CRS Summarizes Unemployment Benefits Funding Issues

The 113^th Congress may face a number of issues related to unemployment insurance programs: Unemployment Compensation (UC), the temporary, now-expired Emergency Unemployment Compensation (EUC08), and Extended Benefits (EB). With the national unemployment rate decreasing but still high, the weekly demand for extended unemployment benefits continues at elevated levels.

Mostly recently, P.L. 112-240 extended the authorization for the EUC08 program until the week ending on or before January 1, 2014 (December 28, 2013, for most states). In addition, P.L. 112-240 extended the 100% federal financing of the EB program through December 31, 2013. Congress is currently considering whether to extend the authorization for these key temporary unemployment insurance provisions, which have expired.

This report provides a brief overview of the three unemployment insurance programs -- UC, EUC08 (currently expired), and EB -- that may provide benefits to eligible unemployed workers. This report contains a brief explanation of how the EUC08 program, as well as some other UC-related payments, began to experience reductions in benefits as a result of the sequester order contained within the Budget Control Act of 2011 (P.L. 112-25).

This report also includes descriptions of enacted and proposed unemployment insurance (UI) legislation in the 113^th Congress, organized by the following categories:

• Extension of federal UI provisions (H.R. 2821, H.R. 3546, H.R. 3773, H.R. 3813, H.R. 3824, H.R. 3885, H.R. 3936, S. 1747, S. 1797, S. 1845, S.Amdt. 2631, S.Amdt. 2714, S. 1931, S. 2077, S. 2097, S. 2148, and S. 2149)

• Exemption of UI benefits from the sequester (H.R. 2177)

• UI program integrity (P.L. 113-67, H.R. 3205, H.R. 2826, H.R. 3447, S. 1870, and S. 1876)

• Concurrent receipt of Social Security Disability Insurance (SSDI) and UI benefits (H.R. 1502, H.R. 3885, S.Amdt. 2631, S. 1099, S. 1931, and S. 2097)

• UI income restrictions (S. 18, H.R. 2448, S.Amdt. 2714, S. 2097, S. 2148, and S. 2149)

• UI vouchers/demonstration projects (H.R. 51 and H.R. 3864)

• Job training/education (H.R. 1530, S. 2097, S. 2148, and S. 2149)

• Drug testing (H.R. 1172, H.R. 1277, and H.R. 3454)

• Aid for Hurricane Sandy states (S. 803)

• Proposals to aid in the rehiring of UI beneficiaries and exhaustees (H.R. 188, H.R. 1617, H.R. 2821, H.R. 2889, H.R. 3453, H.R. 3726, H.R. 3781, and H.R. 4033)

• Domestic violence (H.R. 1229)

• President's Budget Proposal for FY2015

Overview of Unemployment Insurance Programs

In general, when eligible workers lose their jobs, the joint federal-state Unemployment Compensation (UC) program may provide up to 26 weeks of income support through the payment of regular UC benefits. UC benefits may be extended in two ways: (1) for up to 47 weeks by the temporarily authorized Emergency Unemployment Compensation (EUC08) program (currently expired); and (2) for up to 13 or 20 weeks by the Extended Benefit (EB) program if certain economic situations exist within the state.¹Figure 1 depicts the sequence of unemployment benefits that were available until December 28, 2013. Currently, only the UC and EB programs are authorized, although no state is in an active EB period.

 

Figure 1. Sequence of Unemployment Benefits: UC, EUC08, and EB

 

Until December 28, 2013

 

 

 

Notes: Authorization for the EUC08 program expired the week ending on or before January 1, 2014 (i.e., December 28, 2013; or December 29, 2013, in New York State).No EUC08 benefits are payable for weeks of unemployment after this expiration date.

Several temporary components of the permanent-law EB program also expired at the end of calendar year 2013. The temporary 100% federal financing of EB ended December 31, 2013 (under permanent law, states finance 50% of EB benefits and the federal government finances 50%). The temporary option for states to use three-year lookbacks as part of their EB triggers also expired the week ending on or before December 31, 2013.

Unemployment Compensation Program

The joint federal-state UC program, authorized by the Social Security Act of 1935 (P.L. 74-271), provides unemployment benefits for up to a maximum of 26 weeks.² Former U.S. military service members may be eligible for unemployment benefits through the unemployment compensation for ex-service members (UCX) program.³ The Emergency Unemployment Compensation Act of 1991 (P.L. 102-164) provides that ex-service members be treated the same as other unemployed workers with respect to benefit levels, the waiting period for benefits, and benefit duration.

Although federal laws and regulations provide broad guidelines on UC benefit coverage, eligibility, and benefit determination, the specifics regarding UC benefits are determined by each state. This results in essentially 53 different programs.⁴ Generally, UC eligibility is based on attaining qualified wages and employment in covered work over a 12-month period (called a base period) prior to unemployment. All states require a worker to have earned a certain amount of wages or to have worked for a certain period of time (or both) within the base period to be monetarily eligible to receive any UC benefits. The methods states use to determine monetary eligibility vary greatly. Most state benefit formulas replace approximately half of a claimant's average weekly wage up to a weekly maximum.

The UC program is financed by federal taxes under the Federal Unemployment Tax Act (FUTA) and by state payroll taxes under the State Unemployment Tax Acts (SUTA). The 0.6% effective net FUTA tax paid by employers on the first $7,000 of each employee's earnings (no more than $42 per worker per year) funds both federal and state administrative costs, loans to insolvent state UC accounts, the federal share (50%) of EB payments, and state employment services.⁵

SUTA taxes on employers are limited by federal law to funding regular UC benefits and the state share (50%) of EB payments. Federal law requires that the state tax be on at least the first $7,000 of each employee's earnings (it may be more) and requires that the maximum state tax rate be at least 5.4%. Federal law also requires the state tax rate to be based on the amount of UC paid to former employees (known as "experience rating"). Within these broad requirements, states have great flexibility in determining the SUTA structure of their state. Generally, the more UC benefits paid out to its former employees, the higher the tax rate of the employer, up to a maximum established by state law. Funds from FUTA and SUTA are deposited in the appropriate accounts within the Unemployment Trust Fund (UTF).

