PRINTER'S NO. 2698
No. 2083 Session of 1999
INTRODUCED BY GORDNER, HERMAN, ZUG, MARKOSEK, McILHATTAN,
SANTONI, LEDERER, WALKO, BELFANTI, GRUCELA, STERN, BROWNE,
FRANKEL, WOJNAROSKI, MYERS, CASORIO, LAUGHLIN, MANDERINO,
STURLA, LEH, M. COHEN, ROBINSON, BELARDI, HALUSKA, CORRIGAN,
YOUNGBLOOD, S. MILLER, VAN HORNE, BATTISTO AND CAPPABIANCA,
NOVEMBER 17, 1999
REFERRED TO COMMITTEE ON COMMERCE AND ECONOMIC DEVELOPMENT,
NOVEMBER 17, 1999
AN ACT
1 Amending the act of June 29, 1996 (P.L.434, No.67), entitled, as
2 amended, "An act to enhance job creation and economic
3 development by providing for an annual financing strategy,
4 for opportunity grants, for job creation tax credits, for
5 small business assistance, for the Small Business Advocacy
6 Council, for a family savings program, for industrial
7 development assistance, for community development bank grants
8 and loans and for tax-exempt bond allocation; conferring
9 powers and duties on various administrative agencies and
10 authorities; further providing for various funds; and making
11 repeals," further providing for the Family Savings Account
12 Program.
13 The General Assembly of the Commonwealth of Pennsylvania
14 hereby enacts as follows:
15 Section 1. Sections 2101 and 2102 of the act of June 29,
16 1996 (P.L.434, No.67), known as the Job Enhancement Act, amended
17 November 17, 1998 (P.L.788, No.100), are amended to read:
18 Section 2101. Definitions.
19 The following words and phrases when used in this chapter
20 shall have the meanings given to them in this section unless the
1 context clearly indicates otherwise:
2 "Account." A family savings account [at a financial
3 institution or other institution that is approved by the
4 Department of Community and Economic Development and which is]
5 that is opened and maintained by [the] a saver [as part of an
6 approved account program for the restricted purpose of providing
7 funds for an eligible use] enrolled in the program.
8 ["Approved account program." A program approved by the
9 Department of Community and Economic Development and that is
10 operated by a service provider.]
11 "Approved plan." A plan developed for an individual saver
12 defining savings goals and program requirements, including the
13 saver's anticipated use of both the savings and the match. The
14 approved plan shall serve as the contract between the saver and
15 the service provider and shall be for a contribution period of
16 not less than 12 months nor more than 24 months.
17 "Department." The Department of Community and Economic
18 Development of the Commonwealth.
19 "Education." A postsecondary program of instruction provided
20 by a college, university, community college, area vocational-
21 technical school, professional institution or specialized
22 degree-granting college or school legally authorized to grant
23 degrees. The term shall also include a job training or related
24 educational program approved by the Department of Community and
25 Economic Development. The term shall not include a school of
26 theology or theological seminary.
27 "Eligible uses." Education, purchase of a home,
28 participation in entrepreneurial activity, enrollment of a
29 saver's child in day care to enable the saver to participate in
30 job training, any work-related activity or educational program
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1 or other activity based on an approved plan.
2 "Entrepreneurial activity." Purchase of or investment in a
3 for-profit venture in which the saver will be a principal.
4 "Financial institution." Any of the following:
5 (1) A Federal or State-chartered bank, bank and trust
6 company, savings bank, savings and loan association, trust
7 company or credit union.
8 (2) A financial entity which:
9 (i) is licensed or regulated by a Federal or
10 Commonwealth agency; and
11 (ii) insures its deposits up to $100,000.
12 "Match." An amount equal to 50%, up to $500 per year, of the
13 [contribution amount] money deposited into [an] the account by a
14 saver during the contribution period of the saver's approved
15 plan.
16 "Minimum savings amount." An amount established in the
17 approved plan as the minimum amount to be deposited by a saver
18 in order to be eligible for the match.
19 "Program." The Family Savings Account Program established
20 pursuant to this chapter.
21 "Saver." An individual or family who resides in this
22 Commonwealth and whose total annual income at the time of
23 enrollment is not more than 200% of the Federal poverty standard
24 and who has applied for enrollment in [an approved account] the
25 program.
26 "Service provider." A nonprofit institution that encourages
27 and assists local community building and that is certified by
28 the Department of Community and Economic Development for
29 participation in the program.
30 Section 2102. Administration.
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1 (a) Certification of service providers.--The department
2 shall certify service providers who shall enroll eligible savers
3 into the program.
4 (b) Application process.--Eligible savers shall apply to a
5 service provider to participate in the program. The service
6 provider shall develop an approved plan with each enrolled saver
7 which specifies a minimum savings amount and how much money the
8 saver intends to contribute to the saver's family savings
9 account on either a weekly, biweekly or monthly basis. The
10 application and approved plan shall be on a form and shall meet
11 such requirements as deemed appropriate by the department.
