To provide for special transfers of funds to States to promote certain improvements in State unemployment compensation laws.

Summary: Unemployment Insurance Modernization Act - Amends the Social Security Act to require the Secretary of Labor to make unemployment compensation modernization incentive payments in FY2008-FY2011 by certain transfers from the federal unemployment account to the accounts of the states in the Unemployment Trust Fund.

Prescribes a formula for determining the maximum allowable incentive payments.

Specifies requirements state law must meet for the state to qualify for such a payment.

Limits the use of transferred amounts to the payment of cash unemployment benefits to individuals (including for dependents' allowances and for unemployment compensation, exclusive of administrative expenses).

Requires the Secretary of the Treasury to reserve specified funds out of the federal unemployment account for such incentive payments.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Unemployment Insurance Modernization 
Act''.

SEC. 2. SPECIAL TRANSFERS FOR UNEMPLOYMENT COMPENSATION MODERNIZATION.

    (a) In General.--Section 903 of the Social Security Act (42 U.S.C. 
1103) is amended by adding at the end the following:

     ``Special Transfers in Fiscal Years 2009, 2010, and 2011 for 
                             Modernization

    ``(f)(1)(A) In addition to any other amounts, the Secretary of 
Labor shall provide for the making of unemployment compensation 
modernization incentive payments (hereinafter `incentive payments') to 
the accounts of the States in the Unemployment Trust Fund, by transfer 
from amounts reserved for that purpose in the Federal unemployment 
account, in accordance with succeeding provisions of this subsection.
    ``(B) The maximum incentive payment allowable under this subsection 
with respect to any State shall, as determined by the Secretary of 
Labor, be equal to the amount obtained by multiplying $7,000,000,000 by 
the same ratio as would apply under subsection (a)(2)(B) for purposes 
of determining such State's share of any excess amount (as described in 
subsection (a)(1)) that would have been subject to transfer to State 
accounts, as of October 1, 2008, under the provisions of subsection 
(a).
    ``(C) Of the maximum incentive payment determined under 
subparagraph (B) with respect to a State--
            ``(i) one-third shall be transferred to the account of such 
        State upon a certification under paragraph (4)(B) that the 
        State law of such State meets the requirements of paragraph 
        (2); and
            ``(ii) the remainder shall be transferred to the account of 
        such State upon a certification under paragraph (4)(B) that the 
        State law of such State meets the requirements of paragraph 
        (3).
    ``(2) The State law of a State meets the requirements of this 
paragraph if such State law--
            ``(A) uses a base period that includes the most recently 
        completed calendar quarter before the start of the benefit year 
        for purposes of determining eligibility for unemployment 
        compensation; or
            ``(B) provides that, in the case of an individual who would 
        not otherwise be eligible for unemployment compensation under 
        the State law because of the use of a base period that does not 
        include the most recently completed calendar quarter before the 
        start of the benefit year, eligibility shall be determined 
        using a base period that includes such calendar quarter.
    ``(3) The State law of a State meets the requirements of this 
paragraph if such State law includes provisions to carry out at least 2 
of the following subparagraphs:
            ``(A) An individual shall not be denied regular 
        unemployment compensation under any State law provisions 
        relating to availability for work, active search for work, or 
        refusal to accept work, solely because such individual is 
        seeking only part-time (and not full-time) work, except that 
        the State law provisions carrying out this subparagraph may 
        exclude an individual if a majority of the weeks of work in 
        such individual's base period do not include part-time work.
            ``(B) An individual shall not be disqualified from regular 
        unemployment compensation for separating from employment if 
        that separation is for any compelling family reason. For 
        purposes of this subparagraph, the term `compelling family 
        reason' means the following:
                    ``(i) Domestic violence, verified by such 
                reasonable and confidential documentation as the State 
                law may require, which causes the individual reasonably 
                to believe that such individual's continued employment 
                would jeopardize the safety of the individual or of any 
                member of the individual's immediate family (as defined 
                by the Secretary of Labor).
                    ``(ii) The illness or disability of a member of the 
                individual's immediate family (as defined by the 
                Secretary of Labor).
                    ``(iii) The need for the individual to accompany 
                such individual's spouse--
                            ``(I) to a place from which it is 
                        impractical for such individual to commute; and
                            ``(II) due to a change in location of the 
                        spouse's employment.
            ``(C) Weekly unemployment compensation is payable under 
        this subparagraph to any individual who is unemployed (as 
        determined under the State unemployment compensation law), has 
        exhausted all rights to regular unemployment compensation under 
        the State law, and is enrolled and making satisfactory progress 
        in a State-approved training program or in a job training 
        program authorized under the Workforce Investment Act of 1998. 
        Such programs shall prepare individuals who have been separated 
        from a declining occupation, or who have been involuntarily and 
        indefinitely separated from employment as a result of a 
        permanent reduction of operations at the individual's place of 
        employment, for entry into a high-demand occupation. The amount 
        of unemployment compensation payable under this subparagraph to 
        an individual for a week of unemployment shall be equal to the 
        individual's average weekly benefit amount (including 
        dependents' allowances) for the most recent benefit year, and 
        the total amount of unemployment compensation payable under 
        this subparagraph to any individual shall be equal to at least 
        26 times the individual's average weekly benefit amount 
        (including dependents' allowances) for the most recent benefit 
        year.
            ``(D) Dependents' allowances are provided, in the case of 
        any individual who is entitled to receive regular unemployment 
        compensation and who has any dependents (as defined by State 
        law), in an amount equal to at least $15 per dependent per 
        week, subject to any aggregate limitation on such allowances 
        which the State law may establish (but which aggregate 
        limitation on the total allowance for dependents paid to an 
        individual may not be less than $50 for each week of 
        unemployment or 50 percent of the individual's weekly benefit 
        amount for the benefit year, whichever is less).
    ``(4)(A) Any State seeking an incentive payment under this 
subsection shall submit an application therefor at such time, in such 
manner, and complete with such information as the Secretary of Labor 
may within 60 days after the date of the enactment of this subsection 
prescribe (whether by regulation or otherwise), including information 
relating to compliance with the requirements of paragraph (2) or (3), 
as well as how the State intends to use the incentive payment to 
improve or strengthen the State's unemployment compensation program. 
The Secretary of Labor shall, within 30 days after receiving a complete 
application, notify the State agency of the State of the Secretary's 
findings with respect to the requirements of paragraph (2) or (3) (or 
both).
    ``(B)(i) If the Secretary of Labor finds that the State law 
provisions (disregarding any State law provisions which are not then 
currently in effect as permanent law or which are subject to 
discontinuation) meet the requirements of paragraph (2) or (3), as the 
case may be, the Secretary of Labor shall thereupon make a 
certification to that effect to the Secretary of the Treasury, together 
with a certification as to the amount of the incentive payment to be 
transferred to the State account pursuant to that finding. The 
Secretary of the Treasury shall make the appropriate transfer within 7 
days after receiving such certification.
    ``(ii) For purposes of clause (i), State law provisions which are 
to take effect within 12 months after the date of their certification 
under this subparagraph shall be considered to be in effect as of the 
date of such certification.
    ``(C)(i) No certification of compliance with the requirements of 
paragraph (2) or (3) may be made with respect to any State whose State 
law is not otherwise eligible for certification under section 303 or 
approvable under section 3304 of the Federal Unemployment Tax Act.
    ``(ii) No certification of compliance with the requirements of 
paragraph (3) may be made with respect to any State whose State law is 
not in compliance with the requirements of paragraph (2).
    ``(iii) No application under subparagraph (A) may be considered if 
submitted before the date of the enactment of this subsection or after 
the latest date necessary (as specified by the Secretary of Labor) to 
ensure that all incentive payments under this subsection are made 
before October 1, 2011.
    ``(5)(A) Except as provided in subparagraph (B), any amount 
transferred to the account of a State under this subsection may be used 
by such State only in the payment of cash benefits to individuals with 
respect to their unemployment (including for dependents' allowances and 
for unemployment compensation under paragraph (3)(C)), exclusive of 
expenses of administration.
    ``(B) A State may, subject to the same conditions as set forth in 
subsection (c)(2) (excluding subparagraph (B) thereof, and deeming the 
reference to `subsections (a) and (b)' in subparagraph (D) thereof to 
include this subsection), use any amount transferred to the account of 
such State under this subsection for the administration of its 
unemployment compensation law and public employment offices.
    ``(6) Out of any money in the Federal unemployment account not 
otherwise appropriated, the Secretary of the Treasury shall reserve 
$7,000,000,000 for incentive payments under this subsection. Any amount 
so reserved shall not be taken into account for purposes of any 
determination under section 902, 910, or 1203 of the amount in the 
Federal unemployment account as of any given time. Any amount so 
reserved for which the Secretary of the Treasury has not received a 
certification under paragraph (4)(B) by the deadline described in 
paragraph (4)(C)(iii) shall, upon the close of fiscal year 2011, become 
unrestricted as to use as part of the Federal unemployment account.
    ``(7) For purposes of this subsection, the terms `benefit year', 
`base period', and `week' have the respective meanings given such terms 
under section 205 of the Federal-State Extended Unemployment 
Compensation Act of 1970 (26 U.S.C. 3304 note).