Emergency Unemployment Compensation Program

On June 30, 2008, President George W. Bush signed the Supplemental Appropriations Act of 2008 (P.L. 110-252), which created a new temporary unemployment insurance program, the EUC08 program. This was the eighth time Congress had created a federal temporary program to extend unemployment compensation during an economic slowdown.⁶ State UC agencies administer the EUC08 benefit along with regular UC benefits.

EUC08 benefits have not been available in North Carolina since June 2013.⁷ The authorization for this program has been extended multiple times and most recently was authorized through December 28, 2013, for all states except New York (December 29, 2013).

EUC08 Benefit Availability Through December 28, 2013

The EUC08 program was amended 11 times, most recently by P.L. 112-240.⁸ The EUC08 benefit amount was equal to the eligible individual's weekly regular UC benefits and included any applicable dependents' allowances. The most recent modifications to the underlying structure of the EUC08 program were made by P.L. 112-96. These modifications included changes to the number of weeks available in each EUC08 tier as well as the state unemployment rates required to have an active tier in that state. These requirements were implemented during 2012 in three separate phases.⁹ The following weeks of benefits were available in the tiers listed below through December 28, 2013:

• Tier I was available in all states, except in North Carolina, with up to 14 weeks of EUC08 benefits provided to eligible individuals.

• Tier II was available if the state's total unemployment rate (TUR)¹⁰ is at least 6%, with up to 14 weeks provided to eligible individuals in those states (not available in North Carolina).

• Tier III was available if the state's TUR is at least 7% (or an insured unemployment rate, IUR,¹¹ of at least 4%), with up to 9 weeks provided to eligible individuals in those states (not available in North Carolina).

• Tier IV was if the state's TUR is at least 9% or the IUR is 5%, with up to 10 weeks provided to eligible individuals in those states (not available in North Carolina).

All tiers of EUC08 benefits were temporary and expired in the week ending on or before January 1, 2014. Thus, on December 28, 2013 (December 29, 2013, for New York), the EUC08 program ended. All entitlement to EUC08 benefits has ended. (There is no grandfathering of any EUC08 benefit.)

Impact of Federal "Nonreduction" Rule on State UC Laws

In response to similar state UC financial stress following prior recessions, states typically reduced the amount of UC benefits paid to individuals through reductions in the maximum benefit amount or through changes in the underlying benefit calculations. Under two temporary provisions in federal law, however, most states are prohibited from enacting legislation that would reduce UC benefit amounts through changes to benefit calculation from February 2009 through December 2013.¹² One state, North Carolina, implemented new legislation that reduced benefit amounts. As a result, the EUC08 agreement between North Carolina and the Secretary of the U.S. Department of Labor (DOL) terminated early. All tiers of EUC08 ended in North Carolina as of June 29, 2013. No EUC08 benefits have been available in that state since June 30, 2013.

The implementation of this "nonreduction" rule coincided with new state actions that reduced UC benefit duration as an alternative means to decrease total UC benefit payments.¹³ As a result, these changes in state UC benefit duration may be a state response to state UC financing shortfall. For more information on the state law changes, see CRS Report R41859, Unemployment Insurance: Consequences of Changes in State Unemployment Compensation Laws.

Extended Benefit Program

The EB program was established by the Federal-State Extended Unemployment Compensation Act of 1970 (EUCA), P.L. 91-373 (26 U.S.C. § 3304, note). EUCA may extend receipt of unemployment benefits (extended benefits) at the state level if certain economic situations exist within the state.

The EB program is triggered when a state's insured unemployment rate (IUR) or total unemployment rate (TUR) reaches certain levels.¹⁴ All states must pay up to 13 weeks of EB if the IUR for the previous 13 weeks is at least 5% and is 120% of the average of the rates for the same 13-week period in each of the two previous years. There are two other optional thresholds that states may choose. (States may choose one, two, or none.) If the state has chosen a given option, they would provide the following:

• Option 1: an additional 13 weeks of benefits if the state's IUR is at least 6%, regardless of previous years' averages.

• Option 2: an additional 13 weeks of benefits if the state's TUR is at least 6.5% and is at least 110% of the state's average TUR for the same 13 weeks in either of the previous two years; an additional 20 weeks of benefits if the state's TUR is at least 8% and is at least 110% of the state's average TUR for the same 13 weeks in either of the previous two years.

Expired Temporary EB Provisions in P.L. 111-312

P.L. 111-312, as amended (most recently by P.L. 112-240), made some technical changes to certain triggers in the EB program. These changes allowed states to temporarily use lookback calculations based on three years of unemployment rate data (rather than the permanent-law lookback of two years of data) as part of their mandatory IUR and optional TUR triggers if states would otherwise trigger off or not be on a period of EB benefits. Using a two-year versus a three-year EB trigger lookback was an important adjustment at the time of the signing of P.L. 111-312 (December 17, 2010) because many states were likely to trigger off of their EB periods despite high, sustained -- but not increasing -- unemployment rates. For more information on these state law changes see CRS Report R41859, Unemployment Insurance: Consequences of Changes in State Unemployment Compensation Laws. The authorization for the temporary EB trigger modifications expired the week ending on or before December 31, 2013.

