Text: SSB02168                          Text: SSB02170
Text: SSB02100 - SSB02199               Text: SSB Index
Bills and Amendments: General Index     Bill History: General Index

Senate Study Bill 2169

Conference Committee Text

PAG LIN
  1  1      Division I - Family Investment Program Waiver Request
  1  2    Section 1.  WAIVER REQUEST.  The department of human
  1  3 services shall submit a waiver request to the United States
  1  4 department of health and human services as necessary to
  1  5 implement the policy change proposed by this section in the
  1  6 family investment program under chapter 239 and the job
  1  7 opportunities and basic skills (JOBS) program under chapter
  1  8 249C.  The waiver request shall be for the purpose of
  1  9 simplifying administration of the programs.  The policy change
  1 10 applies to the family investment agreement of a family
  1 11 investment program participant.  Under the policy to be
  1 12 changed on the effective date of this Act, a family investment
  1 13 agreement ends at the point cash assistance under the program
  1 14 is not provided to the participant and a new agreement is
  1 15 required if the participant reapplies for cash assistance.
  1 16 Under the policy change adopted pursuant to this Act, if the
  1 17 period without cash assistance is one month or less and the
  1 18 participant has not become exempt from JOBS program
  1 19 participation at the time the participant reapplies for cash
  1 20 assistance, the participant's family investment agreement
  1 21 would be reinstated at the time the participant reapplies.
  1 22 The reinstated agreement may be revised to accommodate
  1 23 circumstances at the time of reapplication.  For the purposes
  1 24 of this section, "participant" means a participant in the
  1 25 family investment program under chapter 239 and includes an
  1 26 individual whose income is considered in making eligibility
  1 27 and benefit determinations by the department of human services
  1 28 under the family investment program.
  1 29    Sec. 2.  CONTINGENCY PROVISION.  The waiver request
  1 30 submitted by the department of human services pursuant to
  1 31 section 1 of this Act to the United States department of
  1 32 health and human services shall be to apply the provisions of
  1 33 section 1 statewide.  If federal waiver approval of a
  1 34 provision of section 1 of this Act is granted, the department
  1 35 of human services shall implement the provision in accordance
  2  1 with the federal approval.  If implementing a provision of
  2  2 section 1 of this Act is in conflict with a provision of
  2  3 chapter 239 or 249C, notwithstanding that provision in chapter
  2  4 239 or 249C, the provision of section 1 shall be implemented.
  2  5 The department shall propose an amendment for the 1997
  2  6 legislative session in accordance with the provisions of
  2  7 section 2.16 to chapter 239 or 249C to resolve the conflict
  2  8 and, as necessary to place the provisions of this division of
  2  9 this Act before the public in a codified statute.
  2 10    Sec. 3.  EMERGENCY RULES.  The department of human services
  2 11 may adopt emergency rules under section 17A.4, subsection 2,
  2 12 and section 17A.5, subsection 2, paragraph "b", to implement
  2 13 the provisions of this division of this Act and the rules
  2 14 shall be effective immediately upon filing unless a later date
  2 15 is specified in the rules.  If necessary to conform with
  2 16 federal waiver terms or to efficiently administer the
  2 17 provisions, the rules may apply additional policies and
  2 18 procedures which are consistent with the provisions of section
  2 19 1 of this Act.  Any rules adopted in accordance with this
  2 20 section shall also be published as a notice of intended action
  2 21 as provided in section 17A.4.
  2 22    Sec. 4.  APPLICABILITY.  The effective date of the waiver
  2 23 provisions in section 1 of this Act granted by the federal
  2 24 government shall be July 1, 1996, unless federal approval is
  2 25 granted after that date, in which case the effective date
  2 26 shall be the beginning of either the first or second month
  2 27 following the month in which the federal approval is granted,
  2 28 as specified in administrative rules adopted by the
  2 29 department.  If federal law is amended to permit the state to
  2 30 initiate any of the provisions in section 1 of this Act
  2 31 without a federal waiver before July 1, 1996, the department
  2 32 of human services shall proceed to implement the provisions on
  2 33 July 1, 1996.
