Session of 2000
By Representatives Haley, Barnes, Gilbert, Henderson, Kirk, Ruff,
Spangler, Toelkes and Wells

10             AN  ACT concerning indigent persons; establishing the family develop-
11             ment account program and family development account reserve fund.
13       Be it enacted by the Legislature of the State of Kansas:
14             Section  1. This act shall be known and may be cited as the family
15       development account program.
16             Sec.  2. As used in this act:
17             (a) "Account holder" means a person who is the owner of a family
18       development account.
19             (b) "Community-based organization" means any religious or chari-
20       table association that is approved by the secretary of commerce and hous-
21       ing to implement the family development account reserve fund.
22             (c) "Department" means the department of commerce and housing.
23             (d) "Family development account" means a financial instrument es-
24       tablished in section 3, and amendments thereto.
25             (e) "Family development account reserve fund" means the fund cre-
26       ated by an approved community-based organization for the purposes of
27       funding the costs incurred in the administration of the program by the
28       financial institutions and the community-based organizations and for pro-
29       viding matching funds for moneys in family development accounts.
30             (f) "Federal poverty level" means the most recent poverty income
31       guidelines published in the calendar year by the United States depart-
32       ment of health and human services.
33             (g) "Financial institution" means any bank, trust company, savings
34       bank, credit union or savings and loan association or any other financial
35       institution regulated by the state of Kansas, any agency of the United
36       States or other state with an office in Kansas which is approved by the
37       secretary to create and manage the necessary financial instruments setting
38       up family development accounts for eligible families or individuals to
39       implement this program.
40             (h) "Matching funds" means the moneys contributed from a family
41       development account reserve fund to a family development account by a
42       community-based organization at a one-to-one ratio up to a three-to-one
43       ratio.


  1             (i) "Program" means the Kansas family development account pro-
  2       gram established in sections 1 through 7, and amendments thereto.
  3             (j) "Program contributor" means a person or entity who makes a con-
  4       tribution to a family development account reserve fund.
  5             (k) "Secretary" means the secretary of commerce and housing.
  6             Sec.  3. (a) There is hereby established within the department a pro-
  7       gram to be known as the family development account program. The pro-
  8       gram shall provide eligible families and individuals with an opportunity
  9       to establish special savings accounts for moneys which may be used by
10       such families and individuals for education, home ownership or small
11       business capitalization.
12             (b) The secretary shall adopt rules and regulations and policies to
13       implement and administer the provisions of sections 1 through 8, and
14       amendments thereto.
15             (c) The secretary shall enter into contracts as deemed appropriate to
16       carry out the provisions of this act.
17             (d) The department of commerce and housing shall prepare a request
18       for proposals from community-based organizations seeking to administer
19       a family development account reserve fund on a not-for-profit basis. The
20       community-based organization proposals shall include:
21             (1) A requirement that the community-based organization make
22       matching contributions to the development account of an individual ac-
23       count holder's or family's contributions to the family development
24       account;
25             (2) a process for including account holders in decision making re-
26       garding the investment of funds in the accounts;
27             (3) specifications of the population or populations targeted for pri-
28       ority participation in the program;
29             (4) a requirement that the individual account holder or the family of
30       the account holder attend economic literacy seminars;
31             (5) a process for including economic literacy seminars in the family
32       development account program; and
33             (6) a process for regular evaluation and review of family development
34       accounts to ensure program compliance by account holders.
35             (e) A notice of the request for proposals shall be published once a
36       week for two consecutive weeks in a newspaper having general circulation
37       in the community at least 30 days before any action thereon. The request
38       for proposals shall also be posted on readily accessible bulletin boards in
39       all offices of the department and sent elsewhere as the secretary of com-
40       merce and housing deems best.
41             (f) In reviewing the proposals of community-based organizations, the
42       department shall consider the following factors:
43             (1) The not-for-profit status of such organization;


