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Massachusetts Senate Bill S628

Massachusetts 2023-2024 Regular Session

Massachusetts Senate Bill S628 Compare Versions

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22 SENATE DOCKET, NO. 1221 FILED ON: 1/19/2023
33 SENATE . . . . . . . . . . . . . . No. 628
44 The Commonwealth of Massachusetts
55 _________________
66 PRESENTED BY:
77 James B. Eldridge
88 _________________
99 To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
1010 Court assembled:
1111 The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
1212 An Act to promote economic mobility through matched savings.
1313 _______________
1414 PETITION OF:
1515 NAME:DISTRICT/ADDRESS :James B. EldridgeMiddlesex and WorcesterPatricia D. JehlenSecond Middlesex2/16/2023Sal N. DiDomenicoMiddlesex and Suffolk3/10/2023 1 of 12
1616 SENATE DOCKET, NO. 1221 FILED ON: 1/19/2023
1717 SENATE . . . . . . . . . . . . . . No. 628
1818 By Mr. Eldridge, a petition (accompanied by bill, Senate, No. 628) of James B. Eldridge, Patricia
1919 D. Jehlen and Sal N. DiDomenico for legislation to promote economic mobility through matched
2020 savings. Financial Services.
2121 The Commonwealth of Massachusetts
2222 _______________
2323 In the One Hundred and Ninety-Third General Court
2424 (2023-2024)
2525 _______________
2626 An Act to promote economic mobility through matched savings.
2727 Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
2828 of the same, as follows:
2929 1 Chapter 23A of the General Laws is hereby amended by adding the following three
3030 2sections:-
3131 3 Section 70.
3232 4 (a) As used in this section, the following words shall, unless the context clearly requires
3333 5otherwise, have the following meanings:
3434 6 “Account holder”, a household that is an eligible participant.
3535 7 “Eligible participant”, a household which has an income that does not exceed 80 per cent
3636 8of the median income for the area, with adjustments made for smaller and larger families, as such
3737 9median shall be determined from time to time by the secretary of the United States Department
3838 10of Housing and Urban Development pursuant to 42 U.S.C. 1437(a)(B)(2) or any successor
3939 11legislation and the regulations promulgated thereunder; provided however, that: (1) 2 of 12
4040 12notwithstanding any federal law or rule to contrary, a person shall not be denied assistance under
4141 13this chapter based wholly or in part on the amount of the person’s assets; (2) that any income
4242 14generated by such assets may be treated as countable income; (3) receipt of federal, state or local
4343 15public assistance of any form shall not make a person ineligible to be an account holder.
4444 16 “Community-based organization”, a public or private nonprofit organization that is
4545 17exempt from taxation under 26 U.S.C. 501(c)(3), a community foundation, housing authority, a
4646 18city or town with demonstrated effectiveness in representing a community or a significant
4747 19segment of a community and providing educational or related social services to individuals in
4848 20that community.
4949 21 “Fiscal intermediary”, a Massachusetts nonprofit organization that is exempt from
5050 22taxation under 26 U.S.C. 501(c)(3) with demonstrated effectiveness in matched-savings account
5151 23management.
5252 24 “Financial institution”, a bank, credit union, any association or corporation chartered by
5353 25the commonwealth under chapter 168, 170, 171 or 172, or an individual, association, partnership
5454 26or corporation incorporated or doing a banking business in the commonwealth subject to the
5555 27supervision of the commissioner.
5656 28 “Matched-savings account”, a contract between an account holder and a fiscal
5757 29intermediary to increase their economic mobility.
5858 30 (b) (1) A person who qualifies to become an account holder may establish a matched-
5959 31savings account. The matched-savings account shall permit the account holder to work towards
6060 32approved savings goals set forth in subsection (c). 3 of 12
6161 33 (2) A matched-savings account shall provide for the deposit of funds into 2 accounts at a
6262 34financial institution: (i) a designated account at a financial institution by the account holder and;
6363 35(ii) the deposit of matching funds by the fiscal intermediary into a designated account at a
6464 36financial institution.
6565 37 (3) Before creating a matched-savings account, a person shall create a savings plan
6666 38developed by the participant and a community-based organization. The plan shall provide the
6767 39participant with the appropriate financial education, counseling and asset-specific training
6868 40designed to increase the economic mobility of the participant’s household.
