Use of grants
General rules
Subject to this part, a State to which a grant is made under section 603 of this title may use the grant—
in any manner that is reasonably calculated to accomplish the purpose of this part, including to provide low income households with assistance in meeting home heating and cooling costs; or
in any manner that the State was authorized to use amounts received under part A or F, as such parts were in effect on
Limitation on use of grant for administrative purposes
Limitation
Exception
Authority to treat interstate immigrants under rules of former State
Authority to use portion of grant for other purposes
In general
Subject to paragraph (2), a State may use not more than 30 percent of the amount of any grant made to the State under section 603(a) of this title for a fiscal year to carry out a State program pursuant to any or all of the following provisions of law:
Division A of subchapter XX of this chapter.
The Child Care and Development Block Grant Act of 1990 [42 U.S.C. 9857 et seq.].
Limitation on amount transferable to division A 11 See References in Text note below. of subchapter XX programs
In general
Applicable percent
Applicable rules
In general
Exception relating to division A 1 of subchapter XX programs
Authority to carry over certain amounts for benefits or services or for future contingencies
Authority to operate employment placement program
Implementation of electronic benefit transfer system
Use of funds for individual development accounts
In general
Individual development accounts
Establishment
Qualified purpose
A qualified purpose described in this subparagraph is 1 or more of the following, as provided by the qualified entity providing assistance to the individual under this subsection:
Postsecondary educational expenses
First home purchase
Business capitalization
Contributions to be from earned income
Withdrawal of funds
Requirements
In general
“Qualified entity” defined
As used in this subsection, the term “qualified entity” means—
a not-for-profit organization 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 acting in cooperation with an organization described in clause (i).
No reduction in benefits
Definitions
As used in this subsection—
Eligible educational institution
The term “eligible educational institution” means the following:
An institution described in section 1088(a)(1) or 1141(a) of title 20, as such sections are in effect on
An area vocational education school (as defined in subparagraph (C) or (D) of section 2471(4) of title 20) which is in any State (as defined in section 2471(33) of title 20), as such sections are in effect on
Post-secondary educational expenses
The term “post-secondary educational expenses” means—
tuition and fees required for the enrollment or attendance of a student at an eligible educational institution, and
fees, books, supplies, and equipment required for courses of instruction at an eligible educational institution.
Qualified acquisition costs
Qualified business
Qualified business capitalization expenses
Qualified expenditures
Qualified first-time homebuyer
In general
Date of acquisition
Qualified plan
The term “qualified plan” means a business plan which—
is approved by a financial institution, or by a nonprofit loan fund having demonstrated fiduciary integrity,
includes a description of services or goods to be sold, a marketing plan, and projected financial statements, and
may require the eligible individual to obtain the assistance of an experienced entrepreneurial advisor.
Qualified principal residence
Sanction welfare recipients for failing to ensure that minor dependent children attend school
Requirement for high school diploma or equivalent
Limitations on use of grant for matching under certain Federal transportation program
Use limitations
A State to which a grant is made under section 603 of this title may not use any part of the grant to match funds made available under section 3037 of the Transportation Equity Act for the 21st Century, unless—
the grant is used for new or expanded transportation services (and not for construction) that benefit individuals described in subparagraph (C), and not to subsidize current operating costs;
the grant is used to supplement and not supplant other State expenditures on transportation;
the preponderance of the benefits derived from such use of the grant accrues to individuals who are—
recipients of assistance under the State program funded under this part;
former recipients of such assistance;
noncustodial parents who are described in section 603(a)(5)(C)(iii) of this title; and
low-income individuals who are at risk of qualifying for such assistance; and
the services provided through such use of the grant promote the ability of such recipients to engage in work activities (as defined in section 607(d) of this title).
Amount limitation
Rule of interpretation
Source
(Aug. 14, 1935, ch. 531, title IV, § 404, as added Pub. L. 104–193, title I, § 103(a)(1),Notes
Editorial Notes
References in Text
Codification
Prior Provisions
Amendments
Statutory Notes and Related Subsidiaries
Effective Date of 2008 Amendment
Effective Date of 1999 Amendments
Effective Date of 1998 Amendment
Effective Date of 1997 Amendment
Effective Date
Assets for Independence
SHORT TITLE.