  1             (2) the fiscal accountability of the community-based organization;
  2             (3) the ability of the community-based organization to provide or
  3       raise moneys for matching contributions;
  4             (4) the ability of the community-based organization to establish and
  5       administer a reserve fund account which shall receive all contributions
  6       from program contributors; and
  7             (5) the significance and quality of proposed auxiliary services; includ-
  8       ing economic literacy seminars and their relationship to the goals of the
  9       family development account program.
10             (g) No more than 20% of all funds in the reserve fund account may
11       be used for administrative costs of the program in the first and second
12       years of the program, and no more than 15% of such funds may be used
13       for administrative costs in any subsequent year. Funds deposited by ac-
14       count holders shall not be used for administrative costs.
15             Sec.  4. A family or individual whose household income is less than
16       or equal to 200% of the federal poverty level may open a family devel-
17       opment account for the purpose of accumulating and withdrawing mon-
18       eys for specified expenditures. The account holder may withdraw moneys
19       from the account on the approval of the financial institution, without
20       penalty, for any of the following expenditures:
21             (a) Educational costs for any family member at an accredited insti-
22       tution of higher education;
23             (b) job training costs for any family member 18 years of age or older,
24       at an accredited or licensed training program;
25             (c) purchase of a primary residence;
26             (d) major repairs or improvements to a primary residence; or
27             (e) start-up capitalization of a small business for any family member
28       18 years of age or older.
29             Sec.  5. (a) Financial institutions seeking to administer family devel-
30       opment accounts on a not-for-profit basis approved by the department
31       shall be permitted to establish family development accounts pursuant to
32       sections 1 through 7, and amendments thereto. The financial institution
33       shall certify to the department, on forms prescribed by the department
34       and accompanied by any documentation required by the department, that
35       such accounts have been established pursuant to this act and that deposits
36       have been made on behalf of the account holder.
37             (b) A financial institution establishing a family development account
38       shall:
39             (1) Keep the account in the name of the account holder;
40             (2) permit deposits to be made in the account by the following, sub-
41       ject to the indicated conditions:
42             (A) The account holder; or
43             (B) a community-based organization on behalf of the account holder.


  1       Such a deposit may include moneys to match the account holder's de-
  2       posits, up to a three to one match ratio;
  3             (3) require the account to earn at least the market rate of interest;
  4       and
  5             (4) permit the account holder to withdraw moneys from the account
  6       for any of the purposes listed in subsections (a) through (e) of section 4,
  7       and amendments thereto.
  8             (c) The total of all deposits by the account holder into a family de-
  9       velopment account in a calendar year shall not exceed $2,000. The total
10       balance in a family development account at any time shall not exceed
11       $50,000.
12             Sec.  6. (a) Account holders who withdraw moneys from a family de-
13       velopment account not in accordance with subsections (a) through (e) of
14       section 4, and amendments thereto, shall forfeit all matching moneys in
15       the account.
16             (b) All moneys forfeited by an account holder pursuant to subsection
17       (a) shall be returned to the family development account reserve fund of
18       the contributing community-based organization.
19             (c) In the event of an account holder's death, the account may be
20       transferred to the ownership of a contingent beneficiary. An account
21       holder shall name contingent beneficiaries at the time the account is
22       established and may change such beneficiaries at any time. If the named
23       beneficiary is deceased or otherwise cannot accept the transfer, the mon-
24       eys shall be transferred to the family development account reserve fund
25       of the contributing community-based organization.
26             Sec.  7. (a) Moneys deposited in a family development account by an
27       account holder, pursuant to section 4, and amendments thereto, shall be
28       exempt from income taxation imposed under the Kansas income tax act
29       unless withdrawn for an unapproved use.
30             (b) Earnings by any financial institution attributable to its family de-
31       velopment accounts shall be exempt from privilege taxation imposed by
32       article 11 of chapter 79 of the Kansas Statutes Annotated.
33             (c) Interest earned by a family development account shall be exempt
34       from taxation under the Kansas income tax act.
35             (d) Any funds in a family development account, including accrued
36       interest, shall be disregarded when determining eligibility to receive, or
37       the amount of, any public assistance or benefits.
38             (e) A program contributor shall be allowed a credit against state in-
39       come tax imposed under the Kansas income tax act in an amount not to
40       exceed $50,000 per program contributor or 50% of the contribution
41       amount, whichever is less.
42             (f) The department of commerce and housing shall verify all tax credit
43       claims by contributors. The administration of the community-based or-


  1       ganization, with the cooperation of the participating financial institutions,
  2       shall submit the names of contributors and the total amount each con-
  3       tributor contributes to the family development account reserve fund for
  4       the calendar year. The secretary shall determine the date by which such
  5       information shall be submitted to the secretary by the local administrator.
  6       The department shall submit verification of qualified tax credits pursuant
  7       to sections 1 through 7 and amendments thereto to the department of
  8       revenue.
  9             (g) The total tax credits authorized pursuant to this section shall not
10       exceed $4,000,000 in any fiscal year.
11             (h) The provisions of this section shall be applicable to all taxable
12       years commencing after December 31, 1999.
13             Sec.  8. (a) Subject to appropriations, the department shall award an-
14       nually up to $100,000 for an independent evaluation of the program. The
15       secretary shall develop the necessary criteria and prepare requests for
16       proposals to perform an independent evaluation of the program. Notice
17       for the request for proposals shall be performed as set out in subsection
18       (e) of section 3 and amendments thereto.
19             (b) Based on the independent evaluation, the department shall pro-
20       vide a comprehensive report on the program to the legislature during
21       each legislative session, beginning in the year 2001. 
22        Sec.  9. This act shall take effect and be in force from and after its
23       publication in the statute book.