SB 95 — INDIVIDUAL DEVELOPMENT ACCOUNT ACT CHANGES

"individual development account program" e e n d 18 means a program approved by the [office ] department to = = l ] 19 establish and administer individual development accounts and a l r i 20 reserve accounts for eligible individuals and to provide t e a t financial capability training or financial coaching required by m m 21 e d r e 22 the [office] department for account owners;

c e r c 23 [I.

"financial institution" means a bank, bank and e a n b 24 trust, savings bank, savings association or credit union u [ authorized to be a trustee of individual retirement accounts as .211341.2 - 5 - defined by federal law, the deposits of which are insured by the federal deposit insurance corporation or the national credit union administration;

"indigent""individual meansdevelopment anaccount individualprogram" who,means takinga intoprogram accountapproved theby present income and the liquiddepartment assetsto establish and theadminister 6individual requirementdevelopment foraccounts otherand basicreserve necessitiesaccounts of life for theeligible individualindividuals and the individual's dependents, is unable to payprovide thefinancial costscapability oftraining allowableor usesfinancial ascoaching setrequired forthby in the Individualdepartment Developmentfor Accountaccount Act;]owners; K.

"matchingK. funds" means money deposited in a reserve account to match the withdrawals for allowable uses from an individual development account according to a proportionate formula that complies with rules adopted by the [director] secretary;

"matching funds" means money deposited in a reserve account to match the withdrawals for allowable uses from an individual development account according to a proportionate formula that complies with rules adopted by the secretary;

"nonprofit organization" means an instrumentality of the state or a local government or an e e 17 organization described in Section 501(c)(3) of the Internal e e n d 18 Revenue Code of 1986 and exempt from taxation pursuant to = = l ] 19 Section 501(a) of that code;

aM. l r i 20 [M.

"office""program administrator" means a nonprofit organization or tribe that is selected pursuant to the officeSB of95 workforcePage training5 tIndividual eDevelopment Account Act to offer an individual development account program pursuant to a tcontract andwith development;the secretary;

mN. m 21 e d r e 22 N.] M.

"program administrator" means a nonprofit c e r c 23 organization or tribe that is selected pursuant to the e a n b 24 Individual Development Account Act to offer an individual u [ development account program pursuant to a contract with the .211341.2 - 6 - [director] secretary;

[O.] N.

[and ] O.

INDIVIDUAL DEVELOPMENT ACCOUNTS.--An individual development account may be established for an eligible individual as part of an individual development account program e e 17 if the written instrument creating the account sets forth the e e n d 18 following:

= = l ] 19 A.

the account owner is an eligible individual a l r i 20 according to program requirements at the time the account is t e a t established;

m m 21 e d r e 22 B.

the individual development account is c e r c 23 established and maintained in an authorized financial eSB a95 nPage b6 24 institution;

u [ C.

deposits to an individual development account .211341.2 - 7 - shall be made in accordance with the rules adopted pursuant to the Individual Development Account Act;

withdrawals from an individual development account shall only be made in accordance with the Individual Development Account Act [and rules adopted pursuant to that act] for allowable uses;

Except as set forth in Subsections B and C of e e 17 this section, an eligible individual shall have earned income e e n d 18 and shall be:

= = l ] 19 (1) eighteen years of age or older;

a l r i 20 (2) a citizen, [or ] legal resident, [of] t e a t refugee, asylee or person otherwise legally present in the m m 21 e d r e 22 United States at the time the person opens the person's c e r c 23 individual development account;

e a n b 24 (3) a resident of New Mexico;

and uSB [95 Page 7 (4) an indigent.

.211341.2 - 8 - B.

A child in foster care is an eligible individual if the child isis: :

(1) [is] fifteen years of age or older;

(2) [is] an indigent;

](3) a citizen, [or] a legal resident, [of (3) [is the United States] a refugee or an asylee or is otherwise legally present in the United States at the time the person opens the person's individual development account;

and (4) [is] a resident of New Mexico.

