ASSEMBLY, No STATE OF NEW JERSEY. 213th LEGISLATURE INTRODUCED MAY 22, 2008

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1 ASSEMBLY, No. STATE OF NEW JERSEY th LEGISLATURE INTRODUCED MAY, 00 Sponsored by: Assemblywoman PAMELA R. LAMPITT District (Camden) Co-Sponsored by: Assemblyman Giblin SYNOPSIS Establishes "Children's Saving Account" program in DCF; appropriations $ million. CURRENT VERSION OF TEXT As introduced. (Sponsorship Updated As Of: //00)

2 A LAMPITT AN ACT concerning children's savings accounts, supplementing Title 0 of the Revised Statutes, and making an appropriation. BE IT ENACTED by the Senate and General Assembly of the State of New Jersey:. The Legislature finds and declares that: in 00, nearly,000 foster children in New Jersey were old enough to leave the foster care system, many not equipped with the tools necessary to help them escape poverty as they reach adulthood; research has shown that youths that age out of the foster care system have a difficult time establishing themselves in a self-sufficient manner as adults; a significant number of these youths experience homelessness, are not regularly employed, and become dependent on public assistance as adults; research has also shown that independent living services that teach youth to save money, build assets, and invest in their economic future have a positive impact, and help these youth to develop skills that will make them fiscally responsible adults; another way to support these youths is to allow them to begin their adult lives with a certain amount of financial security, and Children's Savings Accounts (CSAs) can help; CSAs grew out of the success of Individual Development Accounts (matched savings accounts for low-income families) and are similar in nature, in that, public money, private funds, or a combination of both, are used to match contributions made by the youth or the youth's legal guardians, family, and friends; the accounts have the potential to provide youths leaving the foster care system with a powerful incentive to build and save assets, and invaluable help in achieving financial success as adults; and, therefore, it is in the public interest to establish a Statewide Children's Savings Account program that will help youths leaving the foster care system recognize the importance of saving money, enhance their financial literacy, and invest in their economic future.. There is established in the Department of Children and Families a program to provide youths aging out of the foster care system with an opportunity to establish an individual savings account in a financial institution, to the extent funding will permit. The Commissioner of Children and Families shall establish the program in each county of the State. The commissioner shall solicit proposals from community-based organizations interesting in participating in the program. The commissioner shall review the proposals and contract with the organizations whose proposals best meet the objectives of the program. The commissioner shall give preference to organizations that are providing one or more of the financial and supportive services listed in subsection b. of section of this act and are

3 A LAMPITT financially sound at the time the proposals are solicited pursuant to this section.. a. The program shall be designed to address the need for economic self-sufficiency of youths aging out of the foster care system by promoting economic literacy, the importance of assets accumulation, and providing time-limited supportive services to youths who meet the eligibility requirements provided in subsection b. of section of this act. b. The community-based organizations that are selected by the Commissioner of Children and Families to participate in the program shall provide services to a youth for a period of four years. The services shall include, but are not limited to: () assessment and case management; () financial counseling tailored to each youth's resources and financial goals; () budgeting and money management; and () information on and referral to community-based organizations that provide life skills and other self-sufficiency services, including health care, transportation, child care, career planning, job placement, and employment services. c. A community-based organization selected by the commissioner to participate in the program shall establish a savings account for an eligible youth in a financial institution chosen by the organization. The organization shall: () sign an agreement with the youth stating that the savings account shall be opened and kept in the youth's name as the account holder; () certify to the commissioner that an account has been opened for the youth pursuant to the provisions of this act; () permit deposits to and withdrawals from the account by the youth or other individuals, as appropriate, and in accordance with the provisions of this act; and () maintain records of all transactions for the account in a manner that enables the organization to determine the amounts deposited into and withdrawn from the account, and the amounts paid by the State as matching funds pursuant to section of this act.. a. Subject to the guidelines and policies of the specific contracts entered into by the Department of Children and Families and the community-based organizations participating in the program, a home, residence, center, hospital, residential treatment facility, program, living arrangement or shelter, operated, licensed or approved for payment by the Department of Children and Families to house or provide services to youths between and years of age, may refer a youth to the program if the youth meets all the eligibility requirements provided in subsection b. of this section.

4 A LAMPITT b. A youth shall be eligible to participate in the program if the youth meets the following requirements: () the youth is between and years of age; and () the youth: (a) has been in the care and custody of the Division of Youth and Family Services in the Department of Children and Families for a period of nine months or more following the child's fourteenth birthday; (b) is or has been residing in an independent living arrangement, or a transitional living program established pursuant to P.L., c. (C.:A- et seq.), operated or approved for payment by the division; or (c) is or has been residing in a transitional living program located in the State of New Jersey and approved for payment by the federal government pursuant to the federal "Runaway and Homeless Youth Act," Pub.L.- ( U.S.C.A. s.0 et seq.). c. A youth eligible to participate in the program may, in agreement with a community-based organization selected by the commissioner to participate in the program, open a savings account at a financial institution chosen by the organization. The youth, the youth's parent or legal guardian, friends, or other relatives may deposit into the youth's account up to $,000 per calendar year during the time the youth participates in the program. d. The youth may, upon approval of the community-based organization, withdraw money from the youth's savings account for any of the following purposes: () secondary and post secondary educational or job training expenses; () a down payment for the purchase of a home or automobile; () a security deposit for the rental of an apartment or other housing unit; () the purchase of furniture and other necessities needed to furnish a home; () the purchase of health, automobile, renters', homeowners', or life insurance; () medical and hospitalization expenses; () the establishment of a business enterprise; or () investment in stocks, bonds, accounts or other financial instruments. e. If the youth withdraws any money from the account for any purpose other than those permitted pursuant to subsection d. of this section, the unapproved withdrawal shall be taxed as gross income pursuant to N.J.S.A:-. f. () Money deposited into or withdrawn from the youth's savings account pursuant to this section or matched by the State pursuant to section of this act, or interest earned from the savings account, shall not be considered gross income otherwise includable as income pursuant to N.J.S.A:-.

