Colorado Legislative Council Staff



Drafting Number:

Prime Sponsor(s):

LLS 99-0789

Rep. George

Sen. Blickensderfer


Bill Status:

Fiscal Analyst:

April 8, 1999

House Finance

Janis Baron (303-866-3523)



Fiscal Impact Summary

FY 1999/2000

FY 2000/2001

State Revenues

General Fund - Refund of Excess TABOR Revenue

Cash Fund


Up To -$1,500,000


State Expenditures

General Fund*

Cash Fund

Cash Fund Exempt







FTE Position Change

0.0 FTE

0.0 FTE

Other State Impact: TABOR

Effective Date: Upon signature of the Governor.

Appropriation Summary for FY 1999-2000:

       Department of Regulatory Agencies$ 1,000,000GF


       Department of Law 4,420CFE

Local Government Impact: None.


       *    The bill includes a $1,000,000 GF appropriation for the purpose of implementing the Individual Development Account Program.

Summary of Legislation

            The bill creates the "Individual Development Account Act" which includes the following provisions according to section:


Section 11-39-104 — Individual Development Account Program - Individual Development Account Fund. Requires the Banking Board, in conjunction with the State Commissioner of Financial Services, to establish an individual development account (IDA) program. The IDA program is required to provide eligible persons who establish an IDA through a sponsoring organization to receive the benefit of matching funds, payable directly to a service provider, at the time of expenditure of moneys in the account for securing post-secondary education or training, purchasing a first home, or capitalizing a new business. Expenditures of up to 10 percent of the account may be used for supportive counseling, mentoring, or tutoring. The bill establishes the Individual Development Account Fund in the State Treasury with the following stipulations: (1) moneys in the Fund are to be continuously appropriated to the State Bank Commissioner for disbursement to the financial institutions with which the three certified fiduciary organizations selected by the Division of Banking have contracted; (2) moneys are to be disbursed by the Commissioner to match the moneys raised by the fiduciary organizations in a ratio of 1:1; and (3) no more that $500,000 shall be disbursed to any one certified fiduciary organization.


Section 11-39-105. Eligibility for Participation in the Individual Development Account. Eligibility requirements for IDA program participation provide that the individual's income does not exceed 200 percent of the federal poverty level, and that he or she has entered into an IDA agreement with a sponsoring organization which has an agreement with a certified fiduciary organization. A program participant shall forfeit access to matching fund and interest earned on the account if contributions are withdrawn for unauthorized uses. Account interest forfeited shall revert to the IDA Fund and shall not be treated as taxable income. The principal in an IDA shall not exceed $10,000. The program shall not be construed to create an entitlement; the number of individuals eligible to receive disbursement of matching public and philanthropic funds shall be limited to the availability of those funds in any given year.


Section 11-39-106. Fiduciary Organizations - Certification - Fees. Requires the Division of Banking to certify three qualified nonprofit, fund-raising organizations to serve as certified fiduciary organizations. Requires the Banking Board, in conjunction with the State Commissioner of Financial Services, to adopt rules regarding qualifications and fees for certified fiduciary organizations.


Section 39-22-522. Tax Credit for Individuals contribution Matching Funds for Individual Development Accounts. Provides that deposits into an IDA and interest earned on the deposits shall not be included in taxable income. Provides for a tax credit for contributions of cash, stocks, or bonds to certified fiduciary organizations for use in the IDA program. The credit is effective for income tax years commencing on or after January 1, 2000, when the State Controller certifies that the amount of state revenues for the immediately preceding state fiscal year exceeded the limitation on state fiscal year spending imposed by Section 20 (7) (a) of Article X of the State Constitution and the voters did not authorize the state to retain and spend all of the excess state revenues for that state fiscal year.

State Revenues

            The bill requires that the Department of Regulatory Agencies (DORA), Division of Banking, certify three qualified nonprofit fund-raising organizationsto serve as certified fiduciary organizations. It also provides that the department may assess a fee for certification of a fiduciary organization to cover the administrative expenses of the IDA program. DORA indicates that it will assess a $4,100 certification fee in year one and a renewal fee of $1,200 in subsequent years to support the IDA program. Total cash funds revenue to the Division of Banking Cash Fund are estimated at $12,300 in FY 1999-00 and $3,600 in FY 2000-01.

            Although the revenue impact to the General Fund is estimated to be under $1.5 million, the actual decrease to General Fund revenues cannot be quantified due to several unknown factors: (1) the participation rate in the IDA program; (2) the amount to be claimed in income tax modifications; and (3) the number of taxpayers making contributions to the IDA certified fiduciary organizations, thereby qualifying for the 25 percent income tax credit.

State Expenditures

            Department of Regulatory Agencies — The department will require $12,233 in FY 1999-00 to implement the bill's provisions. Added resources will be needed for the Banking Board to establish rules, publish and distribute rules, and develop audit procedures. Costs in FY 1999-00 are identified accordingly: staff support — $1,563; Board costs — $1,250; contractual services of CPA to develop audit procedures — $5,000; and legal services — $4,420. Board costs and contractual services are a one-time requirement in FY 1999-00. Costs in FY 2000-01 are estimated at $3,577 for ongoing staff support and legal services.

            Department of Law — The department will be required to provide legal services to DORA: 90 hours in FY 1999-00 and 50 hours for each year thereafter. The cost to the department is based on a blended rate of $49.11 per hour. The FY 1999-00 cost is estimated at $4,420; the FY 2000-01 cost is estimated at $2,456.

            Department of Revenue - FY 2000-01 — The department will require a one-time appropriation of $61,200 in its Information Technology Division for 900 hours of contract computer programming to create an income tax credit for individuals and/or corporations donating to any IDA account (900 hrs. x $68/hr. = $61,200).

State Appropriations

            The fiscal note indicates that for FY 1999-00, the Department of Regulatory Agencies should receive a cash funds appropriation of $12,233 from the Division of Banking Cash Fund. The bill includes an appropriation clause which adjusts the FY 1999-00 Long Appropriations Bill — SB 99-215. The appropriation clause provides a $1,000,000 General Fund appropriation to the Department of Regulatory Agencies, Division of Banking, to implement the IDA program. The Department of Law should receive a cash funds exempt appropriation of $4,420.

Departments Contacted

            Human Services

            Regulatory Agencies