(1) [is] at least fifteen years of age and not more than eighteen years of age;

(2) [is] a member of a family whose members are all indigents;

](3) a citizen, [or] a legal resident, [of (3) [is e e 17 the United States] a refugee or an asylee or is otherwise e e n d 18 legally present in the United States at the time the person = = l ] 19 opens the person's individual development account;

and a l r i 20 (4) [is] a resident of New Mexico." t e a t SECTION 6.

Section 58-30-5 NMSA 1978 (being Laws 2003, m m 21 e d r e 22 Chapter 362, Section 5, as amended) is amended to read:

c e r c 23 "58-30-5.

RESPONSIBILITIES OF THE [OFFICE ] DEPARTMENT.-- e a n b 24 A.

The [office ] department shall adopt rules uimplementing [SB implementing95 Page 8 the provisions of the Individual Development .211341.2 - 9 - Account Act.

The [director ] secretary shall make an annual report each November to the governor and to the legislative finance committee.

] department shall use no more than C.

The [officedepartment shall use no more than five percent of the money appropriated to fund the Individual Development Account Act to administer that act, not including the costs of the program administrator.

The "individual development account council" is e e 17 created.

e e n d 18 (1) provide oversight of the administration of = = l ] 19 the Individual Development Account Act;

a l r i 20 (2) suggest possible changes that benefit t e a t account owners or improve the effectiveness of the individual m m 21 e d r e 22 development account programs throughout the state;

and c e r c 23 (3) obtain subject matter expertise through e a n b 24 attendance at conferences and workshops related to proven and u [ promising asset-building strategies.

.211341.2SB -95 10Page -9 B.

The [director] secretary or the [director's] secretary's designee shall serve as an ex-officio member of the council.

e e 17 D.

Appointed members of the individual development e e n d 18 account council shall receive per diem and mileage pursuant to = = l ] 19 the Per Diem and Mileage Act for attendance at required a l r i 20 meetings and at authorized conferences and workshops and shall t e a t receive no other compensation, perquisite or allowance for m m 21 e d r e 22 their participation on the council.

c e r c 23 E.

The [office ] department shall provide adequate e a n b 24 staff support and administrative services for the individual u [ development account council." .211341.2SB -95 11Page -10 SECTION 8.

An individual development account program shall be approved and monitored by the [director ] secretary for compliance with applicable law, the Individual Development Account Act and rules adopted pursuant to that act.

The program administrator shall establish a reserve account sufficient to meet the matching fund commitments made to all account owners participating in the e e 17 individual development account program and shall report at e e n d 18 least quarterly to each account owner the amount of money = = l ] 19 available in the reserve account for use by the program a l r i 20 administrator to match withdrawals for allowable uses.

t e a t [Notwithstanding any matching commitment otherwise required ] m m 21 e d r e 22 The amount of state funds deposited in a reserve account during c e r c 23 a calendar year to match deposits from any single account owner e a n b 24 shall not exceed the higher of:

u [ (1) two thousand dollars ($2,000);

or .211341.2SB -95 12Page -11 (2) an amount determined by rule;

[of the office] provided that the cumulative reserve account deposits shall total not less than one hundred twenty-five percent of the prior calendar year match to deposits beginning in the second year of the individual development account program;

and 6 further provided that the state shall match deposits of every account owner dollar-for-dollar up to two thousand dollars ($2,000) in a calendar year.

The program administrator shall provide financial education, including financial coaching and other necessary [training ] guidance and electronic reminders [pertinent] to encourage deposits and to achieve goals of allowable uses by account owners, develop partnerships with financial institutions, [develop ] distribute matching funds and manage the operations of an individual development account that is established within the program.

e e 17 E.

An eligible individual may open an individual e e n d 18 development account upon verification by the program = = l ] 19 administrator that the individual maintains no other individual a l r i 20 development account.

t e a t F.