  2 34    Sec. 5.  EFFECTIVE DATE.  This division of this Act, being
  2 35 deemed of immediate importance, takes effect upon enactment.  
  3  1  Division II - Family Development and Self-Sufficiency Council
  3  2    Sec. 6.  Section 217.11, Code 1995, is amended by adding
  3  3 the following new subsection:
  3  4    NEW SUBSECTION.  10.  Two persons representing the business
  3  5 community, selected by the other members of the council.  
  3  6         Division III - Individual Development Accounts
  3  7    Sec. 7.  Section 422.7, subsection 28, Code Supplement
  3  8 1995, is amended to read as follows:
  3  9    28.  If the taxpayer is owner of an individual development
  3 10 account certified under chapter 541A at any time during the
  3 11 tax year, deductions of all of the following adjustments shall
  3 12 be made allowed:
  3 13    a.  Subtract, to the extent included, all of the following:
  3 14    (1) a.   Contributions made to the account by persons and
  3 15 entities, other than the taxpayer, as authorized in chapter
  3 16 541A.
  3 17    (2) b.  The amount of any savings refund authorized under
  3 18 section 541A.3, subsection 1.
  3 19    (3) c.  Earnings from the account to the extent not
  3 20 withdrawn.
  3 21    b.  Add, to the extent not included, all of the following:
  3 22    (1)  Earnings from the account which are withdrawn.
  3 23    (2)  Amounts withdrawn which are not authorized by section
  3 24 541A.2, subsection 4, paragraphs "a" and "b" and which are
  3 25 attributable to contributions by persons and entities, other
  3 26 than the taxpayer, as provided in section 541A.2, subsection
  3 27 4.
  3 28    (3)  If the account is closed, amounts received by the
  3 29 taxpayer which have not previously been taxed under this
  3 30 division, except amounts that are redeposited in another
  3 31 individual development account, or the state human investment
  3 32 reserve pool as provided in section 541A.2, subsection 5, and
  3 33 including the total amount of any savings refund authorized
  3 34 under section 541A.3.
  3 35    Sec. 8.  Section 450.4, subsection 6, Code 1995, is amended
  4  1 to read as follows:
  4  2    6.  On property in an individual development account in the
  4  3 name of the decedent that passes to another individual
  4  4 development account, up to ten thousand dollars, or the state
  4  5 human investment reserve pool created in section 541A.4.  For
  4  6 purposes of this subsection, "individual development account"
  4  7 means an account that has been certified as an individual
  4  8 development account pursuant to chapter 541A.
  4  9    Sec. 9.  Section 541A.2, subsection 2, paragraph d, Code
  4 10 1995, is amended to read as follows:
  4 11    d.  A deposit made on behalf of the account holder by an
  4 12 individual or a charitable contributor.  This type of deposit
  4 13 may include but is not limited to moneys to match the account
  4 14 holder's deposits.  A deposit made under this paragraph shall
  4 15 be held in trust for the account holder and shall only be used
  4 16 to earn income in the account or to be withdrawn by the
  4 17 account holder for a purpose provided in subsection 4.
  4 18    Sec. 10.  Section 541A.2, subsections 4, 5, 6, 7, and 8,
  4 19 Code 1995, are amended to read as follows:
  4 20    4.  During a calendar year, an account holder may withdraw
  4 21 without penalty from the account holder's account the sum of
  4 22 the following:
  4 23    a.  With the approval of the operating organization,
  4 24 amounts withdrawn for any of the following approved purposes:
  4 25    (1)  Educational costs at an accredited institution of
  4 26 higher education.
  4 27    (2)  Training costs for an accredited or licensed training
  4 28 program.
  4 29    (3)  Purchase of a primary residence.
  4 30    (4)  Capitalization of a small business start-up.
  4 31    (5)  An improvement to a primary residence which increases
  4 32 the tax basis of the property.
  4 33    (6) Emergency medical costs for the account holder or for a
  4 34 member of the account holder's family.  However, a withdrawal
  4 35 for this purpose is limited to once during the life of the
  5  1 account and the amount of the withdrawal shall not exceed ten
  5  2 percent of the account balance at the time of the withdrawal.
