Enrolled Copy H.B. 116
1 INTERGENERATIONAL POVERTY SOLUTION
2 2023 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: Norman K Thurston
5 Senate Sponsor: Jacob L. Anderegg
6
7 LONG TITLE
8 General Description:
9 This bill creates the Education Savings Incentive Program.
10 Highlighted Provisions:
11 This bill:
12 < defines terms;
13 < creates the Education Savings Incentive Program (the program), including:
14 C providing a process for an individual identified by the Department of Workforce
15 Services as experiencing intergenerational poverty to receive a state match of
16 deposits into certain 529 savings accounts;
17 C providing for the sharing of information between the Department of Workforce
18 Services, the Utah Educational Savings Plan, and the State Tax Commission;
19 and
20 C requiring the Department of Workforce Services and the Utah Educational
21 Savings Plan to provide information about the program to the Legislature
22 through the department's annual report; and
23 < sets a termination date for the program but requires legislative review before the
24 termination date to determine whether the Legislature should extend the program.
25 Money Appropriated in this Bill:
26 This bill appropriates in fiscal year 2024:
27 < to Income Tax Fund Restricted -- Education Savings Incentive Restricted Account,
28 as an ongoing appropriation:
29 C from Income Tax Fund, $870,800;
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30 < to Income Tax Fund Restricted -- Education Savings Incentive Restricted Account,
31 as a one-time appropriation:
32 C from Income Tax Fund, $6,900;
33 < to Department of Workforce Services -- Administration, as an ongoing
34 appropriation:
35 C from Income Tax Fund Restricted -- Education Savings Incentive Restricted
36 Account, $870,800; and
37 < to Department of Workforce Services -- Operations and Policy, as a one-time
38 appropriation:
39 C from Income Tax Fund Restricted -- Education Savings Incentive Restricted
40 Account, $6,900.
41 Other Special Clauses:
42 This bill provides a special effective date.
43 Utah Code Sections Affected:
44 AMENDS:
45 59-1-403, as last amended by Laws of Utah 2022, Chapter 447
46 63I-1-235, as last amended by Laws of Utah 2022, Chapters 25, 36, 118, and 362
47 63I-1-253, as last amended by Laws of Utah 2022, Chapters 10, 30, 31, 172, 173, 194,
48 218, 224, 229, 236, 254, 274, and 414
49 63I-1-259, as last amended by Laws of Utah 2022, Chapter 218
50 ENACTS:
51 35A-9-601, Utah Code Annotated 1953
52 35A-9-602, Utah Code Annotated 1953
53 35A-9-603, Utah Code Annotated 1953
54 35A-9-604, Utah Code Annotated 1953
55 35A-9-605, Utah Code Annotated 1953
56 35A-9-606, Utah Code Annotated 1953
57 53B-8a-301, Utah Code Annotated 1953
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58 53B-8a-302, Utah Code Annotated 1953
59 53B-8a-303, Utah Code Annotated 1953
60
61 Be it enacted by the Legislature of the state of Utah:
62 Section 1. Section 35A-9-601 is enacted to read:
63 Part 6. Education Savings Incentive Program
64 35A-9-601. Definitions.
65 As used in this part:
66 (1) "529 savings account" means a tax-advantaged method of saving for higher
67 education costs that:
68 (a) meets the requirements of Section 529, Internal Revenue Code; and
69 (b) is managed by the plan.
70 (2) "Beneficiary" means the individual designated:
71 (a) in a 529 savings account agreement between a person, an estate, or a trust and the
72 plan; and
73 (b) to benefit from the amount saved in a 529 savings account.
74 (3) "Commission" means the State Tax Commission.
75 (4) "Deposit" means the payment of money from a source other than a match.
76 (5) "Eligible 529 savings account" means a 529 savings account for which:
77 (a) a qualifying individual is the account owner; and
78 (b) a qualifying individual or a minor dependent of a qualifying individual is a
79 beneficiary.
80 (6) "Federal earned income tax credit" means the federal earned income tax credit:
81 (a) described in Section 32, Internal Revenue Code; and
82 (b) that a qualifying individual claims and is eligible to claim on the federal income tax
83 return for the taxable year.
84 (7) "Match" means the monetary amount described in Subsection 35A-9-603(2).
85 (8) "Minor dependent" means an individual under 19 years old for whom a qualifying
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86 individual can claim a tax credit under Section 24, Internal Revenue Code, on the qualifying
87 individual's federal income tax return for the taxable year.