5 A LAMPITT () Money deposited into or the interest earned from the youth's savings account shall not be counted in determining the youth's eligibility for benefits or assistance or the amount of such benefits or assistance under any State or federal means-tested program.. There is established the "New Jersey Children's Savings Account Fund" in the Department of Children and Families. The fund shall be used to provide a State match of one dollar for every dollar deposited into a children's savings account pursuant to subsection c. of section of this act, except the maximum amount provided as a match per individual savings account per calendar year shall be $,000.. There is appropriated $,000,000 from the General Fund to the Department of Children and Families to provide a State match for every dollar deposited into a children's savings account pursuant to section of this act.. Subject to the "Administrative Procedure Act," P.L., c. (C.:B- et seq.), the Commissioner of Children and Families shall adopt rules and regulations to effectuate the purposes of this act.. This act shall take effect immediately. STATEMENT This bill establishes a program in the Department of Children and Families (DCF) to provide youths aging out of the foster care system with an opportunity to establish an individual savings account in a financial institution. The Commissioner of DCF shall establish the program in each county of the State. The bill directs the Commissioner of DCF to solicit proposals from community-based organizations interested in participating in the program and contract with the organizations whose proposals best meet the objectives of the program. The commissioner shall give preference to organizations that are providing one or more of the financial and supportive services listed in the bill and are financially sound at the time the proposals are solicited. The program shall be designed to address the need for economic self-sufficiency of youths aging out of the foster care system by promoting economic literacy, the importance of assets accumulation, and providing supportive services to youths who meet the eligibility requirements listed in the bill. Under the provisions of the bill, the community-based organizations selected by the commissioner to participate in the

6 A LAMPITT program shall provide services to a youth for a period of four years that include, but are not limited to: assessment and case management; financial counseling tailored to the youth's resources and financial goals; budgeting and money management; and information on and referral to community-based organizations that provide life skills and other selfsufficiency services, including health care, transportation, child care, career planning, job placement, and employment services. The community based organizations selected by the commissioner to participate in the program shall: establish a savings account for an eligible youth in a financial institution chosen by the organization; sign an agreement with the youth stating that the savings account shall be opened and kept in the youth's name as the account holder; certify to the commissioner that an account has been opened for the youth; permit deposits to and withdrawals from the account by the youth or other individuals, as appropriate, and in accordance with the provisions of the bill; and maintain records of all transactions for the account in a manner to determine the amounts deposited into and withdrawn from the account, and the amounts paid by the State as matching funds pursuant to the provisions of the bill. Subject to the guidelines and policies of the contracts entered into by the organizations participating in the program, a home, residence, center, hospital, treatment facility, program, living arrangement or shelter, operated, licensed or approved for payment by DCF to house or provide services to youths between and years of age, may refer a youth to the program if the youth meets the following eligibility requirements: the youth is between and years of age; and the youth has been in the care and custody of the Division of Youth and Family Services for a period of nine months or more following the child's fourteenth birthday; or the youth is or has been residing in an independent living arrangement, or a transitional living program established pursuant to P.L., c. (C.:A- et seq.), operated or approved for payment by the division; or the youth is or has been residing in a transitional living program located in the State of New Jersey and approved for payment by the federal government. The bill stipulates that an eligible youth may, in agreement with a community-based organization selected to participate in the

7 A LAMPITT 0 program, open a savings account at a financial institution chosen by the organization. The youth, the youth's parent or legal guardian, friends, or other relatives may deposit into the youth's account up to $,000 per calendar year during the time the youth participates in the program. The youth may also, upon approval of the community-based organization, withdraw money from the savings account for any of the purposes provided for in the bill, and if money is withdrawn from the youth's account for any purpose other than those permitted, the unapproved withdrawal shall be taxed as gross income pursuant to N.J.S.A:-. The bill also provides: that money deposited into or withdrawn from the youth's savings account or matched by the State pursuant to the bill, or interest earned from the account, shall not be considered gross income otherwise includable as income pursuant to N.J.S.A:-; and the money deposited or interest earned from the youth's savings account shall not be counted in determining the youth's eligibility for benefits or assistance or the amount of benefits or assistance under any State or federal means-tested program. The bill establishes a "New Jersey Children's Savings Account Fund" in DCF. The purpose of the fund is to provide a State match of one dollar for every dollar deposited into a children's savings account pursuant to the provisions of the bill, with the maximum amount provided as a match per individual savings account not exceeding $,000 each calendar year. Finally, the bill appropriates $ million from the General Fund to DCF to implement the provisions of the bill.