More than one eligible individual per household m m 21 e d r e 22 may hold an individual development account.

c e r c 23 G.

An account owner shall complete a tested e a n b 24 financial education program, including financial coaching, u [ prior to the withdrawal of money from the account owner's .211341.2SB -95 13Page -12 individual development account for allowable uses unless written approval is obtained from the program administrator." SECTION 9.

(2) costs to acquire or construct a principal residence as defined in rules adopted pursuant to the Individual Development Account Act that is the first principal e e 17 residence acquired or constructed by the account owner within e e n d 18 the previous five years;

= = l ] 19 (3) costs of major home improvements or a l r i 20 repairs on the home of the account owner;

t e a t (4) capitalization or costs to start or expand m m 21 e d r e 22 a business, including capital, plant, equipment, operational c e r c 23 and inventory expenses, attorney and accountant fees and other e a n b 24 costs normally associated with starting or expanding a u [ business;

.211341.2SB -95 14Page -13 (5) acquisition or repair of a vehicle necessary to obtain or maintain employment by an account owner or the spouse of an account owner;

Unless otherwise approved by the program administrator pursuant to the provisions of Subsection D of this section, account owners qualifying as eligible individuals e e 17 pursuant to the provisions of Subsection B or C of Section e e n d 18 58-30-4 NMSA 1978 shall not be permitted to withdraw money from = = l ] 19 an individual development account until such time as the a l r i 20 account owners have completed a high school curriculum at a t e a t public or accredited private New Mexico high school or received m m 21 e d r e 22 a [high school equivalency credential ] general educational c e r c 23 development certificate.

e a n b 24 C.

Except as provided in Subsection D of this u [ section, if an account owner withdraws money from an individualSB .211341.295 -Page 1514 -individual development account for a use other than an allowable use, the account owner forfeits a proportionate amount of matching funds from the reserve account, as set forth in the agreement between the program administrator and the account owner.

The program administrator may approve a withdrawal by an account owner from an individual development account to be used for a purpose other than an allowable use only for serious emergencies as specified in the rules adopted by the [office ] department.

At the request of the account owner and with the e e 17 written approval of the program administrator, amounts may be e e n d 18 withdrawn from the account owner's individual development = = l ] 19 account and deposited in another individual development account a l r i 20 or a qualified tuition program, as defined in Section 529 of t e a t the Internal Revenue Code of 1986, established for an eligible m m 21 e d r e 22 individual who is the account owner's spouse or dependent." c e r c 23 SECTION 10.

Section 58-30-9 NMSA 1978 (being Laws 2003, eSB a95 nPage b15 24 Chapter 362, Section 9, as amended) is amended to read:

u [ "58-30-9.

APPROVAL OF INDIVIDUAL DEVELOPMENT ACCOUNT .211341.2 - 16 - PROGRAMS.-- A.

The [office ] department shall issue a request for proposals from nonprofit organizations or tribes interested in establishing an individual development account program.

(4) state the amount, not to be less than one e e 17 dollar ($1.00), that will be deposited in the reserve account e e n d 18 for each dollar deposited in an individual development account;

= = l ] 19 (5) describe the expertise, experience and a l r i 20 other qualifications of the proposer and its employees;

and t e a t (6) contain such other information as required m m 21 e d r e 22 in the request for proposals and rules of the [directorSB ]95 cPage e16 r c 23 secretary.

e a n b 24 B.

The [director ] secretary shall issue a request u [ for proposals to determine if an interested nonprofit .211341.2 - 17 - organization or tribe is eligible to be a program administrator, determine the legal sufficiency of submitted proposals, evaluate the proposals and, after consulting with the individual development account council, select the program administrators.

In selecting program administrators, the [director] secretary shall:

The [director ] secretary shall enter into contracts with the selected program administrators.

e e 17 E.

The [director ] secretary shall approve an e e n d 18 individual development account program submitted by a program = = l ] 19 administrator before the program establishes individual a l r i 20 development accounts or reserve accounts or provides services t e a t required by the Individual Development Account Act to eligible m m 21 e d r e 22 individuals.

cSB e95 rPage c17 23 F.