FINDINGS.
“Congress makes the following findings:
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.
Fully ½ 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.
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.
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.
PURPOSES.
“The purposes of this title are 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 by saving a portion of their earned income;
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
the extent to which an asset-based policy stabilizes and improves families and the community in which the families live.
DEFINITIONS.
“In this title:
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.
Eligible individual.—
The term ‘eligible individual’ means an individual who is selected to participate in a demonstration project by a qualified entity under section 409.
Emergency withdrawal.—
The term ‘emergency withdrawal’ means a withdrawal by an eligible individual that—
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;
is permitted by a qualified entity on a case-by-case basis; and
is made for—
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);
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
payments necessary to enable the individual to meet necessary living expenses following loss of employment.
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.
Individual development account.—
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 contains the following requirements:
No contribution will be accepted unless the contribution is in cash or by check.
The trustee is a federally insured financial institution, or a State insured financial institution if no federally insured financial institution is available.
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 410.
The assets of the trust will not be commingled with other property except in a common trust fund or common investment fund.
Except as provided in clause (vi), any amount in the trust that is attributable to a deposit provided under section 410 may be paid or distributed out of the trust only for the purpose of paying the qualified expenses of the eligible individual.
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.
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 [26 U.S.C. 408(n)]) 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 title, 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 title, 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 of the account.
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.
Qualified entity.—
In general.—
The term ‘qualified entity’ means—
one or more not-for-profit organizations described in section 501(c)(3) of the Internal Revenue Code of 1986 [26 U.S.C. 501(c)(3)] and exempt from taxation under section 501(a) of such Code;
a State or local government agency, or a tribal government, submitting an application under section 405 jointly with an organization described in clause (i); or
an entity that—
Income test.—
The adjusted gross income of the household is equal to or less than 200 percent of the poverty line (as determined by the Office of Management and Budget) or the earned income amount described in section 32 of the Internal Revenue Code of 1986 [26 U.S.C. 32] (taking into account the size of the household).
Net worth test.—
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.
Determination of net worth.—
For purposes of subparagraph (A), the net worth of a household is the amount equal to—
the aggregate market value of all assets that are owned in whole or in part by any member of the household; minus
the obligations or debts of any member of the household.
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 one motor vehicle owned by a member of the household.
Individuals Unable To Complete the Project.—
The Secretary shall establish such regulations as are necessary to ensure compliance with this title 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, including regulations prohibiting future eligibility to participate in any other demonstration project conducted under this title.
SELECTION OF INDIVIDUALS TO PARTICIPATE.
“From among the individuals eligible to participate in a demonstration project conducted under this title, each qualified entity shall select the individuals—
that the qualified entity determines to be best suited to participate; and
to whom the qualified entity will provide deposits in accordance with section 410.
DEPOSITS BY QUALIFIED ENTITIES.
In General.—
Not less than once every 3 months during each project year, each qualified entity under this title shall deposit in the individual development account of each individual participating in the project, or into a parallel account maintained by the qualified entity—
from the non-Federal funds described in section 405(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 [26 U.S.C. 911(d)(2)]) deposited in the account by a project participant during that period;
from the grant made under section 406(b), an amount equal to the matching contribution made under paragraph (1); and
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.
Limitation on Deposits for an Individual.—
Not more than $2,000 from a grant made under section 406(b) shall be provided to any one individual over the course of the demonstration project.
Limitation on Deposits for a Household.—
Not more than $4,000 from a grant made under section 406(b) shall be provided to any one household over the course of the demonstration project.
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 one 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 a withdrawal from such an account 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.
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 this section to the Reserve Fund of the qualified entity, and use the funds to benefit other individuals participating in the demonstration project involved.
LOCAL CONTROL OVER DEMONSTRATION PROJECTS.