88 (9) "Plan" means the Utah Educational Savings Plan created in Section 53B-8a-103.
89 (10) "Program" means the Education Savings Incentive Program created in Section
90 35A-9-603.
91 (11) "Qualifying individual" means an individual who the department identifies as
92 experiencing intergenerational poverty and who has not been disqualified from participating in
93 the program for overclaiming a match in a previous year.
94 Section 2. Section 35A-9-602 is enacted to read:
95 35A-9-602. Education Savings Incentive Restricted Account.
96 (1) There is created a restricted account within the Income Tax Fund to be known as
97 the Education Savings Incentive Restricted Account.
98 (2) The department shall administer the restricted account for the purposes described in
99 this part.
100 (3) The state treasurer shall invest the money in the restricted account according to the
101 procedures and requirements of Title 51, Chapter 7, State Money Management Act, except that
102 interest and other earnings derived from the restricted account shall be deposited into the
103 restricted account.
104 (4) The restricted account shall be funded by:
105 (a) appropriations made to the account by the Legislature; and
106 (b) private donations, grants, gifts, bequests, or money made available from any other
107 source to implement this part.
108 (5) Subject to appropriation, the department:
109 (a) shall use restricted account money for the program; and
110 (b) may use a portion of the restricted account money for administration of the
111 program.
112 Section 3. Section 35A-9-603 is enacted to read:
113 35A-9-603. Education Savings Incentive Program.
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114 (1) (a) There is created the Education Savings Incentive Program to provide an annual
115 monetary match to eligible 529 savings accounts.
116 (b) The program is established within the higher education system.
117 (c) The department shall implement the program as early as is practicable, but the
118 department shall begin accepting applications for the program no later than January 1, 2024.
119 (2) (a) For each qualifying individual that meets the requirements of Subsection (3), the
120 state shall match, during a calendar year, the amount of a deposit into one or more of the
121 qualifying individual's eligible 529 savings accounts up to $300.
122 (b) The amount in Subsection (2)(a) is the maximum match amount per family per
123 calendar year.
124 (c) (i) Except as provided in Subsections (2)(c)(ii) and (iii), the match rate is $1 for
125 each $1 deposit.
126 (ii) In a fiscal year where the balance of money in the restricted account is insufficient
127 to sustain a $1 for each $1 deposit match rate, the department shall reduce the amount of each
128 match proportionately.
129 (iii) (A) Subject to Subsection (2)(c)(iii)(B), in a fiscal year when the balance of the
130 money in the restricted account exceeds the amount needed for a $1 for each $1 deposit match
131 rate, the department shall increase the amount of each match proportionately.
132 (B) If a qualifying individual's proportionate share under Subsection (2)(c)(iii)(A) is
133 greater than the amount allowed under Subsections (2)(a) and (b), the qualifying individual
134 shall receive the amount allowed under Subsections (2)(a) and (b).
135 (3) To participate in the program, a qualifying individual shall:
136 (a) apply with the department in accordance with Section 35A-9-604;
137 (b) claim and receive a federal earned income tax credit on the qualifying individual's
138 federal income tax return for the previous taxable year; and
139 (c) during the calendar year for which the qualifying individual applies to participate in
140 the program, be the account owner of one or more eligible 529 savings accounts into which a
141 deposit was made.
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142 (4) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
143 department may make rules governing:
144 (a) administration of the program; and
145 (b) after consulting with the plan, additional information to request in the application
146 for the program.
147 Section 4. Section 35A-9-604 is enacted to read:
148 35A-9-604. Application for program.
149 (1) The department shall provide to each qualifying individual:
150 (a) notice of the program;
151 (b) information about the benefits of participating in the program;
152 (c) information explaining that participation in the program requires that the qualifying
153 individual:
154 (i) apply for the program in accordance with this section;
155 (ii) be eligible for and claim a federal earned income tax credit for the taxable year
156 before the year in which the qualifying individual applies for the program;
157 (iii) own one or more eligible 529 savings accounts into which a deposit is made
158 during the same year for which the qualifying individual applies for the program; and
159 (iv) sign an information release;
160 (d) information about how to claim a federal earned income tax credit;
161 (e) information about how to open an eligible 529 savings account; and
162 (f) information about how to apply for the program.
