Bill Text: NJ A1579 | 2022-2023 | Regular Session | Introduced
Bill Title: Establishes New Jersey Baby Bond Account Program.
Spectrum: Partisan Bill (Democrat 5-0)
Status: (Introduced - Dead) 2022-01-11 - Introduced, Referred to Assembly Women and Children Committee [A1579 Detail]
Download: New_Jersey-2022-A1579-Introduced.html
STATE OF NEW JERSEY
220th LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2022 SESSION
Sponsored by:
Assemblyman WILLIAM F. MOEN, JR.
District 5 (Camden and Gloucester)
Assemblyman BENJIE E. WIMBERLY
District 35 (Bergen and Passaic)
Co-Sponsored by:
Assemblywoman Sumter
SYNOPSIS
Establishes New Jersey Baby Bond Account Program.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act establishing the "New Jersey Baby Bond Account Program," supplementing chapter 10 of Title 44 of the Revised Statutes, and making a $70,000,000 appropriation.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. This act shall be known and may be cited as the "New Jersey Baby Bond Account Program Act."
2. As used in this act:
"Account holder" means an eligible individual who is the owner of an individual account established pursuant to paragraph (2) of subsection a. of section 4 of this act.
"Board" means the Baby Bond Account Board established pursuant to section 8 of this act.
"Department" means the Department of the Treasury.
"Eligible individual" means an infant born on or after January 1, 2021 to a family domiciled in this State or outside of this State, provided the individual establishes residence in the State within six months of birth, and who resides in a household having an annual household income on the individual's date of birth that does not exceed 200 percent of the federal poverty level.
"Executive director" means the executive director of the Baby Bond Account Board selected pursuant to subsection f. of section 8 of this act.
"Federal poverty level" means a measure of income promulgated annually by the United States Department of Health and Human Services pursuant to 42 U.S.C. 9902 that established a threshold for poverty in the United States based on the size of household.
"Fund" means the Baby Bond Account Fund established pursuant to paragraph (1) of subsection a. of section 4 of this act.
"Household income" means income as defined in 7 CFR ss.245.2 and 245.6 or any subsequent superseding federal law or regulation
"Individual account" means one of the accounts established within the Baby Bond Account Fund for an eligible individual pursuant to paragraph (2) of subsection a. of section 4 of this act.
"Program" means the New Jersey Baby Bond Account Program established pursuant to the provisions of section 3 of this act.
3. There is established in the Department of the Treasury the "New Jersey Baby Bond Account Program." The program shall be under the direction and control of the executive director and the board. The Department of the Treasury shall provide primary staff support for the program and the board.
The purpose of the program shall be to credit each eligible individual with a $2,000 deposit into an individual account
established by the State Treasurer. The individual account may be used for any of the purposes specified under subsection c. of section 7 of this act.
4. a. (1) There is established in the Department of the Treasury a non-lapsing fund to be known as the "Baby Bond Account Fund," with the board established pursuant to section 8 of this act as its trustee. The fund shall include the individual accounts of eligible individuals, which shall be accounted for as individual accounts. The fund shall be credited with moneys made available from an appropriation of $70,000,000 pursuant to section 10 of this act to effectuate the purposes of this act for a full fiscal year and other moneys that the Legislature may appropriate from time to time.
(2) On and after January 1, 2021, the State Treasurer, in coordination with the executive director, shall establish in the fund an account for each eligible individual identified pursuant to section 6 of this act. Each individual account shall be identified to its account holder by means of a unique personal identifier and shall remain in the fund. The State Treasurer shall credit to each individual account the amounts credited to the fund, which are attributable to the account holder.
b. Moneys in the fund shall be invested by the board, established pursuant to section 8 of this act, in permitted investments or shall be held in interest-bearing accounts in those depositories as the board may select and may be invested and reinvested in permitted investments in accordance with this subsection. The board shall exercise the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; provided that, in making each investment, the board shall act with the reasonable expectation that the return on each investment shall be commensurate with the risk associated with each investment. Any interest earnings that are attributable to moneys in the fund shall be deposited into the fund.
c. The amounts deposited in the fund shall not constitute as property of the State and the fund shall not be construed to be a department, institution, or agency of the State. Amounts in the fund shall not be commingled with State funds and the State shall have no claim to or against, or interest in, such funds.
d. The State Treasurer shall allocate to each individual account an amount equal to the net earnings and net losses from each investment of sums in the fund which are attributable, on a pro rata basis, to sums credited to such account, reduced by an appropriate share of the administrative expenses paid out of the net earnings, as determined by the executive director.
e. In the event a person or entity wishes to make a deposit into an individual account, the State Treasurer shall be authorized to process such deposits, in a manner and method to be determined by the State Treasurer.
f. In the event an account holder wishes to transfer money to the individual account of a family member or dependent, the State Treasurer shall be authorized to receive transfer requests and process such transfers, in a manner and method determined by the State Treasurer.
g. Except as provided in subsection e. of section 7 of this act, the moneys in the fund are appropriated and shall remain available to: make contributions to individual accounts; to invest pursuant to subsection b. of this section; make distributions in accordance with section 7 of this act; and pay the administrative expenses of carrying out this act. The moneys in the fund shall not be appropriated for any purpose other than the purposes specified in this subsection and may not be used for any other purpose.
h. No State entity, board, commission, or agency, or any officer, employee, or member thereof is liable for any loss or deficiency resulting from particular investments selected under this act, except for any liability that arises out of a breach of fiduciary duty by the board under subsection b. of this section.
