Pennsylvania Act 2000-29 — JOB ENHANCEMENT ACT - AMEND FAMILY SAVINGS ACCOUNT PROGRAM

Act text

JOB ENHANCEMENT ACT - AMEND FAMILY SAVINGS ACCOUNT PROGRAM
                  Act of Jun. 22, 2000, P.L. 310, No. 29              Cl. 12
                             Session of 2000
                               No. 2000-29

     HB 2083

                                  AN ACT

     Amending the act of June 29, 1996 (P.L.434, No.67), entitled, as
        amended, "An act to enhance job creation and economic
        development by providing for an annual financing strategy,
        for opportunity grants, for job creation tax credits, for
        small business assistance, for the Small Business Advocacy
        Council, for a family savings program, for industrial
        development assistance, for community development bank grants
        and loans and for tax-exempt bond allocation; conferring
        powers and duties on various administrative agencies and
        authorities; further providing for various funds; and making
        repeals," further providing for the Family Savings Account
        Program; and making a repeal.

        The General Assembly of the Commonwealth of Pennsylvania
     hereby enacts as follows:

        Section 1.  Sections 2101 and 2102 of the act of June 29,
     1996 (P.L.434, No.67), known as the Job Enhancement Act, amended
     November 17, 1998 (P.L.788, No.100), are amended to read:
      Section 2101.  Definitions.
        The following words and phrases when used in this chapter
     shall have the meanings given to them in this section unless the
     context clearly indicates otherwise:
        "Account."  A family savings account [at a financial
     institution or other institution that is approved by the
     Department of Community and Economic Development and which is]
     that is opened and maintained by [the] a saver [as part of an
     approved account program for the restricted purpose of providing
     funds for an eligible use] enrolled in the program.
        ["Approved account program."  A program approved by the
     Department of Community and Economic Development and that is
     operated by a service provider.]
        "Approved plan."  A plan developed for an individual saver
     defining savings goals and program requirements, including the
     saver's anticipated use of both the savings and the match. The
     approved plan shall serve as the contract between the saver and
     the service provider and shall be for a contribution period of
     not less than 12 months nor more than 24 months.
        "Department."  The Department of Community and Economic
     Development of the Commonwealth.
        "Education."  A postsecondary program of instruction provided
     by a college, university, community college, area vocational-
     technical school, professional institution or specialized
     degree-granting college or school legally authorized to grant
     degrees. The term shall also include a job training or related
     educational program approved by the Department of Community and
     Economic Development. The term shall not include a school of
     theology or theological seminary.
        "Eligible uses."  Education, purchase of a home,
     participation in entrepreneurial activity, enrollment of a
     saver's child in day care to enable the saver to participate in
     job training, any work-related activity or educational program
     or other activity based on an approved plan.
        "Entrepreneurial activity."  Purchase of or investment in a
     for-profit venture in which the saver will be a principal.
        "Financial institution."  Any of the following:
            (1)  A Federal or State-chartered bank, bank and trust
        company, savings bank, savings and loan association, trust
        company or credit union.
            (2)  A financial entity which:
                (i)  is licensed or regulated by a Federal or
            Commonwealth agency; and
                (ii)  insures its deposits up to $100,000.
        "Match."  An amount equal to 50%, up to $500 per year, of the
     [contribution amount] money deposited into [an] the account by a
     saver during the contribution period of the saver's approved
     plan.
        "Minimum savings amount."  An amount established in the
     approved plan as the minimum amount to be deposited by a saver
     in order to be eligible for the match.
        "Program."  The Family Savings Account Program established
     pursuant to this chapter.
        "Saver."  An individual or family who resides in this
     Commonwealth and whose total annual income at the time of
     enrollment is not more than 200% of the Federal poverty standard
     and who has applied for enrollment in [an approved account] the
     program.
        "Service provider."  A nonprofit institution that encourages
     and assists local community building and that is certified by
     the Department of Community and Economic Development for
     participation in the program.
      Section 2102.  Administration.
        (a)  Certification of service providers.--The department
     shall certify service providers who shall enroll eligible savers
     into the program.
        (b)  Application process.--Eligible savers shall apply to a
     service provider to participate in the program. The service
     provider shall develop an approved plan with each enrolled saver
     which specifies a minimum savings amount and how much money the
     saver intends to contribute to the saver's family savings
     account on either a weekly, biweekly or monthly basis. The
     application and approved plan shall be on a form and shall meet
     such requirements as deemed appropriate by the department.
        (c)  Ownership.--Each enrolled saver shall open an account as
     defined under this chapter at a financial institution that is
     certified by the department as qualified to participate in the
     program for deposit of the saver's contributions. All moneys in
     that account, including interest earned thereon, shall belong to
     the individual saver.
        [(d)  Grants.--
            (1)  The department shall make grants to service
        providers from funds appropriated for this purpose. The
        amount and number of grants shall be calculated by the
        department in such a manner as to ensure payment of the
        maximum match required for the contribution period for all
        approved plans for enrolled savers and in such a manner as to
        not exceed the amount appropriated.
            (2)  Service providers shall keep all matching grant
        funds in a separate account at a financial institution
        approved by the department until the funds are withdrawn or
        returned to the department according to the provisions of
        this chapter. The service provider shall use grant proceeds
        to provide the required match for the accounts of enrolled
        savers who have met all program requirements. Service
        providers shall be eligible for administrative costs in an
        amount as determined by the department. Not more than 5% of
        funds annually appropriated for this program may be used to
        reimburse service providers for eligible administrative
        costs. The department may approve the use of interest
        earnings on grant funds held by service providers as a
        portion of a service provider's approved administrative
