008.

INTRODUCED BY:

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THE SENATE	S.B. NO.	2837
TWENTY-FOURTH LEGISLATURE, 2008
STATE OF HAWAII