5. The executive director shall notify each eligible individual's family of their potential eligibility for the Baby Bond Account Program. The executive director shall also provide each eligible individual's family with information about the program's eligibility criteria, application process, guidelines, procedures, and requirements for withdrawing money from an individual account to be used for qualified expenses listed in subsection c. of section 7 of this act.
6. a. Upon receipt of the birth certificate of an eligible individual under paragraph (1) of subsection c of this section, or approval of an application received under paragraph (2) of that subsection, the State Treasurer shall establish an individual account for such eligible individual and shall credit the account with $2,000.
b. (1) On the 20th day of each month, the State Registrar shall transmit to the executive director the name of, and social security number issued to, each eligible individual for which the State Registrar received an original birth certificate pursuant to subsection g. of R.S.26:8-25.
(2) In the case of an eligible individual who is not provided an individual account under paragraph (1) of this subsection, the eligible individual may request the establishment of an individual account under this paragraph by application to the executive director on a form prescribed by the executive director.
c. If the amounts in the Baby Bond Account Fund are insufficient to credit $2,000 to a newly established individual account, the board shall determine guidelines to process the new individual accounts established thereafter and the appropriate allocation of any remaining funds to those accounts.
7. a. (1) Except as provided in paragraph (2) of this subsection, no amount may be distributed from an individual account before the date on which the account holder attains the age of 18.
(2) Notwithstanding the provisions of paragraph (1) of this subsection to the contrary, an amount may be distributed from an individual account to the account holder before the account holder attains the age of 18 to pay for qualified tuition and related expenses, as defined in section 25A(f)(1) of the Internal Revenue Code of 1986, of the account holder if the account holder is an eligible student as defined in section 25A(b)(3) of the Internal Revenue Code.
b. No amount may be distributed from an individual account unless the account holder establishes, under rules established by the executive director in consultation with the board, that such amount shall be used for a qualified expense.
c. An eligible individual shall be authorized to withdraw moneys from the individual's account, in the form of a check or transfer of funds made payable to the individual, for any of the following purposes:
(1) post-secondary educational expenses of the account holder;
(2) acquisition costs of a primary residence of the account holder;
(3) qualified business capitalization expenses of the account holder, as determined by the executive director and board; and
(4) any other investment in financial assets or personal capital that provides long-term gains to wages and wealth, as determined by the executive director and board.
d. In the case of a deceased account holder of an individual account which has an account balance greater than zero, upon receipt of notification of such individual's death, the State Treasurer shall close the account and shall transfer the balance in such account to the individual account of such account holder's surviving spouse or, if there is no such account of a surviving spouse, to the duly appointed legal representative of the estate of the deceased account holder, or if there is no such representative, to the person or persons determined to be entitled thereto under the laws of the State. The transfer provided for under this subsection shall occur only if the deceased account holder was domiciled in this State at the time of death.
e. An account holder shall not be authorized to make a distribution from the account holder's individual account unless the account holder is domiciled in the State. If an account holder of an individual account attains the age of 25 and thereafter is domiciled in a state other than New Jersey for five or more consecutive years, the moneys in such individual account shall be presumed abandoned and transferred to the Unclaimed Personal Property Trust Fund.
8. a. There is established in, but not of, the Department of the Treasury the Baby Bond Account Board. The purpose of the board shall be to oversee the fund's investments, to select an executive director for the program, and to assist with the administration of the program.
b. The 11-member board shall consist of:
(1) five ex-officio members, as follows: the State Treasurer, or the State Treasurer's designee, who shall serve as chair; the State Comptroller, or the State Comptroller's designee; the Director of the Office of Management and Budget, or the director's designee; the Chief Executive Officer of the Economic Development Authority, or the chief executive officer's designee; the Commissioner of Human Services, or the commissioner's designee; and
(2) six representatives of the general public with expertise in savings plan administration or investment, or both, of which two representatives shall be appointed by the Governor, two representative shall be appointed by the Speaker of the General Assembly, and two representatives shall be appointed by the Senate President.
c. Members of the board, except for the executive director as provided in subsection f. of this section, shall serve without compensation but may be reimbursed for necessary expenses incurred in the performance of their duties.
