To provide for a program of temporary enhanced unemployment benefits.

Summary: Economic Security Act of 2003 - Provides for a program of temporary enhanced unemployment compensation which may add the greater of 15 percent or $25 to the amount of weekly regular compensation (including dependents' allowances) for which an individual is eligible under the Federal-State Extended Unemployment Compensation Act of 1970. Modifies eligibility requirements for regular compensation, where applicable for purposes of benefits under this Act, to: (1) set an alternative base period ending at the close of the most recently completed calendar quarter; and (2) allow individuals to seek less than full-time work or not accept full-time work.Sets forth program requirements for Federal-State agreements, formulas for determining weekly benefits, nonreduction and coordination rules, payments to States, and financing.Applies program agreements to weeks of unemployment: (1) beginning after the date on which such an agreement is entered into; and (2) ending before July 1, 2004. Makes a modification relating to alternative base periods applicable only to initial claims filed after September 11, 2001. Makes a modification relating to part-time employment and increased benefits applicable to weeks of unemployment in such agreement period, regardless of the date on which an individual's claim for benefits is filed.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Economic Security Act of 2003''.

SEC. 2. FEDERAL-STATE AGREEMENTS.

    (a) In General.--Any State which desires to do so may enter into 
and participate in an agreement under this Act with the Secretary of 
Labor (hereinafter in this Act referred to as the ``Secretary''). Any 
State which is a party to an agreement under this Act may, upon 
providing 30 days' written notice to the Secretary, terminate such 
agreement.
    (b) Provisions of Agreement.--
            (1) In general.--Any agreement under subsection (a) shall 
        provide that the State agency of the State will make payments 
        of regular compensation to individuals in amounts and to the 
        extent that they would be determined if the State law were 
        applied with the modifications described in paragraph (2).
            (2) Modifications described.--The modifications described 
        in this paragraph are as follows:
                    (A) In the case of an individual who is not 
                eligible for regular compensation under the State law 
                because of the use of a definition of base period that 
                does not count wages earned in the most recently 
                completed calendar quarter, then eligibility for 
                compensation under this title shall be determined by 
                applying a base period ending at the close of the most 
                recently completed calendar quarter.
                    (B) In the case of an individual who is not 
                eligible for regular compensation under the State law 
                because such individual does not meet requirements 
                relating to availability for work, active search for 
                work, or refusal to accept work, because such 
                individual is seeking, or is available for, less than 
                full-time work, then compensation under this title 
                shall not be denied by such State to an otherwise 
                eligible individual who seeks less than full-time work 
                or fails to accept full-time work.
                    (C) The amount of regular compensation (including 
                dependents' allowances) payable for any week shall be 
                equal to the amount determined under the State law 
                (before the application of this subparagraph), plus an 
                additional--
                            (i) 15 percent; or
                            (ii) $25,
                whichever is greater.
    (c) Nonreduction Rule.--Under the agreement, subsection (b)(2)(C) 
shall not apply (or shall cease to apply) with respect to a State upon 
a determination by the Secretary that the method governing the 
computation of regular compensation under the State law of that State 
has been modified in a way such that--
            (1) the average weekly amount of regular compensation which 
        will be payable during the period of the agreement (determined 
        disregarding the modifications described in subsection (b)(2)) 
        will be less than
            (2) the average weekly amount of regular compensation which 
        would otherwise have been payable during such period under the 
        State law, as in effect on September 11, 2001.
    (d) Coordination Rule.--The modifications described in subsection 
(b)(2) shall also apply in determining the amount of benefits payable 
under any Federal law to the extent that those benefits are determined 
by reference to regular compensation payable under the State law of the 
State involved.

SEC. 3. PAYMENTS TO STATES HAVING AGREEMENTS UNDER THIS ACT.

    (a) General Rule.--There shall be paid to each State which has 
entered into an agreement under this Act an amount equal to--
            (1) 100 percent of any regular compensation made payable to 
        individuals by such State by virtue of the modifications which 
        are described in section 2(b)(2) and deemed to be in effect 
        with respect to such State pursuant to section 2(b)(1), and
            (2) 100 percent of any regular compensation--
                    (A) which is paid to individuals by such State by 
                reason of the fact that its State law contains 
                provisions comparable to the modifications described in 
                section 2(b)(2)(A)-(B), but only
                    (B) to the extent that those amounts would, if such 
                amounts were instead payable by virtue of the State 
                law's being deemed to be so modified pursuant to 
                section 2(b)(1), have been reimbursable under paragraph 
                (1).
    (b) Determination of Amount.--Sums under subsection (a) payable to 
any State by reason of such State having an agreement under this Act 
shall be payable, either in advance or by way of reimbursement (as may 
be determined by the Secretary), in such amounts as the Secretary 
estimates the State will be entitled to receive under this Act for each 
calendar month, reduced or increased, as the case may be, by any amount 
by which the Secretary finds that the Secretary's estimates for any 
prior calendar month were greater or less than the amounts which should 
have been paid to the State. Such estimates may be made on the basis of 
such statistical, sampling, or other method as may be agreed upon by 
the Secretary and the State agency of the State involved.
    (c) Administrative Expenses, etc.--There is hereby appropriated out 
of the employment security administration account of the Unemployment 
Trust Fund (as established by section 901(a) of the Social Security 
Act) $500,000,000 to reimburse States for the costs of the 
administration of agreements under this Act (including any improvements 
in technology in connection therewith) and to provide reemployment 
services to unemployment compensation claimants in States having 
agreements under this Act. Each State's share of the amount 
appropriated by the preceding sentence shall be determined by the 
Secretary according to the factors described in section 302(a) of the 
Social Security Act and certified by the Secretary to the Secretary of 
the Treasury.

