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Office of the Press Secretary

For Immediate Release October 27, 1998


|                                                                      |
|                   INDIVIDUAL DEVELOPMENT ACCOUNTS:                   |
|                PRESIDENT CLINTON EFFECTIVELY COMPLETES               |
|                   1992 COMMUNITY EMPOWERMENT AGENDA                  |
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| "It's called an Individual Development Account. It would encourage | | poor Americans to set money aside in special savings accounts that |

|  they can use for their education, their training or starting a      |
|  small business."                                                    |
|                           Bill Clinton                               |
|                           September 16, 1992                         |
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Today, President Clinton Signs into Law the Human Services Reauthorization Act Which Includes The Individual Development Act Demonstration Program The President Called for in 1992. In 1992, Bill Clinton proposed to "establish Individual Development Accounts (IDAs) to help low-income Americans save, and create new private-sector opportunities." President Clinton included Individual Development Accounts in his 1994 Welfare Reform proposal. The 1996 Welfare Reform law allowed States to use welfare reform block grants to establish IDAs. The Human Services bill, for the first time, directly authorizes Federal funds for IDAs, and this year's budget includes $10 million to get this demonstration off the ground. The fulfillment of the President's 1992 promise effectively completes President Clinton's 1992 community empowerment agenda.

An Asset-Based Approach To Help Low-Income Americans Get Ahead. Fully one-half of all Americans have either no, negligible, or negative assets available for investments. Low-income individuals and families, whether working or on welfare, should be encouraged to develop savings and assets. IDAs will help low-income families achieve greater independence and economic well-being by providing incentives to save for a first home, education and training, or to start a new business.

Highlights of the IDA Demonstration Included in the Legislation:

Establishes a five-year, $125 million demonstration program to establish Individual Development Accounts (IDAs) for more than 50,000 people.

For each dollar deposited into the IDA by a low-income family, the administering agency would provide a match of between $1 and $8.

IDA investments could be withdrawn for three purposes: (1) purchase of a first home, (2) post-secondary education and training; and (3) the creation of a new small business. In cases of hardship -- such as job loss or serious medical illness -- individuals are allowed to withdraw their own savings, but would lose the matching contributions.

Households that are either eligible for Temporary Assistance for Needy Families (TANF) or that qualify for the Earned Income Tax Credit and have a net worth below $10,000 are eligible to participate in this demonstration.

Grants will be provided to local entities -- including non-profits -- to administer the IDA demonstration. The bill gives a preference to entities that are able to attract pledges of substantial non-Federal, especially private sector, funding to serve as a match for the Federal dollars.

Requires that there be a rigorous evaluation of the program to determine what works and what does not in implementing Individual Development Accounts.