d. Public members shall serve for a term of four years from their date of appointment and until their successors are appointed and qualified. Any vacancy in the membership of the board shall be filled by appointment in the same manner as the original appointment. Vacancies resulting from causes other than by expiration of term shall be filled for the unexpired term only.
e. Each board member, prior to assuming office, shall take an oath that the member will diligently and honestly administer the affairs of the board and that the member will not knowingly violate or willingly permit to be violated any of the provisions of law applicable to the program. The oath shall be certified by the officer before whom it is taken and immediately filed with the Secretary of State.
f. The board shall select and employ an executive director, who shall be responsible for the administration of the Baby Bond Account Program and shall fix the executive director's compensation and conditions of employment. The executive director shall maintain oversight of investment and administrative operations conducted by the board; arrange board agendas with the approval of the board; execute contracts on behalf of the board; and perform any other responsibilities designated to the executive director by the board.
g. The executive director shall make economic literacy training available to each eligible individual's family. The board shall determine the economic literacy training curriculum to be used to
fulfill the provisions of this paragraph, provided that, at a minimum, the curriculum offers a basic understanding of budgets and savings accounts, credit and interest, how to use financial services, and how to use a savings plan to reach the account holder's savings goal for an individual account.
9. Gross income calculations for determining State income tax shall not include:
a. any contribution credited to the individual account of the taxpayer under section 4 of this act; and
b. any distribution from such individual account, including interest and earnings.
10. There is appropriated from the General Fund the sum of $70,000,000 to be credited to the "Baby Bond Account Fund" to effectuate the provisions of this act for a full fiscal year.
11. The State Treasurer, in consultation with the executive director and board, pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), shall promulgate rules and regulations to effectuate the provisions of this act.
12. This act shall take effect immediately.
STATEMENT
This bill establishes the New Jersey Baby Bond Account Program and Baby Bond Account Fund in the Department of the Treasury and appropriates the sum of $70,000,000 from the General Fund to the Baby Bond Account Fund. The purpose of the program is to credit each eligible individual in the State with a $2,000 deposit into an individual account in the Baby Bond Account Fund by the program. An eligible individual is any infant born on or after January 1, 2021 to a family domiciled in this State or outside of this State, provided the individual establishes residence in the State within six months of birth, and who resides in a household having an annual household income on the individual's date of birth that does not exceed 200 percent of the federal poverty level.
The bill requires the State Treasurer to establish in the fund an account for each eligible individual and credit each account with $2,000. The State Treasurer will credit to each individual account the amounts credited to the fund, which are attributable to the account holder of the account. In the event a person or entity wishes to make a deposit into an individual account or an account holders wishes to transfer money to the individual account of a family member or dependent, the bill authorizes the State Treasurer to accept such deposits and to process such transfers, in a manner and method to be determined by the State Treasurer. The money within an individual account may only be distributed when the account holder attains the age of 18, with an exemption of qualified tuition and related expenses for eligible students, defined by the federal Internal Revenue Code of 1986. The moneys within an individual account may only be used for the following expenses:
(1) post-secondary educational expenses of the account holder;
(2) acquisition costs of a primary residence of the account holder;
(3) qualified business capitalization expenses of the account holder, as determined by the program; and
(4) any other investment in financial assets or personal capital that provides long-term gains to wages and wealth, as determined by the program.
This bill requires that the money in the Baby Bond Account Fund will be managed by an 11-member Baby Bond Account Board, established pursuant to this bill, and will be invested in permitted investments or held in interest-bearing accounts. The board will consist of five ex-officio members, as follows: the State Treasurer or the State Treasurer's designee; the State Comptroller or the State Comptroller's designee; the Director of the Office of Management and Budget or the director's designee; the Chief Executive of the Economic Development Authority or the chief executive officer's designee; the Commissioner of Human Services or the commissioner's designee; and six public members with the Governor, the Speaker of the General Assembly, and the Senate President each appointing two members each. The board will hold a fiduciary duty to the fund and will make investments with the reasonable expectation that the return on each investment will be commensurate with the risk associated with each investment.
The board will select and employ an executive director who will be responsible for the administration of the Baby Bond Account Program. The executive director will also be required notify each eligible individual's family of their potential eligibility for the Baby Bond Account Program. The executive director will also provide each eligible individual's family with information about the program's eligibility criteria, application process, guidelines, procedures, and requirements for withdrawing money from an individual account to be used for qualified expenses. Lastly, the executive director will be required to make economic literacy training available to each eligible individual's family. The board will determine the economic literacy training curriculum to fulfill this provision, provided that, at a minimum, the curriculum offers a basic understanding of budgets and savings accounts, credit and interest, how to use financial services, and how to use a savings plan to reach the account holder's savings goal for an individual account.