The EB benefit amount is equal to the eligible individual's weekly regular UC benefits. Under permanent law, FUTA finances half (50%) of the EB payments and 100% of EB administrative costs. States fund the other half (50%) of EB benefit costs through their SUTA. Beginning on February 17, 2009, P.L. 111-5 (most recently amended by P.L. 112-240) temporarily changed the federal-state funding arrangement for the EB program. The FUTA financed 100% of EB benefits from February 17, 2009, through December 31, 2013. The one exception to the 100% federal financing was for those EB benefits based on work in state and local government employment; those "non-sharable" benefits continued to be 100% financed by the former employers.

Unemployment Insurance Benefits and the Sequester

The sequester order required by the Budget Control Act of 2011 (P.L. 112-25) and implemented on March 1, 2013 (after being delayed by P.L. 112-240), affects some but not all types of unemployment insurance expenditures. Regular UC, UCX, and UCFE payments are not subject to the sequester reductions. EB, EUC08, and most forms of administrative funding are subject to the sequester reductions.¹⁶ Please see CRS Report R43133, The Impact of Sequestration on Unemployment Insurance Benefits: Frequently Asked Questions for additional information on the impact of sequestration on UI benefits.

FY2013 Sequester of UI Benefits

The FY2013 sequestration reductions applied to the budgetary resources for all of FY2013 (October 1, 2012, through September 30, 2013) -- but the actual EB and EUC08 payment reductions were not implemented before the week beginning March 31, 2013. The sequester order for FY2013 required a 5.1% reduction to be applied on all nonexempt nondefense mandatory expenditures. Thus, EUC08 and EB payments were required to be reduced by 10.7% for benefits paid for weeks of unemployment beginning on March 31, 2013, to meet the 5.1% reduction target for FY2013.

The U.S. DOL released guidance on how states should implement the FY2013 sequester reductions to unemployment benefits for FY2013.¹⁷ These reductions began the week beginning on or after March 31, 2013. For states that were not able to implement these reductions by March 31, 2013, the amount of the benefit reduction was actuarially increased to be equivalent to a 10.7% reduction. Not all states implemented the sequestration reductions uniformly across all EUC08 beneficiaries. Several states were unable to implement the preferred method of reduction as outlined by the U.S. DOL and opted for an alternative method.¹⁸

No unemployment benefits already paid to individuals before the state began the sequester reductions were affected.

FY2014 Sequester of UI Benefits

In FY2014, the sequestration order requires a 7.2% reduction in all nonexempt nondefense mandatory expenditures.

EUC08: FY2014 Sequestration

The FY2014 sequestration order requires that EUC08 expenditures be reduced by 7.2% for EUC08 benefits paid for weeks of unemployment beginning on October 6, 2013 (ending December 28, 2013, when EUC08 authorization expires). According to its guidance, the U.S. DOL will work with states individually to assist them in administering the FY2014 sequester of EUC08:

EB benefits will be reduced by 7.2% for any benefits paid for weeks of unemployment beginning on October 6, 2013, and ending September 27, 2014. At the week ending March 22, 2014, no state is currently in an EB period.²⁰

Alleviating State Unemployment Compensation Stress

On December 3, 2013, 14 states and the Virgin Islands owed a cumulative $20.0 billion to the federal accounts within the UTF.²¹ The American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5) temporarily stopped the accrual of interest charges on these state UC loans and deemed any interest payments due during that time as having been paid through December 31, 2010. Since January 1, 2011, interest charges again began to accrue and interest payments must be made. For calendar year 2013, employers in 13 states and the Virgin Islands face an increased net federal unemployment tax (FUTA) because the state UC program had borrowed funds from the federal UTF loan account for two consecutive years.²²

President's Budget Proposal for FY2015

The President's Budget Proposal for FY2015²³ attempts to address some of these concerns. The proposal includes extending the suspension of interest accrual for 2014 and 2015 as well as temporarily suspending net FUTA tax increases (because of outstanding state loans) for the same period.

The proposal would increase the FUTA taxable wage base from $7,000 to $15,000 in 2017 while increasing the FUTA tax rate from 0.6% to 0.8% for 2015 and then decreasing the FUTA tax rate from 0.80% to 0.38% in 2017. Beginning in 2017, the FUTA tax base would be indexed to wage growth. Under federal law, the taxable wage base for SUTA taxes in states must be at least the taxable wage base for FUTA. Therefore, the proposed increase in the FUTA taxable wage in the President's Budget Proposal would have the effect of requiring states to have a SUTA taxable wage base of at least $15,000 in 2017, which would then be indexed to wage growth.

The FY2015 President's Budget Proposal also includes various UC program measures:

Enacted Legislation in the 113^th Congress

Unemployment Insurance Integrity Provision in P.L. 113-67

P.L. 113-67, the Bipartisan Budget Act of 2013, was signed by the President on December 26, 2013. P.L. 113-67 includes a provision that requires states (one year after the unemployment benefit overpayment debt was finally determined to be due) to recover any remaining state overpayments through reduced federal income tax refunds.

Legislative Proposals in the 113^th Congress

Extension of Federal UI Provisions

Numerous proposals have been introduced in the 113^th Congress to further extend some or all of the now-expired temporary federal provisions of UI law: the authorization of EUC08, the 100% federal financing of EB, the authorization for states to use a three-year lookback for state EB triggers, temporary railroad UI benefits, and funds for Reemployment Services and Reemployment and Eligibility Assessment Activities (RES/REAs). Additionally, some proposals of these extension proposals also waive the "nonreduction" rule for states that had legislatively lowered their weekly UC benefit amount calculation. Table 1 provides summary details of these proposals.

