00-4390. Individual Development Accounts

AGENCY:

Office of Community Services, ACF, HHS.

ACTION:

Interim final rule with comment.

SUMMARY:

This regulation implements a statutory requirement of the Assets for Independence Act establishing the Assets for Independence Demonstration Program, under title IV of the Community Opportunities, Accountability, and Training and Educational Services Act of 1998. The Act provides competitive demonstration grants for projects to establish, support, and evaluate individual development accounts for low income individuals and families. The statute requires the Secretary of Health and Human Services to prescribe regulations that grantees must follow in accounting for amounts grantees deposit in the reserve fund. This rule implements that provision of the legislation. Other factors in the legislation have been, or will be, addressed administratively, through the grant announcement and award process.

DATES:

These regulations are effective February 25, 2000. Consideration will be given to written comments received by April 25, 2000.

ADDRESSES:

Comments should be submitted in writing to the Office of Community Services, Administration for Children and Families, 370 L'Enfant Promenade, SW, 5th Floor, Washington, DC 20447, Attention: Director of Office of Community Services, Mail Stop: OCS/OD. Comments will be available for public inspection Monday through Friday, 8:30 a.m. to 5 p.m. on the 5th floor of the Department's offices at the above address. Comments may also be submitted by sending electronic mail (e-mail) to [e-mail], or by telefaxing to 202-401-4687 or 202 (401)-5718. This is not a toll-free number. Comments sent electronically must be in ASCII format.

FOR FURTHER INFORMATION CONTACT:

Sheldon Shalit, Office of Community Services, [phone], or Richard Saul, Office of Community Services, [phone]. Hearing impaired individuals may call the Federal Dual Party Relay Service at 800-877-8339 between 8 a.m. and 7 p.m. eastern time.

SUPPLEMENTARY INFORMATION

I. Statutory and Regulatory Authority

These rules implement section 407(b)(2) of the Community Opportunities, Accountability, and Training and Educational Services Act of 1998 (Pub. L. 105-285). Under this provision, the Secretary of Health and Human Services is to prescribe by regulation the rules grantees must follow in accounting for monies in reserve funds, established under the Act, which are used for depositing grant funds, the non-Federal matching funds required for establishing individual development accounts, and the proceeds from any investment of such funds.

II. Background

The Assets for Independence Act, or title IV of Pub. L. 105-285, provides for the establishment of Individual Development Account (IDA) demonstration projects to determine how effective IDAs and “asset-building” strategies are in helping low-income people save, acquire productive assets, and achieve economic self-sufficiency. The Act authorizes the Department of Health and Human Services to conduct a five-year Individual Development Account demonstration, through which grants are made to non-profit organizations on a competitive basis.

The statute provides specific and detailed requirements for establishing such programs and authorizes grants for projects to be awarded within 10 months of enactment of the Act (August 27, 1999). For these reasons, coupled with the Department's commitment to reduce regulatory burden, we have decided to limit regulating to the one area where the statute indicates regulations are required. Specifically, section 407(b)(2) of Pub. L. 105-285 requires grantees to maintain a reserve fund in accordance with accounting regulations prescribed by the Secretary. Responding to this legislative provision, these rules stipulate which Departmental uniform administrative requirements must be met in maintaining IDA reserve funds.

The statute requires that amounts in the reserve funds be used as matching contributions to individual development accounts for project participants; for expenses related to collecting and reporting project data and information required for the evaluation; for administration of the project including skill training necessary to achieve economic self-sufficiency; and for other project related expenses. Federal funds can only be drawn down after the match funds have been deposited.

With respect to provisions of the Act other than accounting for the amounts in the reserve fund, on January 27, 1999, the Department issued a Program Announcement in the Federal Register, “Program Announcement No. OCS-99-04” (64 FR 4258), announcing the availability of funds and requesting competitive applications. On March 29, 1999, the Department published guidance, “Clarification of Program Announcement No. OCS 99-04” (64 FR 14923), in the Federal Register to assist interested applicants in understanding the law and the requirements for eligibility. Also, on July 2, 1999, a Second Round of Applications was published, “Program Announcement No. OCS-99-04” (64 FR 36184). Further information will be made available to the grantees as part of Terms and Conditions at the time of the grant award.

III. Description of Regulatory Provisions

We are adding a new part 1000 in title 45 of the Code of Federal Regulations.

New Part 1000 of Chapter X, title 45 of the CFR—Individual Development Account—Reserve Funds Established Pursuant to Grants for Assets for Independence

We are establishing requirements under new 45 CFR part 1000 regarding reserve funds established pursuant to the Assets for Independence Program. We are confirming that Departmental administrative requirements found in part 74 are applicable to reserve funds established by grantees that are not-for-profit organizations as defined by section 501(c)(3) of the Internal Revenue Code of 1986. We are also confirming that the Departmental administrative requirements found in Part 92 are applicable to reserve funds established by State or local government agencies or tribal governments.

New § 1000.1 provides that this part applies to the Community Services Assets for Independence Program.