  5  3 Amounts withdrawn for purposes of this paragraph shall be
  5  4 charged to the source of principal on a prorated basis.
  5  5 Moneys transferred from another individual development account
  5  6 shall be considered to be a deposit made by the account holder
  5  7 for purposes of charges to the source of principal.
  5  8    b.  At the adult account holder's discretion any income
  5  9 earned by the account.  An account holder who is ten or more
  5 10 but less than eighteen years of age may withdraw any income
  5 11 earned by the account with the approval of the account
  5 12 holder's parent or guardian and of the operating organization.
  5 13 If the account holder is less than ten years of age, any
  5 14 income earned by the account may be withdrawn by the account
  5 15 holder's parent or guardian with the approval of the operating
  5 16 organization.
  5 17    c. b.  At the account holder's discretion, if the account
  5 18 holder is at least fifty-nine and one-half years of age, any
  5 19 amount.
  5 20    5.  If an An account holder is less than eighteen years of
  5 21 age, moneys shall not be withdrawn withdraw moneys from the
  5 22 holder's account unless the withdrawal is authorized under
  5 23 subsection 4.  If an account holder is eighteen or more years
  5 24 of age, any amount of the adjusted account holder deposits
  5 25 withdrawn during a calendar year which is not authorized under
  5 26 subsection 4, is subject to a penalty of fifteen percent.  In
  5 27 addition, if at any time the cumulative amount withdrawn by
  5 28 the account holder over the life of the account that is not
  5 29 authorized under subsection 4 exceeds fifty percent of the
  5 30 amount of the adjusted account holder deposits, the
  5 31 contributions made by a charitable or individual contributor
  5 32 held in trust in the account holder's account shall be removed
  5 33 from the account and redeposited in another individual
  5 34 development account or the reserve pool as directed by the
  5 35 contributor and deposits made by the state of a savings refund
  6  1 authorized under section 541A.3, subsection 1, shall be
  6  2 withdrawn and deposited in the reserve pool.  The amount of
  6  3 the adjusted account holder deposits is the amount remaining
  6  4 after subtracting from the cumulative moneys deposited by the
  6  5 account holder all amounts withdrawn pursuant to subsection 4,
  6  6 paragraph "a".  At the time a charitable or individual
  6  7 contributor contributes moneys to an account the contributor
  6  8 shall indicate the contributor's directions for disposition of
  6  9 moneys which are removed.  If the designated choice of the
  6 10 contributor does not exist the contributed moneys shall be
  6 11 withdrawn and deposited in the reserve pool.
  6 12    6.  Penalty amounts collected pursuant to subsection 5
  6 13 shall be deposited in the reserve pool.
  6 14    7. 6.  An adult account holder may transfer all or part of
  6 15 the assets the adult account holder has deposited in the
  6 16 account to any other account holder's account.  However, an An
  6 17 account holder who is less than eighteen years of age is
  6 18 prohibited from transferring account assets to any other
  6 19 account holder.  Moneys contributed by a charitable or
  6 20 individual contributor are not subject to transfer except as
  6 21 authorized by the contributor.  Amounts transferred in
  6 22 accordance with this subsection are not subject to a penalty.
  6 23    7.  An individual development account closed in accordance
  6 24 with this subsection is not subject to the limitations and
  6 25 benefits provided by this chapter but is subject to state tax
  6 26 in accordance with the provisions of section 422.7, subsection
  6 27 28, and section 450.4, subsection 6.  An individual
  6 28 development account may be closed for any of the following
  6 29 reasons:
  6 30    a.  The account's operating organization determines that
  6 31 the account holder has withdrawn moneys from the account for a
  6 32 purpose other than authorized under subsection 4.
  6 33    b.  The account's operating organization determines there
  6 34 has been no activity in the account during the preceding
  6 35 twelve months.
  7  1    c.  The account holder changes the account holder's place
  7  2 of primary residence to a new location outside the general
  7  3 geographic area served by the operating organization and an
  7  4 operating organization is not available in the new location.
  7  5    d.  The account's operating organization withdraws from
  7  6 involvement with the individual development account project
  7  7 and another operating organization is not available to operate
  7  8 the account.