6969 41 (c) Approved savings goals shall serve to increase economic mobility including, but not
7070 42limited to:
7171 43 (1) the acquisition of post-secondary education or job training;
7272 44 (2) if the account holder has established the account for the benefit of a household
7373 45member who is under the age of 18 years, the payment of extracurricular non-tuition expenses
7474 46designed to prepare the member for post-secondary education or job training;
7575 47 (3) if the account holder has established a savings plan authorized under 26 U.S.C. 529 or
7676 48prepaid tuition plan on behalf of a designated beneficiary, the participant shall provide accurate
7777 49account statements to the fiduciary organization in order to earn match;
7878 50 (4) the purchase of a primary residence; provided further, that account moneys under this
7979 51paragraph shall be broadly construed to include, but not be limited to: (i) payment on the
8080 52purchase price of the residence; and (ii) any usual or reasonable settlement, financing, or other
8181 53closing costs; 4 of 12
8282 54 (5) the rental of a primary residence; provided further, that account moneys under this
8383 55paragraph shall be broadly construed to include, but not be limited to: (i) security deposits; (ii)
8484 56first month’s rent; (iii) prepayment of last month’s rent; (iv) application fees; (v) major
8585 57appliances not included in the lease necessary to move into the primary residence; and (vi)
8686 58moving expenses;
8787 59 (6) the capitalization of a small business; provided further, that account moneys under
8888 60this paragraph shall be broadly construed to include, but not be limited to: (i) capital, plant,
8989 61equipment, and inventory expenses, (ii) hiring employees upon capitalization of the small
9090 62business; (iii) working capital;
9191 63 (7) improvements, repairs, or modifications to a home already owned by the account
9292 64holder;
9393 65 (8) the purchase of equipment, adaptive technology or specialized training required to
9494 66become competitive in obtaining or maintaining employment, or to start or maintain a business,
9595 67or to increase the economic mobility of the account holder;
9696 68 (9) the purchase or repair of a vehicle, as specified in the account holder’s matched-
9797 69savings plan for increasing the economic mobility of the person;
9898 70 (10) the saving of funds for retirement;
9999 71 (11) the payment of debts owed when the account holder is saving for another allowable
100100 72purpose, as specified in the account holder’s matched-savings plan; provided further, a non-profit
101101 73organization with demonstrated expertise shall provide credit counseling; 5 of 12
102102 74 (12) the creation or improvement of a credit score by obtaining a secured credit-builder
103103 75loan or a financial product that is designed to improve credit, as specified in the account holder’s
104104 76matched-savings plan for increasing the economic independence of the person.
105105 77 (d) A fiscal intermediary may qualify as the recipient of account contributions only if the
106106 78fiscal intermediary structures the accounts to have the following features:
107107 79 (1) The fiscal intermediary matches amounts deposited by the account holder according
108108 80to a formula established by the fiscal intermediary. The fiscal intermediary shall deposit $4 into
109109 81the account for each $1 deposited by the account holder.
110110 82 (2) The matching deposits by the fiscal intermediary to the matched-savings account are
111111 83placed in a savings account that is controlled by the fiscal intermediary and is separate from the
112112 84savings account of the account holder.
113113 85 (3) The total amount paid into a matched-savings account during its existence, including
114114 86amounts from participant deposits and matching deposits may not exceed $20,000. The
115115 87participant shall not contribute in excess of $4,000. The amount matched shall not exceed
116116 88$16,000. The executive office of housing and economic development shall adjust the figures set
117117 89forth in this paragraph annually to reflect increases in the cost of living by the same method used
118118 90for federal income tax brackets.
119119 91 (e)(1) If an emergency occurs, an account holder may withdraw all or part of the account
120120 92holder’s deposits to a matched-savings account for a purpose not described in subsection (c). A
121121 93financial emergency is a disruption to the account holder’s economic circumstances including ,
122122 94but not limited to: (i) making payments for necessary medical expenses; (ii) avoiding eviction of 6 of 12
123123 95the account holder from the account holder’s residence; (iii) for necessary living expenses
124124 96following a change in economic circumstances.
125125 97 (2) The account holder shall resume contributions to the account holder’s savings account
126126 98after the account holder deems that the financial emergency has been resolved. The account
127127 99holder may choose to continue to pursue the savings plan through the appropriate financial
128128 100education, counseling and asset-specific training in coordination with the account holder’s
129129 101community-based organization while experiencing the financial emergency.
130130 102 (3) If an account holder withdraws funds from a matched-savings account for other than
131131 103an approved purpose, the fiscal intermediary may remove the account holder from the program.