Many of these extension bills propose reauthorizing the expired federal UI provisions for one additional year through December 2014 (H.R. 3546, H.R. 3773, H.R. 3885, S. 1747, and S. 1797). H.R. 2821, however, would extend the expired provisions for an additional two years (i.e., through December 2015). A number of other bills would extend the expired provisions for less than a year:

• S.Amdt. 2631 proposes an extension of 10.5 months through mid-November 2014;

• H.R. 3936 and S. 2077 propose a six-month extension through June 2014;

• S. 2097, S. 2148, and S. 2149 propose a five-month extension through May 2014; and

• H.R. 3813, H.R. 3824, S.Amdt. 2714, S. 1845, and S. 1931 propose a three-month extension through March 2014.

There is additional variation among these proposals in terms of the other UI provisions:

• All of these bills -- except for H.R. 3773 -- would reauthorize the temporary EB and railroad UI provisions.²⁵

• Most of these bills -- except for H.R. 3773, H.R. 3813, and H.R. 3885 -- would reauthorize the funding for Reemployment Services and Reemployment and Eligibility Assessment Activities (RES/REAs).

• Most of these bills -- except for H.R. 2821, H.R. 3546, H.R. 3773, S. 1747, and S. 1797 -- propose exceptions to the "nonreduction" rule associated with EUC08 prior to its expiration.

• Several of these bills contain offset provisions related to the concurrent receipt of UI and Social Security Disability Insurance (SSDI) payments (H.R. 3885, S.Amdt. 2631, S. 1931, and S. 2097).²⁶

• Two bills -- S.Amdt. 2714 and S. 2097 -- would prohibit any individual reporting more than $1 million in adjusted gross income (AGI) in the preceding year from receiving from receiving federal unemployment compensation, including EB and EUC08 payments.

• Two bills -- S. 2148, and S. 2149 -- would prohibit any individual reporting more than $1 million in AGI in the preceding year from receiving EUC08 benefits.²⁷

• Two of the bills propose changes to REAs:

• • S. 2097 would amend REAs to include an assessment of the reason for unemployment and allow states the option to require that a EUC08 claimant participate in job training program or community service if job training is not appropriate. In addition, it would enact changes to work search and suitable work requirements/disqualifications to conform with EB requirements (rather than UC requirements).

  • S. 2148 and S. 2149 would change the timing of REAs to require that REAs and employment services are available when an individual enters tier I of EUC08 and, if applicable, again when the individual enters tier III of EUC08.

• S.Amdt. 2714, S. 2097, S. 2148, and S. 2149 would extend the changes that the Moving Ahead for Progress in the 21^st Century Act (MAP-21; P.L. 112-141) made to the discount rates that are used by defined benefit (DB) pension plans for four additional years.²⁸ The three bills would allow the sponsors of DB pension plans to contribute less to their pension plans, which would increase plans sponsors' taxable income.

• S. 2077 proposes to offset the cost of its provisions with previously enacted Farm bill savings found in P.L. 113-79.

• S. 2097, S. 2148, and S. 2149 include an extension of certain customs user fees.

• S. 2148 and S. 2149 would allow the sponsors of single-employer and multiemployer DB pension plans to prepay the annual flat-rate, per participant premium paid to the Pension Benefit Guaranty Corporation (PBGC).²⁹

On March 19, 2014, the National Association of State Workforce Agencies (NASWA), an organization of state UI administrators and other employment services stakeholders,³⁰ provided a letter and fact sheet to Senate Majority Leader Reid and Senate Minority Leader McConnell outlining state administrative concerns related to a potential extension of UI.³¹ In particular, these March 2014 NASWA documents responded to the UI provisions in S. 2148.

NASWA highlighted a number of key administrative challenges for states raised by S. 2148, including

• Older state UI computer systems (average age of 25) that make rapid EUC08 program changes difficult to administer;

• Potential difficulty in administering the work search requirement retroactively for all weeks of backdated claims;

• Potential difficulty in administering the proposal to prohibit any individual reporting more than $1 million in AGI in the preceding year from receiving federal unemployment compensation (since UI benefits are not currently means-tested and state UI administrators do not currently collect tax information on UI claimants); and

• Lack of clarity in legislation regarding prohibition on using federal funds to administer EUC08 claims.

^b In addition to the items listed here, the proposal contains other measures not described in this table.

^c Nonreduction rule waiver: the proposal would allow any state that had legislatively lowered its weekly UC benefit calculation before date listed, to not be in violation of the "nonreduction" rule required by the federal-state EUC08 agreements. P.L. 110-252, as amended by P.L. 111-205, prohibits states from enacting legislation that would reduce UC benefit amounts through changes to benefit calculation through December 2013. For details, see the section "Impact of Federal "Nonreduction" Rule on State UC Laws." d. The legislative text of the "millionaires" proposal in S. 2149 provides a technical correction to similar language in S. 2148. The language in S. 2149 clarifies that no federal funds may be used to administer this proposal; however, federal funds may be used elsewhere in the administration of EUC08.

In addition to the two-year extension of federal UI provisions discussed in the previous section, Title III ("Assistance for the Unemployed and Pathways Back to Work") of H.R. 2821 includes several provisions relating to unemployment insurance.

Reemployment NOW Program and Funding Opportunities

H.R. 2821 would establish a "Reemployment NOW" program with $4 billion in federal appropriations. These funds would be allotted to the states based on a two-part formula: (1) two-thirds would be distributed to the states based upon the state share of the U.S. total number of unemployed persons and (2) one-third would be distributed to the states based on the state share of the long-term unemployed (measured as unemployment spells of at least 27 weeks). Up to 1% of the funds would be available for program administration and evaluation. To receive a Reemployment NOW allotment, a state would have to submit a plan to the U.S. DOL describing the activities it would perform to reemploy eligible individuals, among other requirements (such as performance measures).

Reemployment NOW funds would be available for several allowable programs uses:³⁵

• The "Bridge to Work" program, which would allow individuals to continue to receive EUC08 benefits as wages for work performed in a short-term work experience placement.