  7  9    8.  If approved by the Subject to obtaining any necessary
  7 10 federal government waivers, the department of human services
  7 11 shall not consider moneys in an individual development account
  7 12 and any earnings on the moneys shall not be considered by the
  7 13 department of human services for in determining the
  7 14 eligibility or need of an individual for benefits or
  7 15 assistance or the amount of benefits or assistance under the
  7 16 family investment program under chapter 239, or the JOBS
  7 17 program under chapter 249C, or any other program administered
  7 18 by the department of human services.
  7 19    Sec. 11.  Section 541A.3, subsections 1 and 2, Code 1995,
  7 20 are amended to read as follows:
  7 21    1.  Payment by the state of a savings refund on amounts of
  7 22 up to two thousand dollars per calendar year that an account
  7 23 holder deposits in the account holder's account.  Moneys
  7 24 transferred to an individual development account from another
  7 25 account shall not be considered an account holder deposit for
  7 26 purposes of determining a savings refund.  Payment shall be
  7 27 made directly to the account in the most appropriate manner as
  7 28 determined by the administrator.  The state savings refund
  7 29 shall be the indicated percentage of the amount deposited:
  7 30    a.  For an account holder with a household income, as
  7 31 defined in section 425.17, subsection 6, which is less than
  7 32 one hundred fifty percent or less of the federal poverty
  7 33 level, twenty twenty-five percent.
  7 34    b.  For an account holder with a household income which is
  7 35 more than one hundred fifty percent or more but less than one
  8  1 hundred sixty seventy-five percent of the federal poverty
  8  2 level, eighteen twenty percent.
  8  3    c.  For an account holder with a household income which is
  8  4 one hundred sixty seventy-five percent or more but less not
  8  5 more than one two hundred seventy percent of the federal
  8  6 poverty level, sixteen fifteen percent.
  8  7    d.  For an account holder with a household income which is
  8  8 one hundred seventy percent or more but less than one hundred
  8  9 eighty percent of the federal poverty level, fourteen percent.
  8 10    e.  For an account holder with a household income which is
  8 11 one hundred eighty percent or more but less than one hundred
  8 12 ninety percent of the federal poverty level, twelve percent.
  8 13    f.  For an account holder with a household income which is
  8 14 one hundred ninety percent or more but less than two hundred
  8 15 percent of the federal poverty level, ten percent.
  8 16    g. d.  For an account holder with a household income which
  8 17 is more than two hundred percent or more of the federal
  8 18 poverty level, zero percent.
  8 19    2.  Income earned by an individual development account is
  8 20 not subject to state tax until withdrawn, in accordance with
  8 21 the provisions of section 422.7, subsection 28.
  8 22    Sec. 12.  Section 541A.4, subsection 1, Code 1995, is
  8 23 amended to read as follows:
  8 24    1.  For During the five-year pilot phase period beginning
  8 25 January 1, 1995, the total number of individual development
  8 26 accounts shall be limited to ten thousand accounts, with not
  8 27 more than five thousand new accounts opened in the first any
  8 28 one calendar year of the period, and to individuals with a
  8 29 household income which does not exceed two hundred percent of
  8 30 the federal poverty level.  The administrator shall ensure
  8 31 that the family income status of account holders at the time
  8 32 an account is opened proportionately reflects the distribution
  8 33 of the household income status of the state's population up to
  8 34 two hundred percent of the federal poverty level.
  8 35    Sec. 13.  Section 541A.4, subsection 2, paragraph g,
  9  1 subparagraph (3), Code 1995, is amended by striking the
  9  2 subparagraph.
  9  3    Sec. 14.  Section 541A.5, Code 1995, is amended to read as
  9  4 follows:
  9  5    541A.5  RULES.
  9  6    The administrator, in consultation with the department of
  9  7 revenue and finance, may shall adopt administrative rules to
  9  8 implement the provisions of administer this chapter.  The
  9  9 rules adopted by the administrator shall include but are not
  9 10 limited to provision for transfer of an individual development
  9 11 account to a different financial institution than originally
  9 12 approved by the administrator, if the different financial
  9 13 institution has an agreement with the account's operating
  9 14 organization.  