12 (c) Ownership.--Each enrolled saver shall open an account as
13 defined under this chapter at a financial institution that is
14 certified by the department as qualified to participate in the
15 program for deposit of the saver's contributions. All moneys in
16 that account, including interest earned thereon, shall belong to
17 the individual saver.
18 [(d) Grants.--
19 (1) The department shall make grants to service
20 providers from funds appropriated for this purpose. The
21 amount and number of grants shall be calculated by the
22 department in such a manner as to ensure payment of the
23 maximum match required for the contribution period for all
24 approved plans for enrolled savers and in such a manner as to
25 not exceed the amount appropriated.
26 (2) Service providers shall keep all matching grant
27 funds in a separate account at a financial institution
28 approved by the department until the funds are withdrawn or
29 returned to the department according to the provisions of
30 this chapter. The service provider shall use grant proceeds
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1 to provide the required match for the accounts of enrolled
2 savers who have met all program requirements. Service
3 providers shall be eligible for administrative costs in an
4 amount as determined by the department. Not more than 5% of
5 funds annually appropriated for this program may be used to
6 reimburse service providers for eligible administrative
7 costs. The department may approve the use of interest
8 earnings on grant funds held by service providers as a
9 portion of a service provider's approved administrative
10 costs.]
11 (d) Grants.--
12 (1) The department shall make a grant to a service
13 provider from which the service provider shall provide the
14 match for approved plans. A service provider shall deposit
15 all grant funds in a separate account at a financial
16 institution until the funds are withdrawn to provide the
17 required match for a saver or are returned to the
18 Commonwealth. Grants to service providers shall be made from
19 and limited to funds appropriated for this purpose.
20 (2) If a saver's approved plan is modified and the match
21 is reduced or a saver drops out of the program within the
22 fiscal year in which the grant was made to the service
23 provider or the next fiscal year, the service provider may
24 reassign the grant funds to other savers with approved plans
25 within this time period. Any grant funds remaining unassigned
26 at the end of the fiscal year in which the grant was made to
27 the service provider or the next fiscal year must be returned
28 to the Commonwealth as provided in paragraph (3). If a
29 saver's approved plan is modified and the match is reduced or
30 a saver drops out of the program after the fiscal year in
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1 which the grant was made to the service provider or the next
2 fiscal year, the service provider must return the unused
3 grant funds to the Commonwealth as provided in paragraph (3).
4 (3) Service providers shall return any funds due the
5 Commonwealth pursuant to guidelines published by the
6 department but no later than quarterly.
7 (4) A service provider shall be eligible for
8 administrative and counseling costs in an amount determined
9 by the department. No more than 9.5% of funds annually
10 appropriated for this program may be used to reimburse
11 service providers for eligible administrative and counseling
12 costs of which no more than 5% may be used for administrative
13 costs. The department may approve the use of interest
14 earnings on grant funds held by service providers as a
15 portion of a service provider's approved administrative and
16 counseling costs. Eligible counseling costs shall include,
17 but not be limited to, costs associated with interviewing
18 potential savers, enrolling savers, monitoring a saver's
19 progress toward fulfilling the terms of an approved plan and
20 providing periodic money management and financial skills
21 meetings for savers to foster the habit of continued saving.
22 The department shall determine eligible administrative costs.
23 (e) Eligibility for match.--An enrolled saver with an
24 approved plan and account monitored by a service provider must
25 fulfill the requirements of the approved plan for a minimum of
26 12 months but not more than 24 months. The saver shall present
27 satisfactory evidence to the service provider on a quarterly
28 basis that the savings requirements are being met.
29 (f) Restrictions on withdrawal.--
30 (1) In order to obtain [matching funds] the match, the
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1 saver must present satisfactory evidence to the service
2 provider that the amount being withdrawn from the saver's
3 family savings account is being used for an eligible use.
4 Withdrawals from a family savings account for an eligible use
5 by a saver shall be made payable to the legal entity which
6 provides the eligible use.
7 (2) [Match funds] The match shall be paid by the service
8 provider to the legal entity which provides the eligible use.
9 [Match funds] The match shall not be paid to the saver.
10 (3) [Match funds which have] A match which has not been
11 paid for an eligible use within [five] three years after the
12 end of the [match] contribution period shall be returned to
13 the [department] Commonwealth for deposit in the State
14 Treasury.
15 (4) A saver who fails to meet the savings goal set forth
16 in the approved plan or who decides to drop out of the
17 program shall terminate his approved plan with the service
18 provider according to procedures determined by the
19 department. Upon the termination of an approved plan between
20 a saver and a service provider, the service provider [shall
21 return the amount of match to the department in accordance
22 with the guidelines established by the department] shall
23 reassign or return the matching funds according to the
24 provisions of subsection (d), and the saver shall be entitled
25 to withdraw funds within the saver's account for purposes
26 other than provided by this chapter.
27 Section 2. This act shall take effect immediately.
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