• Wage insurance, which would authorize states to provide an income supplement to EUC08 claimants who secure reemployment at a lower wage than their separated employment.

• Enhanced reemployment services, which would allow states to use funds to provide EUC08 claimants and individuals who have exhausted all entitlements to EUC08 benefits with reemployment services that are more intensive than any reemployment services provided by the states previously (for instance, one-on-one assessments, counseling, or case management).

• Start-up of Self-Employment Assistance (SEA) state programs, which would authorize states to use funds for any administrative costs associated with the start-up of SEA agreements.

• Additional innovative programs, which would allow states to use funds for programs other than the programs described above. These programs would be required to facilitate the reemployment of EUC08 claimants, among other requirements.

H.R. 2821 would provide temporary 100% federal financing for up three years and six months after enactment for short-time compensation (STC) benefits in states with existing STC programs. States without existing STC programs would be allowed to enter into an agreement with the U.S. DOL for up to two years and three months after enactment of and receive federal reimbursement for administrative expenses, as well as temporary federal financing of 50% of STC payments to individuals, with employers paying the other 50% of STC costs. If a state enters into an agreement with the U.S. Secretary of Labor and then subsequently enacts a law providing for STC, that state would then be eligible to receive 100% of federal financing.

H.R. 2821 would also award grants of up to $700 million total to eligible states, with one-third of each state's grant available for implementation and improved administration purposes and two-thirds of each state's grant available for program promotion and enrollment of employers. This proposal would also provide $1.5 million for the U.S. DOL to submit a report to Congress and the President, within four years of enactment, on the implementation of this provision.

Long-Term Unemployed Work Opportunity Credits

H.R. 2821 would add a targeted group for purposes of the Work Opportunity Tax Credit (WOTC) for individuals who have been unemployed for six months or more during the one-year period prior to being hired. For those long-term unemployed who are hired and remain on a firm's payroll at least 400 hours, an employer would be able to claim a non-refundable income tax credit of 40% of the first $10,000 in wages paid during the worker's first year of employment. For eligible hires who remain employed for 120 hours to 399 hours, the credit rate would be 25%. Under certain circumstances, tax-exempt employers may claim the credit for hiring long-term unemployed individuals.

Exempting UI Benefits from the Sequester

H.R. 2177, the Unemployment Restoration Act, would make both EB and EUC08 exempt from sequestration. This exemption would be retroactive and would continue through FY2021. Any reduction of UI payments that occurred because of the sequester order would be paid back retroactively.

Integrity Proposals

H.R. 3205, the Promoting Adoption and Legal Guardianship for Children in Foster Care Act; S. 1870, the Supporting At-Risk Children Act; and S. 1876 also include proposals similar to the UI integrity provision enacted via P.L. 113-67. The proposals in H.R. 3205, S. 1870, and S. 1876 would also require states (after two years since the state unemployment benefit overpayment occurred) to recover any remaining state overpayments through reduced federal income tax refunds.

H.R. 2826, the Permanently Ending Receipt by Prisoners Act, would require states to use the PUPS data compiled by the Social Security Administration. States would use PUPS to confirm that an individual is not confined in a jail, prison, or other penal institution or correctional facility.

Any individual who is incarcerated would not be eligible for regular UC benefits because the individual would not be available for work.

H.R. 3447, the Furloughed Federal Employee Double Dip Elimination Act, would clarify that if a federal employee were to receive back pay for a period during which he or she had been furloughed due to a lapse in federal appropriations, the federal employee would have to repay any unemployment compensation for that period.

Concurrent Receipt of Social Security Disability Insurance (SSDI) and UI Benefits³⁶

H.R. 1502, the Social Security Disability Insurance and Unemployment Benefits Double Dip Elimination Act, would require that for any month that an individual is entitled to UC, EB, EUC08 or Trade Adjustment Assistance (TAA), he or she shall be deemed to have engaged in substantial gainful activity (SGA) and so be disqualified from receiving Social Security Disability Insurance (SSDI) benefits after a certain period has elapsed. H.R. 3885, the GROWTH Act, has a similar provision among its many proposals.

S. 1099, the Reducing Overlapping Payments Act, would require that for any month that an individual receives UC, no SSDI benefits would be paid.

S.Amdt. 2631, among its many provisions, would require that any UI benefit paid to an individual during a month offset any SSDI payment for that month.

Among many other provisions, S. 1931, the Responsible Unemployment Compensation Extension Act of 2014, and S. 2097, the Responsible Unemployment Compensation Extension Act of 2014, would both require UI payments to offset SSDI payments except if based upon employment while participating in the Ticket to Work and Self-Sufficiency Program.³⁷

Income Restrictions ("Millionaires")

Four proposals in the 113^th Congress would prohibit any individual reporting more than $1 million in adjusted gross income (AGI) in the preceding year from receiving federal unemployment compensation, including EB and EUC08 payments:³⁸

• S. 18 (Section 401);

• H.R. 2448;

• S.Amdt. 2714 (Section 7); and

• S. 2097 (Section 9).

• S. 2148 (Section 7) and

• S. 2149 (Section 7).

H.R. 51, the Hire Just One Act of 2013, would create an employment assistance voucher program and would allow states to use UC funds to pay for the vouchers. Instead of paying UC directly to the unemployed worker, if an eligible individual is issued an employment assistance voucher and is hired by a participating employer, the employer would receive a subsidy from the state for the wages paid to the employee. The individual must have been unemployed for at least six months and would otherwise be eligible for UC, EB, or EUC08 and must have been profiled as likely to exhaust UC benefits.