  9 15                Division IV - Food Stamp Program
  9 16    Sec. 15.  Section 234.13, Code 1995, is amended to read as
  9 17 follows:
  9 18    234.13  FRAUDULENT PRACTICES RELATING TO FOOD PROGRAMS.
  9 19    For the purposes of this section, unless the context
  9 20 otherwise requires, "benefit transfer instrument" means a food
  9 21 stamp coupon, authorization-to-purchase card, or electronic
  9 22 benefits transfer card.  A person is guilty of commits a
  9 23 fraudulent practice if that person does any of the following:
  9 24    1.  With intent to gain financial assistance to which that
  9 25 person is not entitled, knowingly makes or causes to be made a
  9 26 false statement or representation or knowingly fails to report
  9 27 to an employee of the department of human services any change
  9 28 in income, resources or other circumstances affecting that
  9 29 person's entitlement to such financial assistance; or.
  9 30    2.  As a beneficiary of the food programs, transfers any
  9 31 food stamp coupons or an authorization to purchase card
  9 32 benefit transfer instrument to any other individual with
  9 33 intent that such coupons or card the benefit transfer
  9 34 instrument be used for the benefit of someone other than
  9 35 persons within the beneficiary's food stamp household as
 10  1 certified by the department of human services; or.
 10  2    3.  Knowingly acquires, uses or attempts to use any food
 10  3 stamp coupon or authorization-to-purchase card benefit
 10  4 transfer instrument which was not issued for the benefit of
 10  5 that person's food stamp household by the department of human
 10  6 services, or by an agency administering food programs in
 10  7 another state.
 10  8    4.  Acquires, alters, transfers, or redeems a food stamp
 10  9 coupons benefit transfer instrument or possesses coupons a
 10 10 benefit transfer instrument, knowing that the coupons have
 10 11 benefit transfer instrument has been received, transferred, or
 10 12 used in violation of this section or the provisions of the
 10 13 federal food stamp program under 7 U.S.C. ch. 51 or the
 10 14 federal regulations issued pursuant to that chapter.  
 10 15                           EXPLANATION
 10 16    This bill relates to public assistance and certain
 10 17 associated state tax provisions involving the family
 10 18 investment program, family development and self-sufficiency
 10 19 council, individual development accounts, and a fraudulent
 10 20 practices involving the food stamp program, and provides
 10 21 various applicability provisions and effective dates.
 10 22    Division I directs the department of human services to
 10 23 submit a waiver request to the federal government to implement
 10 24 a policy change in the family investment program (FIP) and the
 10 25 job opportunities and basic skills (JOBS) program.  Under the
 10 26 current federal waiver, most FIP recipients and JOBS program
 10 27 participants must enter into a family investment agreement and
 10 28 the family investment agreement ends at the point cash
 10 29 assistance is no longer provided under FIP.  The waiver would
 10 30 be to reinstate a participant's family investment agreement
 10 31 following a time period when the participant does not receive
 10 32 cash assistance.  The waiver provisions would only apply if
 10 33 the lapse in cash assistance benefits is one month or less and
 10 34 the participant does not become exempt from JOBS program
 10 35 participation at the time of reapplying for cash assistance.
 11  1    Division I directs the department to apply the waiver
 11  2 provisions statewide, provides the waiver provisions supersede
 11  3 Code chapters associated with the two programs, and directs
 11  4 the department to propose Code amendments for the 1997
 11  5 legislative session to place the waiver provisions in a
 11  6 codified statute.  The department is authorized to adopt rules
 11  7 using emergency provisions.  The effective date of
 11  8 implementing the waiver is July 1, 1996, unless federal
 11  9 approval is after July 1, 1996, in which case the effective
 11 10 date is at the beginning of either the first or second month
 11 11 following the month in which the federal approval is granted,
 11 12 as specified by the department in rule.  If federal law is
 11 13 changed to authorize implementation of the policy change
 11 14 without a waiver, the change is to take effect July 1, 1996.
 11 15 Division I takes effect upon enactment.