163 (2) (a) To participate in the program, a qualifying individual shall complete annually an
164 online application that includes:
165 (i) a means for a qualifying individual to sign the information release described in
166 Subsection (2)(b);
167 (ii) a statement that the qualifying individual claimed a federal earned income tax
168 credit for the previous taxable year;
169 (iii) the name of the account owner, the name of the beneficiary, and the account
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170 number of any of the qualifying individual's eligible 529 savings accounts;
171 (iv) the amount of deposit into one or more of the qualifying individual's eligible 529
172 savings accounts during the calendar year in which the application is made;
173 (v) the allocation of the match among the qualifying individual's eligible 529 savings
174 accounts; and
175 (vi) any other information required by the department, the plan, or the commission to
176 administer the program.
177 (b) The department, the plan, and the commission shall develop an information release
178 that directs and allows:
179 (i) the department to report to the plan:
180 (A) the name and identifying information of the qualifying individual;
181 (B) contact information for the qualifying individual; and
182 (C) the name of the account owner, the name of the beneficiary, and the account
183 number of any eligible 529 savings account;
184 (ii) the plan to report to the department:
185 (A) the account number, name of the account owner, and the name of the beneficiary
186 for each eligible 529 savings account into which a deposit was made during the calendar year;
187 and
188 (B) the amount of deposit made into each eligible 529 savings account for the calendar
189 year;
190 (iii) the department to disclose to the commission, if the plan lists the qualifying
191 individual on the report described in Section 53B-8a-302, the name and identifying information
192 of the qualifying individual; and
193 (iv) the commission to disclose to the department, whether the qualifying individual
194 claimed a federal earned income tax credit on the qualifying individual's federal income tax
195 return for a taxable year.
196 (3) (a) The department shall provide to the plan the information described in
197 Subsection (2)(b)(i) for each qualifying individual that the department determines completes
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198 the application requirements described in Subsection (2).
199 (b) The department shall provide the information described in Subsection (3)(a):
200 (i) in a single report; and
201 (ii) with information about which calendar year the department requests a report under
202 Section 53B-8a-302.
203 (4) (a) The department may provide to the commission the information described in
204 Subsection (2)(b)(iii) for each qualifying individual that the plan lists on the report described in
205 Section 53B-8a-302.
206 (b) The department shall provide the information described in Subsection (4)(a):
207 (i) in a single report; and
208 (ii) with information about which calendar year the department requires a disclosure
209 under Subsection 59-1-403(4)(aa).
210 (5) The department, the plan, and the commission shall provide for the security and
211 maintenance of confidentiality of any information shared under an information release.
212 (6) (a) The department shall determine whether an applicant for the program:
213 (i) is a qualifying individual; and
214 (ii) meets the program requirements described in this section.
215 (b) An applicant may not appeal the department's determination that the applicant is
216 not a qualifying individual.
217 (c) An applicant may reapply if the department later identifies the applicant as a
218 qualifying individual.
219 Section 5. Section 35A-9-605 is enacted to read:
220 35A-9-605. Payment of match.
221 (1) Subject to the other provisions of this section, the department shall transfer money
222 appropriated from the Education Savings Incentive Restricted Account to the plan in the
223 amount of each qualifying individual's match.
224 (2) The department shall send with the transfer described in Subsection (1), for each
225 qualifying individual that is receiving a match:
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226 (a) the amount of the match for the qualifying individual;
227 (b) the qualifying individual's allocation of the match among eligible 529 savings
228 accounts; and
229 (c) for each eligible 529 savings account into which the qualifying individual allocates
230 the match:
231 (i) the name of the qualifying individual who is the account owner;
232 (ii) the name of the beneficiary; and
233 (iii) the account number.
234 Section 6. Section 35A-9-606 is enacted to read:
235 35A-9-606. Reporting to the department -- Annual report.
236 (1) On or before September 1, the plan shall submit to the department the aggregate
237 average balance in eligible 529 savings accounts during the previous calendar year.
238 (2) The department shall include in the annual report required by Section 35A-1-109
239 the following information for the previous calendar year:
240 (a) the number of qualifying individuals to whom the department provides notice of the
241 program;
242 (b) the number of applications for the program;
243 (c) the number of applications for the program from qualifying individuals;
244 (d) the number of qualifying individuals participating in the program;
245 (e) the number of eligible 529 savings accounts that receive a match;
246 (f) the total dollar amount provided as a match; and
247 (g) the aggregate average balance in eligible 529 savings accounts as reported by the
248 plan.
249 Section 7. Section 53B-8a-301 is enacted to read:
250 Part 3. Education Savings Incentive Program
251 53B-8a-301. Definitions.
252 As used in this part:<