132132 104 (f)(1) If the account holder of an account established for the purpose set forth in the third
133133 105paragraph through the tenth paragraph, inclusive, of subsection (c) has achieved the account’s
134134 106approved purpose in accordance with the matched-savings plan developed by the account holder,
135135 107the account holder may withdraw, or authorize the withdrawal of, the remaining amount of all
136136 108deposits, including matching deposits, and interest in the account as follows: (i) for an account
137137 109established for the purpose set forth in subsection (c)(3) of this section, by rolling over the entire
138138 110withdrawal amount into one or more savings plans authorized under 26 U.S.C. 529, the
139139 111establishment of which is the purpose of the matched-savings account; or (ii) for an account
140140 112established for the purpose set forth in subsection (c)(10) of this section, by rolling over the
141141 113entire withdrawal amount into an individual retirement account, a retirement plan or a similar
142142 114account or plan established under the Internal Revenue laws of the United States.
143143 115 (2) Upon withdrawal of all funds in the matched-savings account as provided in the first
144144 116paragraph of this subsection, the account relationship shall terminate. 7 of 12
145145 117 (g) (1) If an account holder moves from the area where the program is conducted or is
146146 118otherwise unable to continue in the program, the fiscal intermediary may remove the account
147147 119holder from the program.
148148 120 (2) If the fiscal intermediary removes an account holder from the program, all matching
149149 121deposits in the account and all interest earned on matching deposits shall revert to the fiscal
150150 122intermediary. The fiscal intermediary shall use the reverted funds as a source of matching
151151 123deposits for other accounts.
152152 124 (h) (1) The executive office of housing and economic development may select a fiscal
153153 125intermediary to administer moneys directed by the commonwealth to matched-savings account
154154 126purposes.
155155 127 (2) In making the selection, the executive office of housing and economic development
156156 128shall consider factors related to its effectiveness including, but not limited to:
157157 129 (i) the ability of the fiscal intermediary to implement and administer the matched-savings
158158 130program, including the ability to verify account holder eligibility, certify that matching deposits
159159 131are used only for approved purposes and exercise general fiscal accountability;
160160 132 (ii) the capacity of the fiscal intermediary to convene and provide professional
161161 133development opportunities that increase the capacity of community-based organizations to
162162 134provide financial education, counseling, and asset-related training to account holders;
163163 135 (iii) the partnerships that the fiscal intermediary maintains with like-minded community-
164164 136based organizations, government agencies, and other entities that support asset-building and
165165 137wealth creation among the lower-income households across the commonwealth; 8 of 12
166166 138 (iv) Subject to executive office of housing and economic development rules, a fiscal
167167 139intermediary has sole authority over, and responsibility for, the administration of matched-
168168 140savings accounts.
169169 141 (3) The fiscal intermediary may use at least 5 per cent of the allocated moneys to the
170170 142matched-savings program for account management, compliance, and participation in audits.
171171 143 (4) (i) The fiscal intermediary shall ensure that account holders include people of color
172172 144and women, at least in such proportion as these groups exist in the commonwealth’s population
173173 145as periodically determined by the state secretary as the commonwealth’s chief census officer. (ii)
174174 146The fiscal intermediary shall ensure that account holders represent diverse geographic areas of
175175 147the commonwealth, including urban, rural and suburban areas.
176176 148 (5) The fiscal intermediary shall provide the executive office of housing and economic
177177 149development with an annual report of the fiscal intermediary's matched-savings account program
178178 150activity. The fiscal intermediary shall file the report with the executive office of housing and
179179 151economic development no later than 90 days after the end of the fiscal intermediary’s fiscal year.
180180 152The report shall include, but is not limited to: (i) the number of matched-savings accounts
181181 153administered by the fiscal intermediary; (ii) the amount of deposits and matching deposits for
182182 154each account; (iii) the purpose of each account; (iv) the number of withdrawals made; and (v)
183183 155participant demographics including, but not limited to, race, ethnicity, age, gender identity and
184184 156sexual orientation, and any other information the executive office of housing and economic
185185 157development may require for the purpose of making a return-on-investment analysis.
186186 158 (i) (1) Subject to executive office of housing and economic development rules, the
187187 159responsibility of the community-based organization extends to all aspects of operating the 9 of 12
188188 160matched-savings program, including, but not limited to: (i) marketing and outreach; (ii)
189189 161verification and enrollment of participants; (iii) financial education; (iv) one-on-one counseling;
190190 162(v) conducting asset-specific training; (vi) indirect costs; (vii) and other required verification and
191191 163compliance activities.
192192 164 (2) There is no limit to how many community-based organizations work with the selected
193193 165fiscal intermediary if they satisfy the required qualifications.
194194 166 (3) A community-based organization shall receive no more than 25 per cent of the
195195 167allocated monies for providing all activities set forth in the first paragraph.
196196 168 (j) The executive office of housing and economic development may issue regulations to
197197 169implement this section.