 11 16    Division II amends section 217.11 to provide for two
 11 17 additional members of the family development and self-
 11 18 sufficiency council to represent the business community.  The
 11 19 additional members would be selected by the other members of
 11 20 the council.  The council reviews research concerning long-
 11 21 term dependency upon public assistance and foster care and
 11 22 awards grants for family development services to families at
 11 23 risk of such dependency.
 11 24    Division III amends various tax and program provisions
 11 25 associated with the individual development account (IDA)
 11 26 project.
 11 27    Section 422.7 is amended to revise state income tax
 11 28 deductions and additions to taxable income associated with the
 11 29 accounts.  A restriction in current law which does not permit
 11 30 a deduction of earnings withdrawn from an account is stricken.
 11 31 Provisions providing for additions to taxable income to
 11 32 reflect withdrawals from the account are stricken.
 11 33    Section 450.4, providing for exemptions from state
 11 34 inheritance tax, is amended to remove a $10,000 restriction on
 11 35 the amount of an IDA passing to another IDA which is exempt
 12  1 from inheritance tax.
 12  2    The bill includes the following amendments to section
 12  3 541A.2:  strikes a requirement for an IDA to be held as a
 12  4 trust account; strikes monetary penalties for unauthorized
 12  5 withdrawals from an IDA; adds authorized withdrawals for
 12  6 improvements to a primary residence or for certain emergency
 12  7 medical costs; strikes provisions requiring withdrawals from
 12  8 an IDA to be charged proportionally to the source of
 12  9 principal; strikes provisions authorizing limited withdrawals
 12 10 by minor account holders subject to certain permissions; in
 12 11 subsections 4 and 5 strikes provisions permitting adult
 12 12 account holders who are less than 59.5 years of age to make
 12 13 unauthorized withdrawals, subject to monetary penalties;
 12 14 strikes a prohibition against transfer of moneys deposited in
 12 15 an IDA by an individual or charitable contributor; provides
 12 16 for closing of an IDA under certain circumstances; and expands
 12 17 the provision directing the department to not consider moneys
 12 18 in an IDA for public assistance program eligibility to also
 12 19 apply to benefit amounts and any program administered by the
 12 20 department.
 12 21    Section 541A.3, providing for a state savings refund on
 12 22 amounts deposited by an account holder in an IDA, is amended
 12 23 to reduce the number of graduations in the income levels used
 12 24 to determine the amount of the refund.  The upper range of
 12 25 income eligible for a state savings refund remains unchanged
 12 26 at a household income of 200 percent of the federal poverty
 12 27 level.  In addition, provision for making the earnings of an
 12 28 IDA subject to state tax when withdrawn is stricken.
 12 29    Section 541A.4 is amended to remove a requirement that the
 12 30 10,000 authorized accounts be distributed in a manner to
 12 31 reflect the distribution of the state's general population
 12 32 with an income up to 200 percent of the federal poverty level
 12 33 and to revise an initial restriction on the number of accounts
 12 34 to apply to any one calendar year.
 12 35    Section 541A.5 is amended to make adoption of
 13  1 administrative rules mandatory by the project's administrator,
 13  2 the department of human services, rather than optional.  In
 13  3 addition, the department is required to adopt rules providing
 13  4 for transfer of individual development accounts to a different
 13  5 financial institution than initially approved by the
 13  6 department.
 13  7    Division IV amends section 234.13, relating to fraudulent
 13  8 practices under department of human services administered food
 13  9 programs.  The amendments expand the fraudulent practices to
 13 10 include those committed involving an electronic benefit card
 13 11 or other food stamp benefit transfer instrument.  
 13 12                      BACKGROUND STATEMENT
 13 13                     SUBMITTED BY THE AGENCY
 13 14    Division I &endash; The purpose of this division is to hold
 13 15 family investment program (FIP) participants responsible for
 13 16 the terms of a family investment agreement (FIA) even when
 13 17 they have experienced a break in cash assistance, so long as
 13 18 the break is no more than one month and the participant has
 13 19 not become exempt from promoting independence, self-
 13 20 sufficiency, and employment-job opportunity and basic skills
 13 21 (PROMISE-JOBS) program participation.