H.R. 3864, the Flexibility to Promote Reemployment Act, would make a number of changes to the state UC demonstration projects created by the Middle Class Tax Relief and Job Creation Act of 2012 (P.L. 112-96).⁴⁰ For instance, H.R. 3864 would expand the existing authority for state UC demonstration projects by authorizing 10 states per year to conduct approved demonstration projects (the current authority is only for 10 states total) and extending the time period that state demonstration projects may be approved by U.S. DOL by two years until December 31, 2017. H.R. 3864 would also revise state UC demonstration project requirements, including removing a requirement that any direct disbursements paid to employers for hiring UC claimants not exceed an individual's UC weekly benefit amount and requiring that U.S. DOL approve state applications for UC demonstration projects based on the order of receipt. Additionally, H.R. 3864 would transfer the responsibility for state UC demonstration project impact evaluation from states, as under current law, to U.S. DOL and require a specific procedure for termination of state UC demonstration project by U.S. DOL.

Job Training/Education

H.R. 1530, the Opportunity KNOCKs Act, would require that states allow UC beneficiaries to participate in a Workforce Investment Act (WIA) authorized job training program and remain eligible for benefits. If the UC beneficiary has been profiled to exhaust regular benefits the individual may be enrolled in any coursework necessary to attain a recognized postsecondary credential.

S. 2097 would require that EUC08 claimants undergo an assessment for the cause of continued unemployment and to allow states the option to require that a EUC08 claimant participate in job training program or community service if job training is not appropriate.

S. 2148 would change the timing of REAs for EUC08 claimants so that REAs and employment services would available, at the minimum, when an individual enters tier I of EUC08 as well as again when the individual enters tier III of EUC08, if applicable.

Drug Testing⁴¹

H.R. 1172 would create a new federal requirement that individuals be deemed ineligible for UC benefits based on previous employment from which they were separated due to an employment-related drug or alcohol offense. The bill would deny benefits to anyone who (1) is discharged from employment for alcohol/drug use; (2) is in possession of controlled substance at place of employment; (3) refuses drug testing by employer; or (4) tests positive on employer drug test for illegal or controlled substances. This proposal would require states to amend their state UC laws.

H.R. 1277, the Accountability in Unemployment Act of 2013, would create a new federal requirement for states to drug test all UC claimants as a condition of benefit eligibility. If an individual tests positive for certain controlled substances (in the absence of a valid prescription or as otherwise authorized under a state's laws), he or she would be required to retake a drug test after a 30-day period and test negative in order to be eligible for UC benefits.

H.R. 3454, the Ensuring Quality in the Unemployment Insurance Program act, would require states to assess each UC applicant for substance abuse for each benefit year. The screening instrument would be approved by the Director of the National Institutes of Health and designed to determine whether an individual has a high risk of substance abuse. If the applicant is determined to be "high risk," the applicant would have to test negative for controlled substances within one week after the results of such assessment.

Aid for Hurricane Sandy States

S. 803, Superstorm Sandy Unemployment Relief Act of 2013, would have allowed 13 additional weeks of Disaster Unemployment Assistance (DUA) for unemployment as a result of the disaster declaration made for Hurricane Sandy after October 20, 2012, to make such assistance available for 39 weeks after the date of the declaration (currently limited to 26 weeks). In addition, the bill would have reimbursed states 100% of the amount UC paid under state law to affected individuals in each affected state or any area within it. Payments would have been available until July 28, 2013.

Rehiring Unemployment Insurance Beneficiaries and Exhaustees

Several proposals have attempted to target the rehiring of workers who have exhausted unemployment benefits. In addition to the measures described above in the "Additional Unemployment Insurance Provisions in the American Jobs Act of 2013 (H.R. 2821)" section, H.R. 188, H.R. 1617, and H.R. 2889 give priority to those workers who have exhausted regular UC benefits.

H.R. 3453 would extend the priority treatment tax treatment in P.L. 112-56 (Work Opportunity Tax Credits, WOTC, now expired) for employers who hire veterans who have exhausted unemployment benefits or are otherwise long-term unemployed for an additional two years, until March 31, 2016.

H.R. 3726, the Long-Term Unemployed Hiring Incentive Act, would similarly extend priority to all workers who had exhausted regular unemployment benefits for three additional years, until December 31, 2016.

H.R. 3781, the American Unemployed Worker Investment Act of 2013, would similarly extend priority to any worker who is receiving any state or federal unemployment benefit at the time of hire for the two years following enactment of the bill.

H.R. 4033, the American Worker Mobility Act of 2014, would provide a UC exhaustee with up to $10,000 in relocation expenses to begin a new job or to move to an area where the unemployment rate is at least two percentage points lower than the worker's current location.

Domestic Violence

H.R. 1229, the Security and Financial Empowerment Act, would require states to consider an individual who quit a job as a result of domestic or sexual violence to be eligible for UC benefits.

Author Contact Information

² Arkansas and Illinois provide up to 25 weeks; Michigan, Missouri, and South Carolina provide up to 20 weeks; and the maximum duration of UC in Florida, Georgia, and North Carolina is variable, based on the state unemployment rates. For more details on these states with less than 26 weeks of UC available, see CRS Report R41859, Unemployment Insurance: Consequences of Changes in State Unemployment Compensation Laws, by Katelin P. Isaacs. In addition, the maximum UC duration is 28 weeks in Montana and 30 weeks in Massachusetts. In conjunction with federal EB benefits, however, UC duration is capped at 26 weeks.

³ For more information on the UCX program, see CRS Report RS22440, Unemployment Compensation (Insurance) and Military Service, by Julie M. Whittaker.

⁴ The District of Columbia, Puerto Rico, and the Virgin Islands are considered to be states in UC law.