ANNUAL PROGRESS REPORTS.
In General.—
Each qualified entity under this title 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:
The number and characteristics of individuals making a deposit into an individual development account.
The amounts in the Reserve Fund established with respect to the project.
The amounts deposited in the individual development accounts.
The amounts withdrawn from the individual development accounts and the purposes for which such amounts were withdrawn.
The balances remaining in the individual development accounts.
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.
What service configurations of the qualified entity (such as configurations relating to 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.
Such other information as the Secretary may require to evaluate the demonstration project.
Submission of Reports.—
The qualified entity shall submit each report required to be prepared under subsection (a) to—
the Secretary; and
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.
Timing.—
The first report required by subsection (a) shall be submitted not later than 60 days after the end of the project 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.
SANCTIONS.
Authority To Terminate Demonstration Project.—
If the Secretary determines that a qualified entity under this title is not operating a demonstration project in accordance with the entity’s approved application under section 405 or the requirements of this title (and has not implemented any corrective recommendations directed by the Secretary), the Secretary shall terminate such entity’s authority to conduct the demonstration project.
Actions Required Upon Termination.—
If the Secretary terminates the authority to conduct a demonstration project, the Secretary—
shall suspend the demonstration project;
shall take control of the Reserve Fund established pursuant to section 407;
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, if modification is necessary to incorporate the recommendations, the application as modified) and the requirements of this title;
shall, if the Secretary identifies an entity (or entities) described in paragraph (3)—
authorize the entity (or entities) to conduct the project in accordance with the approved application (or, if modification is necessary to incorporate the recommendations, the application as modified) and the requirements of this title;
transfer to the entity (or entities) control over the Reserve Fund established pursuant to section 407; and
consider, for purposes of this title—
such other entity (or entities) to be the qualified entity (or entities) originally authorized to conduct the demonstration project; and
the date of such authorization to be the date of the original authorization; and
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—
terminate the project; and
from the amount remaining in the Reserve Fund established as part of the project, remit to each source that provided funds under section 405(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 from the source under section 405(c)(4) bears to the amount provided from all such sources under that section.
EVALUATIONS.
In General.—
Not later than 10 months after the date of enactment of this title [
Factors To Evaluate.—
In evaluating any demonstration project conducted under this title, the research organization shall address the following factors:
The effects of incentives and organizational or institutional support on savings behavior in the demonstration project.
The savings rates of individuals in the demonstration project based on demographic characteristics including gender, age, family size, race or ethnic background, and income.
The economic, civic, psychological, and social effects of asset accumulation, and how such effects vary among different populations or communities.
The effects of individual development accounts on savings rates, homeownership, level of postsecondary education attained, and self-employment, and how such effects vary among different populations or communities.
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.
The lessons to be learned from the demonstration projects conducted under this title and if a permanent program of individual development accounts should be established.
Such other factors as may be prescribed by the Secretary.
Methodological Requirements.—
In evaluating any demonstration project conducted under this title, the research organization shall—
for at least one site, use control groups to compare participants with nonparticipants;
before, during, and after the project, obtain such quantitative data as are necessary to evaluate the project thoroughly; and
develop a qualitative assessment, derived from sources such as in-depth interviews, of how asset accumulation affects individuals and families.
Reports by the Secretary.—
Interim reports.—
Not later than 90 days after the end of the project year in which the Secretary first authorizes a qualified entity to conduct a demonstration project under this title, and every 12 months thereafter until all demonstration projects conducted under this title are completed, the Secretary shall submit to Congress an interim report setting forth the results of the reports submitted pursuant to section 412(b).
Final reports.—
Not later than 12 months after the conclusion of all demonstration projects conducted under this title, the Secretary shall submit to Congress a final report setting forth the results and findings of all reports and evaluations conducted pursuant to this title.
Evaluation Expenses.—
Of the amount appropriated under section 416 for a fiscal year, the Secretary may expend not more than $500,000 for such fiscal year to carry out the objectives of this section.