 13 22    Under current policy, the PROMISE-JOBS worker and the
 13 23 participant must complete a new FIA whenever the client
 13 24 reapplies and is reapproved for cash assistance after a break
 13 25 in the receipt of assistance.  This is true even when the
 13 26 break in assistance is less than one month and even when the
 13 27 terms of the FIA are still appropriate for the family.
 13 28    The PROMISE-JOBS provider agencies have asked the
 13 29 department to consider a change in policy.  This proposal is
 13 30 to the advantage of both FIP participants and PROMISE-JOBS
 13 31 offices because it simplifies administration.
 13 32    Division II &endash; Amend the family development and self-
 13 33 sufficiency council make-up by including two members from the
 13 34 private business sector to the composition of the council.
 13 35    The council on human services has suggested this change
 14  1 stemming from "the belief that state government cannot meet
 14  2 all needs and that communities must be an active partner in
 14  3 achieving desired outcomes".  Some of the grantees have
 14  4 already established relationships with the business community
 14  5 and it is believed that this type of partnership would benefit
 14  6 the entire program.  Additionally, businesses provide the jobs
 14  7 which enable welfare recipients to become self-sufficient.
 14  8    There is no expected cost associated with this proposal.
 14  9 Amending the Code to include council members from the business
 14 10 community will have little or no impact to the existing
 14 11 operation of the council.
 14 12    Division III &endash; The purpose of the amendments to the
 14 13 individual development account (IDA) project is to simplify
 14 14 the accounting, recordkeeping, and administrative requirements
 14 15 of the project.
 14 16    Section 422.7 is amended to eliminate state income tax
 14 17 deferral on income earned on principal in the IDA and to
 14 18 substitute with a state income tax deduction on income earned
 14 19 and deposits to the account by charitable and state sources.
 14 20 (Due to the account holders' income bracket, this change will
 14 21 have a zero-to-negligible impact on the state's tax receipts.)
 14 22    Section 541A.2, subsection 2, is amended to eliminate any
 14 23 trust requirements, including holding individual and
 14 24 charitable contributions in trust, but amends section 541A.2,
 14 25 subsections 4 and 5 to require that withdrawal of all funds
 14 26 (principal and income) shall only be for approved purposes set
 14 27 forth in the statute which are approved by the operating
 14 28 organization.  (Currently, all individual and charitable
 14 29 contributions must be held in trust, and this enormously
 14 30 complicates administration of the project and has been cited
 14 31 as a reason not to be involved in the project.  The proposed
 14 32 revision eliminates unapproved withdrawals.)
 14 33    Section 541A.2, subsection 4, is amended to add as an
 14 34 approved purpose for withdrawal of IDA principal funds, the
 14 35 designation of "home improvements" and "up to 10 percent
 15  1 withdrawal for family medical emergencies".
 15  2    Section 541A.2 is amended by adding a new subsection on
 15  3 closure of an IDA for certain reasons.
 15  4    Section 541A.2, subsection 4, is amended to delete a
 15  5 requirement that withdrawals from an IDA be charged to the
 15  6 source of principal on a prorated basis.  (Banks and operating
 15  7 organizations say this is a nightmare &endash; currently this type
 15  8 of complex accounting is only done by banks in their trust
 15  9 departments; it is labor-intensive and very costly.  It is
 15 10 cited as a reason by organizations not to be involved in this
 15 11 project.)
 15 12    Section 541A.3 is amended to eliminate the seven enumerated
 15 13 state saving refund levels in favor of three at a 5 percent
 15 14 higher level:
 15 15    Twenty-five percent refund &endash; household income at or below
 15 16 150 percent of the federal poverty level.
 15 17    Twenty percent refund &endash; household income over 150 percent
 15 18 but below 175 percent of the federal poverty level.
 15 19    Fifteen percent refund &endash; household income from 175 percent
 15 20 up to and including 200 percent of the federal poverty level.
 15 21    This change will have a negligible budgetary impact
 15 22 compared to the current refund levels.