⁵ FUTA imposes a 6.0% gross tax rate on the first $7,000 paid annually by employers to each employee. Employers in states with programs approved by the federal government and with no delinquent federal loans may credit 5.4 percentage points against the 6.0% tax rate, making the minimum net federal unemployment tax rate 0.6%. See CRS Report RS22954, The Unemployment Trust Fund (UTF): State Insolvency and Federal Loans to States, by Julie M. Whittaker, for details on how delinquent loans affect the net FUTA tax.

⁶ The other programs became effective in 1958, 1961, 1972, 1975, 1982, 1991, and 2002. For more details on these programs, see CRS Report RL34340, Extending Unemployment Compensation Benefits During Recessions, by Julie M. Whittaker and Katelin P. Isaacs.

⁷ For more details, see the section in this report on "Impact of Federal "Nonreduction" Rule on State UC Laws" or CRS Report R41859, Unemployment Insurance: Consequences of Changes in State Unemployment Compensation Laws, by Katelin P. Isaacs.

⁸ The 11 amendments are P.L. 110-449, P.L. 111-5, P.L. 111-92, P.L. 111-118, P.L. 111-144, P.L. 111-157, P.L. 111-205, P.L. 111-312, P.L. 112-78, P.L. 112-96, and P.L. 112-240. Summary details on all of these laws are provided in Table 1 of CRS Report R42444, Emergency Unemployment Compensation (EUC08): Current Status of Benefits, by Julie M. Whittaker and Katelin P. Isaacs.

⁹ See CRS Report R41662, Unemployment Insurance: Legislative Issues in the 112^th Congress, for details on how these changes were implemented.

¹⁰ The TUR is the ratio of unemployed workers to all workers (employed and unemployed) in the labor market. The TUR is essentially a weekly version of the unemployment rate published by the Bureau of Labor Statistics (BLS) and based on data from the BLS' monthly Current Population Survey.

¹¹ The IUR is the ratio of UC claimants divided by individuals in UC-covered jobs. The IUR is substantially different from the TUR because it excludes several important groups: self-employed workers, unpaid family workers, workers in certain not-for-profit organizations, and several other, primarily seasonal, categories of workers. In addition to those unemployed workers whose last jobs were in the excluded employment, the insured unemployed rate excludes the following: those who have exhausted their UC benefits (even if they receive EB or EUC08 benefits); new entrants or reentrants to the labor force; disqualified workers whose unemployment is considered to have resulted from their own actions rather than from economic conditions; and eligible unemployed persons who do not file for benefits.

¹² The current "nonreduction" rule was put into place when P.L. 111-205 amended P.L. 110-252. There was a similar, but programmatically distinct "nonreduction" rule in P.L. 111-5, as amended, which prevented states from actively changing the method of calculation of the UC weekly benefit amount to pay UC benefit amounts less than what would have been paid under state law prior to December 31, 2008. No states acted to decrease UC benefit amounts between December 31, 2008, and June 2, 2010, when the federal authorization for this earlier "nonreduction" rule expired.

¹³ An exception was made in P.L. 112-96 that maintained the "nonreduction rule" for the calculation of the regular UC benefit amount, except in the case of state legislation that was enacted before March 1, 2012, but did not take effect before January 1, 2012. The "nonreduction" rule prohibits states from decreasing average weekly benefit amounts without invalidating their EUC08 federal-state agreements.

¹⁴ The TUR is the ratio of unemployed workers to all workers (employed and unemployed) in the labor market. The TUR is essentially a weekly version of the unemployment rate published by the Bureau of Labor Statistics (BLS) and based on data from the BLS' monthly Current Population Survey. The IUR is the ratio of UC claimants divided by individuals in UC-covered jobs. The IUR is substantially different from the TUR because it excludes several important groups: self-employed workers, unpaid family workers, workers in certain not-for-profit organizations, and several other, primarily seasonal, categories of workers. In addition to those unemployed workers whose last jobs were in the excluded employment, the insured unemployed rate excludes the following: those who have exhausted their UC benefits (even if they receive EB or EUC08 benefits); new entrants or reentrants to the labor force; disqualified workers whose unemployment is considered to have resulted from their own actions rather than from economic conditions; and eligible unemployed persons who do not file for benefits.

¹⁵ EB benefits on interstate claims are limited to two extra weeks unless both the agent state (e.g., Texas) and liable state (e.g., Louisiana) are in an EB period.

¹⁶ Please see CRS Report R42050, Budget "Sequestration" and Selected Program Exemptions and Special Rules, coordinated by Karen Spar, for a detailed discussion of the sequester order.

¹⁷ See pages 5 and 6 of UIPL 13-13, http://wdr.doleta.gov/directives/attach/UIPL/UIPL_13_013_Acc.pdf.

¹⁸ National Association of State Workforce Agencies, NASWA Survey Shows Majority of States Have Implemented EUC08 Sequestration Cuts, June 14, 2013, http://www.naswa.org/assets/utilities/serve.cfm?gid=073c1905-b9cf-4e89-b09e-ed1ce21fb5ac.

¹⁹ Employment and Training Administration, U.S. Department of Labor, Unemployment Insurance Program Letter (UIPL), No. 30-13, Washington, DC, September 27, 2013, http://wdr.doleta.gov/directives/attach/UIPL/UIPL_30_13_Acc.pdf.

²⁰ See http://www.workforcesecurity.doleta.gov/unemploy/trigger/2014/trig_031614.html.

²¹ Bureau of Public Debt, U.S. Treasury Department, Title XII Advance Activities Schedule, Washington, DC, Accessed on December 5, 2013, http://www.treasurydirect.gov/govt/reports/tfmp/tfmp_advactivitiessched.htm.

²² See CRS Report RS22954, The Unemployment Trust Fund (UTF): State Insolvency and Federal Loans to States, by Julie M. Whittaker, for more information on the interest calculation and the net FUTA increases in some states.

²³ Accessible at http://www.dol.gov/dol/budget/2015/PDF/CBJ-2015-V1-10.pdf.