        costs.]
        (d)  Grants.--
            (1)  The department shall make a grant to a service
        provider from which the service provider shall provide the
        match for approved plans. A service provider shall deposit
        all grant funds in a separate account at a financial
        institution until the funds are withdrawn to provide the
        required match for a saver or are returned to the
        Commonwealth. Grants to service providers shall be made from
        and limited to funds appropriated for this purpose.
            (2)  If a saver's approved plan is modified and the match
        is reduced or a saver drops out of the program within the
        fiscal year in which the grant was made to the service
        provider or the next fiscal year, the service provider may
        reassign the grant funds to other savers with approved plans
        within this time period. Any grant funds remaining unassigned
        at the end of the fiscal year in which the grant was made to
        the service provider or the next fiscal year must be returned
        to the Commonwealth as provided in paragraph (3). If a
        saver's approved plan is modified and the match is reduced or
        a saver drops out of the program after the fiscal year in
        which the grant was made to the service provider or the next
        fiscal year, the service provider must return the unused
        grant funds to the Commonwealth as provided in paragraph (3).
            (3)  Service providers shall return any funds due the
        Commonwealth pursuant to guidelines published by the
        department but no later than quarterly.
            (4)  A service provider shall be eligible for
        administrative and counseling costs in an amount determined
        by the department. No more than 9.5% of funds annually
        appropriated for this program may be used to reimburse
        service providers for eligible administrative and counseling
        costs of which no more than 5% may be used for administrative
        costs. The department may approve the use of interest
        earnings on grant funds held by service providers as a
        portion of a service provider's approved administrative and
        counseling costs. Eligible counseling costs shall include,
        but not be limited to, costs associated with interviewing
        potential savers, enrolling savers, monitoring a saver's
        progress toward fulfilling the terms of an approved plan and
        providing periodic money management and financial skills
        meetings for savers to foster the habit of continued saving.
        The department shall determine eligible administrative costs.
        (e)  Eligibility for match.--An enrolled saver with an
     approved plan and account monitored by a service provider must
     fulfill the requirements of the approved plan for a minimum of
     12 months but not more than 24 months. The saver shall present
     satisfactory evidence to the service provider on a quarterly
     basis that the savings requirements are being met.
        (f)  Restrictions on withdrawal.--
            (1)  In order to obtain [matching funds] the match, the
        saver must present satisfactory evidence to the service
        provider that the amount being withdrawn from the saver's
        family savings account is being used for an eligible use.
        Withdrawals from a family savings account for an eligible use
        by a saver shall be made payable to the legal entity which
        provides the eligible use.
            (2)  [Match funds] The match shall be paid by the service
        provider to the legal entity which provides the eligible use.
        [Match funds] The match shall not be paid to the saver.
            (3)  [Match funds which have] A match which has not been
        paid for an eligible use within [five] three years after the
        end of the [match] contribution period shall be returned to
        the [department] Commonwealth for deposit in the State
        Treasury.
            (4)  A saver who fails to meet the savings goal set forth
        in the approved plan or who decides to drop out of the
        program shall terminate his approved plan with the service
        provider according to procedures determined by the
        department. Upon the termination of an approved plan between
        a saver and a service provider, the service provider [shall
        return the amount of match to the department in accordance
        with the guidelines established by the department] shall
        reassign or return the matching funds according to the
        provisions of subsection (d), and the saver shall be entitled
        to withdraw funds within the saver's account for purposes
        other than provided by this chapter.
        Section 2.  The act is amended by adding a section to read:
      Section 5106.1.  Family Savings Account Program/Tuition Account
                    Program Coordination.
        (a)  Program coordination.--A saver under the Family Savings
     Account Program (FSA) established under Chapter 21 may transfer
     the saver's Family Savings Account contributions into a Tuition
     Account Program (TAP) contract pursuant to the act of April 3,
     1992 (P.L.28, No.11), known as the Tuition Account Program and
     College Savings Bond Act, and become an FSA/TAP account owner if
     the FSA saver has successfully completed all the terms of the
     FSA saver's approved plan pursuant to section 2102(e) and the
     FSA saver's approved plan specifies education as the eligible
     use. The FSA saver does not have to be the beneficiary of the
     education.
        (b)  Match payment.--The match to be provided pursuant to
     Chapter 21 shall be paid by the FSA saver's service provider
     directly to the Treasury Department for deposit in the FSA/TAP
     saver's selected Tuition Account Program account.
        (c)  Waiver of restrictions.--The restrictions on withdrawal
     of the FSA match pursuant to section 2102(f)(3) shall not apply
     to an FSA/TAP account owner.
        (d)  Termination.--In the event an FSA/TAP account owner
     terminates the Tuition Account Program contract pursuant to
     section 313 of the Tuition Account Program and College Savings
     Bond Act, the amount refunded to the FSA/TAP account owner shall
     exclude the match made pursuant to section 2102(f) and any
     increase in value resulting from that match. The Treasury
     Department shall pay the match to the Department of Community
     and Economic Development.
        (e)  Agency coordination.--The Treasury Department and the
     Department of Community and Economic Development may issue
     regulations to further facilitate coordination of the Tuition
     Account Program and the Family Savings Account Program.
        Section 3.  Section 21 of the act of July 2, 1993 (P.L.439,
     No.64), known as the Ben Franklin/IRC Partnership Act, is
     repealed.
        Section 4.  Within one year of the effective date of this act
     and each following year, the Department of Community and
     Economic Development shall issue a report to the General
     Assembly on the amount of bank fees that are assessed on or paid
     for on behalf of participants of the program.
        Section 5.  This act shall take effect immediately.

     APPROVED--The 22nd day of June, A. D. 2000.

     THOMAS J. RIDGE