       ``Special Transfer in Fiscal Year 2009 for Administration

    ``(g)(1) In addition to any other amounts, the Secretary of the 
Treasury shall transfer from the employment security administration 
account to the account of each State in the Unemployment Trust Fund, 
within 30 days after the date of the enactment of this subsection, the 
amount determined with respect to such State under paragraph (2).
    ``(2) The amount to be transferred under this subsection to a State 
account shall (as determined by the Secretary of Labor and certified by 
such Secretary to the Secretary of the Treasury) be equal to the amount 
obtained by multiplying $500,000,000 by the same ratio as determined 
under subsection (f)(1)(B) with respect to such State.
    ``(3) Any amount transferred to the account of a State as a result 
of the enactment of this subsection may be used by the State agency of 
such State only in the payment of expenses incurred by it for--
            ``(A) the administration of the provisions of its State law 
        carrying out the purposes of subsection (f)(2) or any 
        subparagraph of subsection (f)(3);
            ``(B) improved outreach to individuals who might be 
        eligible for regular unemployment compensation by virtue of any 
        provisions of the State law which are described in subparagraph 
        (A);
            ``(C) the improvement of unemployment benefit and 
        unemployment tax operations, including responding to increased 
        demand for unemployment compensation; and
            ``(D) staff-assisted reemployment services for unemployment 
        compensation claimants.''.
    (b) Regulations.--The Secretary of Labor may prescribe any 
regulations, operating instructions, or other guidance necessary to 
carry out the amendment made by subsection (a).