We are adding a definition of Individual Development Account at § 1000.2(a) to read:

Individual Development Account means a trust or custodial account created or organized in the United States exclusively for the purpose of paying the qualified expenses of an eligible individual, as defined in section 404(2) of Pub. L. 105-285, or enabling the eligible individual to make an emergency withdrawal, as prescribed in section 404(3) of Pub. L. 105-285. The written governing instrument creating the trust or custodial account must meet the requirements of section 404(5) of Pub. L. 105-285, (section 404(5)(A)) and of the Project Eligibility Requirements set forth in the Program Announcement No. OCS-99-04 and any future announcements that may be issued.

We are adding a definition of qualified entity at § 1000.2(b) to read:

Qualified Entity means one or more not-for-profit organizations 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, or a tribal government, submitting an application under section 405 of Pub. L. 105-285 jointly with a 501(c)(3) organization that is exempt from taxation under 501(a) of the Internal Revenue Code of 1986.

We are adding a definition of reserve fund at § 1000.2(c) to read

(c) Reserve Fund means a fund, established by a qualified entity, that shall include all funds provided to the qualified entity from any public or private source in connection with the demonstration project and the proceeds from any investment made with such funds. The fund shall be maintained in accordance with Section 407 of Pub. L. 105-285. At least 90.5% of the funds must be used as matching contributions for Individual Development Accounts.

Under § 1000.3(a), we are confirming that Reserve Funds under the Assets for Independence Program established by qualified entities, other than State or local government agencies or tribal governments, are subject to the Department of Health and Human Services' uniform administrative requirements under 45 CFR part 74.

Under § 1000.3(b), we are confirming which requirements are applicable to Reserve Funds by a qualified entity that is a State or local government agency or tribal government. While these entities are not required to establish reserve funds, reserve funds that are established by these entities are subject to the Department of Health and Human Services' uniform administrative requirements under 45 CFR part 92.

IV. Justification for Dispensing with Notice of Proposed Rulemaking

These regulations are being published in final form with a comment period. The Administrative Procedure Act, 5 U.S.C. 553(b)(3)(B), provides that, if the Department for good cause finds that a notice of proposed rulemaking is unnecessary, impracticable or contrary to public interest, it may dispense with the notice if it incorporates a brief statement in the final regulations of the reasons for doing so.

The Department finds that there is good cause to dispense with proposed rulemaking procedures for the following reasons. First, the new part 1000 of the CFR does not establish original accounting requirements, but provides that existing regulations found in 45 CFR parts 74 and 92 apply to Reserve Funds established under the Assets for Independence Act. Therefore, this Interim Final Rule is a matter in which public comment would not significantly aid. Second, the Assets for Independence Act, as part of the Human Services Reauthorization Act of 1998, established stringent timelines which mandate that grant awards are to be determined by August 27, 1999. To ensure that grantees will have guiding principles by which they may operate the program, it is necessary to provide adequate administrative regulations in a timely manner. Therefore, we are eliminating a proposed rule for the sake of expediency.

For these reasons, OCS believes that there is sufficient cause to dispense with proposed rulemaking. Nonetheless, we wish to have the advantage of the information and opinions we may receive through public comments. We will consider any comments received and revise the regulations if necessary. We will issue a final document confirming that this interim final rule is final and will add any revisions, as needed, from the comments.

V. Justification for Dispensing with Publication 30 Days Prior to the Effective Date

The Assets for Independence Act, as part of the Human Services Reauthorization Act of 1998, established stringent timelines which mandate that grant awards are to be determined by August 27, 1999. To ensure that grantees will have guiding principles by which they may operate the program, it is necessary to provide adequate administrative regulations in a timely manner. Therefore, we are eliminating the 30-day delay period for the effective date of publication for this rule.

VI. Regulatory Flexibility Analysis

The Secretary certifies, under 5 U.S.C. 605(b), the Regulatory Flexibility Act (Pub. L. 96-354), that these proposed regulations will not result in a significant impact on a substantial number of small entities. The primary impact is on a limited number of grantees and the impact is not significant.

VII. Executive Order 12866

Executive Order 12866 requires that regulations be reviewed to ensure that they are consistent with the priorities and principles set forth in the Executive Order. The Department has determined that this proposal is consistent with these priorities and principles. The rule implements the statutory provisions by specifying applicable rules grantees are subject to in meeting accounting requirements for reserve funds established for purposes of carrying out demonstration projects under the Assets for Independence Act.

VIII. Unfunded Mandates Act

Section 202 of the Unfunded Mandates Reform Act of 1995 (Unfunded Mandates Act) requires that a covered agency prepare a budgetary impact statement before promulgating a rule that includes any Federal mandate that may result in the expenditure by State, local and Tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year.

If a covered agency must prepare a budgetary impact statement, section 205 further requires that it select the most cost-effective and least burdensome alternative that achieves the objectives of the rule and is consistent with the statutory requirements. In addition, section 203 requires a plan for informing and advising any small government that may be significantly or uniquely impacted by the proposed rule.

We have determined that this rule will not result in the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector, of more than $100 million in any one year. Accordingly, we have not prepared a budgetary impact statement, specifically addressed the regulatory alternatives considered, or prepared a plan for informing and advising any significantly or uniquely impacted small government.