198198 170 Section 70a. (a) There shall be a Matched Savings Trust Fund, which shall be
199199 171administered by the secretary of housing and economic development. Monies in the trust fund
200200 172shall be deposited with the state treasurer in a manner that will secure the highest interest rate
201201 173available consistent with the safety of the trust fund.
202202 174 (b) The secretary shall appoint the trustee of the fund, who shall serve until a successor is
203203 175appointed.
204204 176 (c) There shall be credited to the trust fund: (1) all revenue collected through section 70b;
205205 177(2) all additional funds appropriated by the general court; (3) federal funds directed to the trust
206206 178fund; (4) grants and any other funds directed to the trust fund; and (5) all interest earned on
207207 179monies in the trust fund. 10 of 12
208208 180 (d) Expenditures from the fund shall not be subject to appropriation and balances
209209 181remaining at the end of a fiscal year shall not revert to the General Fund. Expenditures from the
210210 182fund shall be made for promoting economic mobility among account holders as defined in
211211 183section 70. Expenditures from the fund may be made for satisfying the objectives of section,
212212 184including but limited to, providing matches to account holder contributions to their accounts,
213213 185financial education, counseling, asset-specific training, for program administration, the fiscal
214214 186intermediary and for oversight by the executive office of housing and economic development.
215215 187 (e) Not later than August 1 of each fiscal year, the secretary shall submit a spending plan
216216 188to the secretary of administration and finance and the house and senate committees on ways and
217217 189means. For the purpose of accommodating discrepancies between the receipt of revenues and
218218 190related expenditures, the secretary may incur obligations and the comptroller may certify
219219 191payment amounts not to exceed the most recent revenue estimate submitted by the secretary and
220220 192approved by the secretary of administration and finance but the fund shall be in balance by the
221221 193close of each fiscal year.
222222 194 Section 70b.
223223 195 (a) For the purposes of this section, the following words shall, unless the context clearly
224224 196requires otherwise, have the following meanings:-
225225 197 “Commissioner”, the commissioner of revenue or the commissioner's duly authorized
226226 198representative.
227227 199 “Community partnership fund”, a fund administered by a nonprofit organization selected
228228 200by the department to receive qualified investments from taxpayers for the purpose of allocating
229229 201such investments to community partners. 11 of 12
230230 202 “Taxpayer”, a taxpayer subject to an excise under this chapter.
231231 203 (b) There is hereby established a Massachusetts matched savings tax credit.
232232 204 (c) No tax credit shall be allowed to a taxpayer that makes a qualified investment of less
233233 205than $1,000.
234234 206 (d) A taxpayer that makes a qualified investment through a community partnership fund
235235 207shall be allowed a refundable credit, to be computed as provided in this subsection, against the
236236 208taxes imposed by chapter 63. If the amount of the credit allowed under this subsection exceeds
237237 209the taxpayer's tax liability, the commissioner shall treat the excess as an overpayment and shall
238238 210pay the taxpayer the amount of the excess, without interest. Alternatively, at the option of the
239239 211taxpayer, a taxpayer entitled to a credit under this subsection for a taxable year may carry over
240240 212and apply against the taxpayer's tax liability for any 1 or more of the succeeding 5 taxable years,
241241 213the portion, as reduced from year to year, of the credit which exceeds the tax for the taxable year.
242242 214If the taxpayer elects to carry over a credit balance, then the credit refund provision allowed by
243243 215this subsection shall not apply. The credit shall be equal to 50 per cent of the total qualified
244244 216investments made by the taxpayer, subject to the limits described in subsection (g). The
245245 217department shall issue a certification to the taxpayer after the taxpayer makes a qualified
246246 218investment. The certification shall be acceptable as proof that the expenditures related to that
247247 219investment qualify as a qualified investment for purposes of the credit allowed under this section.
248248 220 (e) The credit allowable under this section shall be allowed for the taxable year in which
249249 221a qualified investment is made.
250250 222 (f) Matched savings tax credits allowed to a pass-through entity such as a partnership or a
251251 223limited liability company taxed as a partnership shall be passed through to the persons designated 12 of 12
252252 224as partners, members or owners, respectively, pro rata or under an executed agreement among
253253 225the persons designated as partners, members or owners documenting an alternative distribution
254254 226method without regard to their sharing of other tax or economic attributes of the entity.
255255 227 (g) The department shall authorize the tax credits under this section. The total value of
256256 228the tax credits authorized in this section shall not exceed $12,000,000 in each taxable year.
257257 229 (h) The commissioner, in consultation with the department, shall prescribe regulations
258258 230necessary to carry out the tax credit established under this section.