 15 23    Section 541A.4 is amended to eliminate the requirement that
 15 24 the department of human services shall ensure that the family
 15 25 income status of account holders at the time an account is
 15 26 opened proportionately reflects the distribution of the
 15 27 household income status of the state's population up to 200
 15 28 percent of the federal poverty level.  (On top of the other
 15 29 administrative requirements, this will be almost impossible to
 15 30 implement under the project as it has been enacted.  This is a
 15 31 hold-over requirement from an earlier version of the bill when
 15 32 eligibility was open to all Iowans.  Current law narrows
 15 33 eligibility to household income under 200 percent of poverty.)
 15 34    The accounting processes, quasi-trust requirements,
 15 35 recordkeeping, and administrative complexity of the current
 16  1 IDA statute make the IDA project unworkable.  The suggested
 16  2 amendments simplify the project by eliminating cumbersome
 16  3 administrative and project barriers which are threatening the
 16  4 viability of the project and make the pilots feasible for
 16  5 organizations to implement and for the state to monitor and
 16  6 facilitate.
 16  7    Since the issuance of the IDA request for proposals (RFP)
 16  8 and the selection of the four IDA operating organizations for
 16  9 the first year of the IDA project, the department has received
 16 10 strong comments of concern and criticism from community
 16 11 organizations and banks about the complexity of account
 16 12 management, recordkeeping, and accounting which they believe
 16 13 will hinder operation of the pilots.  They assert, and the
 16 14 department agrees, that a disproportionate amount of time and
 16 15 resources would be spent attempting to comply with these
 16 16 requirements at the expense of working more productively to
 16 17 expand the program through recruiting IDA account holders and
 16 18 raising matching funds, which would happen if the law were
 16 19 simplified.
 16 20    The department distributed approximately 1,800 copies of
 16 21 the RFP in May and June 1995.  The department received letters
 16 22 of intent from only 11 organizations, and only four submitted
 16 23 proposals (all four were selected by DHS).  According to
 16 24 contacts made by the department, a major reason for the small
 16 25 amount of interest and failure to submit proposals is the
 16 26 complexity of the project and lack of compensation to
 16 27 organizations to defray administrative expenses.  In the last
 16 28 few weeks, one of the four organizations has indicated it may
 16 29 withdraw because of program complexity and lack of financial
 16 30 resources.  In the last few days, another organization has
 16 31 notified DHS that it is considering a major "downsizing" of
 16 32 its project due to the same reasons.
 16 33    This year's input is consistent with input received last
 16 34 year from similar organizations, financial institutions,
 16 35 provider groups, and others during focus group meetings held
 17  1 by the Iowa human investment policy/IDA work group prior to
 17  2 the adoption of the IDA administrative rules.
 17  3    Currently, no DHS funds have been budgeted for
 17  4 administration or for grants or other payment for services to
 17  5 selected operating organizations to operate local IDA pilots.
 17  6 DHS field offices have virtually no IDA duties under the
 17  7 current statue or under the proposed revision.  The amendments
 17  8 will have a major beneficial impact on the operation of the
 17  9 project by simplifying the successful implementation of the
 17 10 project and enabling the organizations to be more productive
 17 11 in recruiting IDA account holders and focusing on fundraising
 17 12 for matching contributions.  The amendments will also make
 17 13 state administration of the IDA project and facilitation of
 17 14 operating organizations much more simple.
 17 15    Division IV - Food Stamp Program.  Iowa Code section
 17 16 234.13, which addresses fraudulent practices relating to food
 17 17 programs, required updating to include electronic benefit
 17 18 transfer (EBT) as a food stamp issuance method.
 17 19    Use of EBT is an effective and more secure benefit issuance
 17 20 system but this system is not immune to fraudulent practices.
 17 21 The statutory change is needed to insure that fraudulent
 17 22 practices involving electronic benefit transfer cards and
 17 23 benefits are defined to allow for prosecution of persons
 17 24 engaged in such activities.
 17 25    There is no expected cost associated with this proposal.
 17 26 Changing statutory language to include a current benefit
 17 27 issuance system should have little to no impact on existing
 17 28 benefit issuance operations.  This change includes improper
 17 29 use of electronic benefit transfer technology in the
 17 30 definition of fraudulent practices.  
 17 31 LSB 3294DP 76
 17 32 jp/sc/14.1

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