An individual development account and a reserve e a n b 24 account may be established only in an authorized financial u [ institution.

.211341.2 - 18 - G.

The [director ] secretary shall monitor all individual development account programs to ensure that individual development accounts and reserve accounts are being operated according to the contract provisions, federal law, the provisions of the Individual Development Account Act and rules adopted pursuant to that act." SECTION 11.

(1) [office ] department determines that the program is not being operated pursuant to the provisions of the contract between the program administrator and the [director ] secretary, the Individual Development Account Act or rules e e 17 adopted pursuant to that act;

e e n d 18 (2) provider of the program no longer retains = = l ] 19 its status as a program administrator;

or a l r i 20 (3) program administrator chooses to cease t e a t providing an individual development account program.

mSB m95 21Page e18 d r e 22 B.

Upon termination of an individual development c e r c 23 account program, the [director ] secretary shall administer the e a n b 24 program until a qualified program administrator is selected to u [ administer the program.

If, after a reasonable period, the .211341.2 - 19 - [director] secretary is unable to identify and certify a program administrator to assume the authority to continue to operate a terminated individual development account program, money in a reserve account shall be deposited into the individual development accounts of the account owners for whom the proportionate share of the reserve account was established as of the first day of termination of the program." SECTION 12.

REPORTING.--A program administrator operating an individual development account program pursuant to the Individual Development Account Act shall report at least annually to the [director ] secretary, as set forth in the rules of the [office ] department.

the number of eligible individuals making e e 17 contributions to individual development accounts;

e e n d 18 B.

the total money contributed to each individual = = l ] 19 development account and deposited into each reserve account;

a l r i 20 C.

the total money in the aggregate deposited in tSB e95 aPage t19 individual development accounts and reserve accounts m m 21 e d r e 22 administered by the individual development account program;

c e r c 23 D.

the amounts withdrawn from individual e a n b 24 development accounts [for either ] identifying the allowable u [ uses [or for] and uses other than allowable uses and the .211341.2 - 20 - amounts withdrawn from reserve accounts;

other information requested by the [directorsecretary ] to monitor the costs and outcomes of the individual secretary development account program." SECTION 13.

e e 17 B.

When determining eligibility for benefits and e e n d 18 determining benefit amounts due under the [food stamp program ] = = l ] 19 supplemental nutrition assistance program, children's health ainsurance lSB r95 iPage 20 insurance program, child care and development block grant and t e a t medicaid, the human services department shall, pursuant to the m m 21 e d r e 22 authority granted by 7 USCA 2014 (d) and (g), disregard money c e r c 23 deposited into an individual development account, interest e a n b 24 earned on that account and interest and matching funds u [ deposited in a reserve account for the benefit of the account .211341.2 - 21 - owners.

e e 17 Money in the fund is appropriated to the [office ] department e e n d 18 for the purposes of carrying out the provisions of theSB =95 =Page l21 ]the 19 Individual Development Account Act.

Expenditures shall be made a l r i 20 on warrant of the secretary of finance and administration t e a t pursuant to vouchers signed by the [director ] secretary of m m 21 e d r e 22 workforce solutions or the [director's] secretary's designee." c e r c 23 SECTION 15.

APPROPRIATION.--Five hundred thousand dollars e a n b 24 ($500,000) is appropriated from the general fund to the u [ individual development fund for expenditure in fiscal year 2020 .211341.2 - 22 - and subsequent fiscal years to carry out the purposes of the individual development fund.

Any unexpended or unencumbered balance remaining at the end of a fiscal year shall not revert to the general fund.

SECTION 16.

-SB 2395 -Page 9 11 13 15 e e 17 e e n d 18 = = l ] 19 a l r i 20 t e a t m m 21 e d r e 22 c8 e25 r c 23 e a n b 24 u [ .211341.2