IX. Paperwork Reduction Act

Under the Paperwork Reduction Act of 1995, Pub. L. 104-13, all Departments are required to submit to the Office of Management and Budget (OMB) for review and approval any reporting or record keeping requirements inherent in a rule. This rule contains information collection requirements in § 1000.3 (requiring the establishment of a reserve fund) which have been submitted to OMB for review and approval.

The respondents to the information collection requirements in the rule are IDA grantees, which may be not-for-profit organizations, State or local agencies or tribal governments.

The Department is requiring the collection of information in conjunction with section 407 of Pub. L. 105-285 which requires a qualified entity, other than a State or local government agency or a tribal government, to establish a Reserve Fund for depositing all funds provided to the qualified entity from any public or private source in connection with the demonstration project and the proceeds from any investments.

We estimate a burden of 40 hours for each new grantee. On average we anticipate 76 new grantees each year resulting in a total annual burden for this rule of 3,040 hours.

The Administration for Children and Families will consider comments by the public on this proposed collection of information in: evaluating whether the proposed collection is necessary for the proper performance of the functions of ACF, including whether the information will have practical utility; evaluating the accuracy of ACF's estimate of the burden of the proposed collections of information, including the validity of the methodology and assumptions used; enhancing the quality, usefulness, and clarity of the information to be collected; and minimizing the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technology.

OMB is required to make a decision concerning the collection of information contained in this interim final rule between 30 and 60 days after publication of this document in the Federal Register. Therefore, a comment is best assured of having its full effect if OMB received it within 30 days of publication. Written comments to OMB for the proposed information collection should be sent directly to the following: Office of Management and Budget, Paperwork Reduction Project, 725 17th Street, NW, Washington, DC 20503, Attn: Wendy Taylor.

X. Congressional Review

This rule is not a major rule as defined in 5 U.S.C., Chapter 8.

XI. Assessment of Federal Regulations and Policies on Families

Section 654 of the Treasury and General Government Appropriations Act of 1999 requires Federal agencies to determine whether a policy or regulation may affect family well being. If the agency's conclusion is affirmative, then the agency must prepare an impact assessment addressing seven criteria specified in the law. These regulations will not have an impact on family well being as defined in the legislation.

XII. Executive Order 13132

Executive Order 13132 on Federalism applies to policies that have federalism implications, defined as “regulations, legislative comments or proposed legislation, and other policy statements or actions that have substantial direct effects on the States, on the relationship between the national government and the States, or the distribution of power and responsibilities among the various levels of government.” This rule does not have federalism implications as defined in the Executive Order.

List of Subjects in 45 CFR part 1000

• Grant programs-Social programs

(Catalog of Federal Domestic Assistance Programs No. 93.602, Individual Development Account/Assets for Independence)

Dated: October 21, 1999.

Olivia A. Golden,

Assistant Secretary for Children and Families.

Approved: November 1, 1999.

Donna E. Shalala,

Secretary, Department of Health and Human Services.

For the reasons set forth in the preamble, we are adding to Chapter X a new part 1000 of title 45 of the Code of Federal Regulations as follows:

1. A new Part 1000 is added to Chapter X of title 45 of the Code of Federal Regulations to read as follows:

Part 1000—Individual Development Account Reserve Funds Established Pursuant to Grants for Assets for Independence

1000.1

Scope.

1000.2

Definitions.

1000.3

Requirements.

Authority: § 407(b)(2), Pub. L. 105-285, 112 Stat. 2766.

§ 1000.1

Scope.

This part applies to the Office of Community Services' Assets for Independence Program.

§ 1000.2

Definitions.

Individual Development Account means a trust or custodial account created or organized in the United States exclusively for the purpose of paying the qualified expenses of an eligible individual, as defined in section 404(2) of Pub. L. 105-285, or enabling the eligible individual to make an emergency withdrawal as defined in section 404(3) of Pub. L.105-385. The written governing instrument creating the trust or custodial account must meet the requirements of Section 404(5) of Pub. L. 105-285, and of the Project Eligibility Requirements set forth in Program Announcements.

Qualified Entity means one or more not-for-profit organizations 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, or a tribal government, submitting an application under section 405 of Pub. L. 105-285 jointly with a 501(c)(3) organization that is also exempt from taxation under 501(a) of the Internal Revenue Code of 1986.

Reserve Fund means a fund, established by a qualified entity, that shall include all funds provided to the qualified entity from any public or private source in connection with the demonstration project and the proceeds from any investment made with such funds. The fund shall be maintained in accordance with section 407 of Pub. L. 1052-285. At least 90.5% of the funds must be used as matching contributions for Individual Development Accounts.

§ 1000.3

Requirements.

(a) A qualified entity, other than a State or local government agency or tribal government, shall establish a Reserve Fund for use in the Assets for Independence program. Each reserve fund established by a qualified entity, other than a State or local government agency or tribal government, is subject to the Department of Health and Human Services' uniform administrative requirements under 45 CFR part 74.

(b) Any reserve fund established by a qualified entity that is a State or local government agency or tribal government, is subject to the Department of Health and Human Services' uniform administrative requirements under 45 CFR part 92.