²⁴ Under this proposal, REA funding would be $158 million for FY2015, which would be an increase of approximately $78 million from the previous fiscal year.

²⁵ For more information on the now-expired, temporary extension of extended railroad UI benefits, see CRS Report RS22350, Railroad Retirement Board: Retirement, Survivor, Disability, Unemployment, and Sickness Benefits, by Scott D. Szymendera.

²⁶ For additional information on this type of proposal, see the section in this report on "Concurrent Receipt of Social Security Disability Insurance (SSDI) and UI Benefits."

²⁷ The legislative text of the "millionaires" proposal in S. 2149 provides a technical correction to the text of S. 2148. S. 2149 clarifies that no federal funds may be used to administer this proposal; however, federal funds may be used elsewhere in the administration of EUC08.

²⁸ For more information on the DB pension changes under MAP-21 (P.L. 112-141), see CRS Report 95-118, Pension Benefit Guaranty Corporation (PBGC) and Defined Benefit Pension Plan Funding Issues, by John J. Topoleski.

²⁹ For more information on PBGC premiums, see CRS Report 95-118, Pension Benefit Guaranty Corporation (PBGC) and Defined Benefit Pension Plan Funding Issues, by John J. Topoleski.

³⁰ More information about NASWA is available at http://www.naswa.org/about/index.cfm?action=home.

³¹ National Association of State Workforce Agencies, NASWA Letter to Senate Majority and Minority Leaders on Emergency Unemployment Compensation Extension Act of 2014, March 19, 2013, http://www.naswa.org/assets/utilities/serve.cfm?gid=56E2EB2D-5A38-4EF1-9835-9C3CCEA39B53.

³² Ibid, p. 1.

³³ Letter from Thomas Perez, U.S. Department of Labor Secretary, to Senate Majority Leader Reid and Senate Minority Leader McConnell, March 21, 2014, http://www.scribd.com/doc/213774550/PerezLetter.

³⁴ Ibid, p. 1.

³⁵ For additional details on these Reemployment NOW allowable programs uses, see the summary of UI provisions in the President's American Jobs Act of 2011/S. 1549/H.R. 12/S. 1660 in the 112^th Congress, which is available in CRS Report R41662, Unemployment Insurance: Legislative Issues in the 112^th Congress, by Julie M. Whittaker and Katelin P. Isaacs, and CRS Report R42033, American Jobs Act: Provisions for Hiring Targeted Groups, Preventing Layoffs, and for Unemployed and Low-Income Workers, coordinated by Karen Spar. These proposals in the 112^th Congress contain UI provisions similar to H.R. 2821.

³⁶ For an overview of SSDI benefits, see CRS Report RL32279, Primer on Disability Benefits: Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI), by Umar Moulta-Ali.

Under certain circumstances, an individual may claim Social Security Disability Insurance (SSDI) payments at the same time as receiving a UC benefit. An individual may apply for SSDI after employment loss. The inability to find employment is one of the many inputs into the SSDI eligibility determination. An individual with the potential for concurrent receipt of SSDI and UC may be excluded from receiving a UI benefit in certain states based upon whether a person receiving a disability payment would have met the criteria of "able" in the able, available, and searching for work criteria embedded in various ways in states' laws. The SSDI program considers UC benefits to be non-work related income and not subject to offset.

In addition, differences in program rules and definitions allow individuals in certain circumstances to receive overlapping SSDI and UC benefits without violating eligibility requirements. SSDI's definition of a disability involves work that does not rise to the level of substantial gainful activity (SGA). For 2014, a non-blind person who is earning more than a $1,070 a month is ordinarily considered to be engaging in SGA. In contrast, a state's monetary determination of UC substantial work history (and thus eligibility for UC benefits) may have a base-period earnings requirement that is effectively a lower average monthly threshold. As a result, some individuals may have a disability under federal law but have an earnings history that meets state UC earnings thresholds under state law; and, thus, are eligible to receive SSDI and UI at the same time.

The Government Accountability Office (GAO) estimated that approximately 117,000 individuals in 2010 may have received concurrent SSDI and UI benefit payments. These individuals represented less than 1percent of the total beneficiaries of both programs. Because of the higher volume of individuals receiving extended unemployment benefits (EB and the temporary, now-expired EUC08) in 2010, the number of individuals receiving concurrent UI and SSDI benefits is likely to be lower in 2014. See U.S. Government Accountability Office, Income Security: Overlapping Disability and Unemployment Benefits Should be Evaluated for Potential Savings, INCOME SECURITY, July 2012, http://www.gao.gov/assets/600/593203.pdf.

³⁷ See CRS Report R41934, Ticket to Work and Self-Sufficiency Program: Overview and Current Issues, by William R. Morton.

³⁸ See CRS Report R42643, Receipt of Unemployment Insurance by Higher-Income Unemployed Workers ("Millionaires"), by Katelin P. Isaacs and Julie M. Whittaker, for implications of imposing income limitations on UC benefit receipt.

³⁹ The legislative text of the "millionaires" proposal in S. 2149 provides a technical correction to S. 2148. S. 2149 clarifies that the prohibition on use of federal funds only applies in the administration of the specific "millionaires" proposal (rather than administration of EUC08 as a whole).

⁴⁰ For more details on these state UC demonstration projects, as currently authorized under 42 U.S.C. § 505, see CRS Report R41662, Unemployment Insurance: Legislative Issues in the 112^th Congress, by Julie M. Whittaker and Katelin P. Isaacs.

⁴¹ See CRS Report R42326, Constitutional Analysis of Suspicionless Drug Testing Requirements for the Receipt of Governmental Benefits, by David H. Carpenter, for information on what types of drug testing may have constitutionally imposed restrictions.