SEC. 4. FINANCING PROVISIONS.

    (a) In General.--Funds in the extended unemployment compensation 
account (as established by section 905(a) of the Social Security Act), 
and the Federal unemployment account (as established by section 904(g) 
of the Social Security Act), of the Unemployment Trust Fund shall be 
used, in accordance with subsection (b), for the making of payments 
(described in section 4(a)) to States having agreements entered into 
under this Act.
    (b) Certification.--The Secretary shall from time to time certify 
to the Secretary of the Treasury for payment to each State the sums 
described in section 4(a) which are payable to such State under this 
Act. The Secretary of the Treasury, prior to audit or settlement by the 
General Accounting Office, shall make payments to the State in 
accordance with such certification by transfers from the extended 
unemployment compensation account (or, to the extent that there are 
insufficient funds in that account, from the Federal unemployment 
account) to the account of such State in the Unemployment Trust Fund.

SEC. 5. DEFINITIONS.

    For purposes of this Act:
            (1) In general.--The terms ``compensation'', ``regular 
        compensation'', ``base period'', ``State'', ``State agency'', 
        ``State law'', and ``week'' have the respective meanings given 
        such terms under section 205 of the Federal-State Extended 
        Unemployment Compensation Act of 1970, subject to paragraph 
        (2).
            (2) State law and regular compensation.--In the case of a 
        State entering into an agreement under this Act--
                    (A) ``State law'' shall be considered to refer to 
                the State law of such State, applied in conformance 
                with the modifications described in section 2(b)(2), 
                subject to section 2(c), and
                    (B) ``regular compensation'' shall be considered to 
                refer to such compensation, determined under its State 
                law (applied in the manner described in subparagraph 
                (A)),
        except as otherwise provided or where the context clearly 
        indicates otherwise.

SEC. 6. APPLICABILITY.

    (a) In General.--An agreement entered into under this Act shall 
apply to weeks of unemployment--
            (1) beginning after the date on which such agreement is 
        entered into, and
            (2) ending before July 1, 2004.
    (b) Specific Rules.--Under such an agreement--
            (1) the modification described in section 2(b)(2)(A) 
        (relating to alternative base periods) shall not apply except 
        in the case of initial claims filed after September 11, 2001, 
        and
            (2) the modifications described in section 2(b)(2)(B)-(C) 
        (relating to part-time employment and increased benefits, 
        respectively) shall apply to weeks of unemployment (described 
        in subsection (a)), irrespective of the date on which an 
        individual's claim for benefits is filed.

SEC. 7. NO REDUCTION IN UNEMPLOYMENT COMPENSATION AS A RESULT OF 
              PENSION ROLLOVERS.

    (a) In General.--Section 3304(a) of the Internal Revenue Code of 
1986 is amended by adding at the end the following flush sentence:
``In no event shall paragraph (15) apply in the case of any rollover 
distribution which is not includable in gross income for the taxable 
year in which paid.''.
    (b) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendment made by this section shall apply to compensation paid 
        for weeks of unemployment beginning on or after the date that 
        is 60 days after the date of enactment of the Economic Security 
        Act of 2003.
            (2) Extension of effective date for state law amendment.--
        If the Secretary of Labor determines that a State requires an 
        amendment to State law for that State to meet the requirements 
        imposed under the Federal-State Extended Unemployment 
        Compensation Act of 1970 (26 U.S.C. 3304 note) by the amendment 
        made by this section, the State shall not be regarded as 
        failing to comply with the requirements of such Act solely on 
        the basis of its failure to meet these requirements before the 
        first day of the first calendar quarter beginning after the 
        close of the first regular session of the State legislature 
        that begins after the date of the enactment of this Act. For 
        purposes of the previous sentence, in the case of a State that 
        has a 2-year legislative session, each year of the session is 
        considered to be a separate regular session of the State 
        legislature.