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[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1802 Introduced in House (IH)]

108th CONGRESS
  1st Session
                                H. R. 1802

 To amend the Federal Unemployment Tax Act and the Social Security Act 
to modernize the unemployment insurance system, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             April 11, 2003

 Mr. McDermott (for himself, Mr. Sanders, Ms. Norton, Mr. Nadler, Ms. 
  Carson of Indiana, Mr. Evans, Mr. Owens, Ms. Solis, Mr. Stark, Mr. 
    Kucinich, Mr. Lantos, Ms. Lee, and Mr. Frank of Massachusetts) 
 introduced the following bill; which was referred to the Committee on 
                             Ways and Means

_______________________________________________________________________

                                 A BILL

 
 To amend the Federal Unemployment Tax Act and the Social Security Act 
to modernize the unemployment insurance system, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; ETC.

    (a) Short Title.--This Act may be cited as the ``Keep America 
Working Act of 2003''.
    (b) Table of Contents.--

Sec. 1. Short title; etc.
    TITLE I--RESTORING INSURANCE ELIGIBILITY IN AN EVOLVING ECONOMY

Sec. 101. Expansion of circumstances under which unemployment 
                            compensation is payable.
Sec. 102. Expansion of unemployment tax wage base.
Sec. 103. Determinations of whether individuals are employees for 
                            purposes of employment taxes.
Sec. 104. Repeal of determination of employer's liability for certain 
                            employment taxes.
Sec. 105. Effective dates.
      TITLE II--ENCOURAGING JOB MOBILITY AND ADEQUATE COMPENSATION

Sec. 201. Separation from work due to a move relating to spouse's or 
                            domestic partner's new principal place of 
                            work not a bar to receiving unemployment 
                            compensation; replacement ratios for lower 
                            paid workers who become unemployed.
        TITLE III--ENSURING SOLVENCY AND PREPARING FOR RECESSION

Sec. 301. Increase and decrease in earnings credited to State accounts 
                            when States meet or fail to meet funding 
                            goals.
Sec. 302. Amendments to trigger provisions of extended benefit program.
Sec. 303. Eliminate special Federal eligibility requirements for 
                            extended compensation.
 TITLE IV--IMPROVING ADMINISTRATIVE FUNDING FOR THE UNEMPLOYMENT SYSTEM

Sec. 401. Funding for administration of State unemployment 
                            compensation, State systems of public 
                            employment offices and veterans employment 
                            service programs.

    TITLE I--RESTORING INSURANCE ELIGIBILITY IN AN EVOLVING ECONOMY

SEC. 101. EXPANSION OF CIRCUMSTANCES UNDER WHICH UNEMPLOYMENT 
              COMPENSATION IS PAYABLE.

    (a) In General.--Subsection (a) of section 3304 of the Internal 
Revenue Code of 1986 (relating to approval of State unemployment 
compensation laws) is amended by striking ``and'' at the end of 
paragraph (18), by redesignating paragraph (19) as paragraph (29), and 
by inserting after paragraph (18) the following new paragraphs:
            ``(19) compensation shall not be denied to an individual 
        solely because such individual is seeking only part-time work, 
        if--
                    ``(A) such individual otherwise qualifies for 
                unemployment compensation, based wholly or mostly on 
                part-time work; and
                    ``(B) the part-time work sought by such individual 
                generally requires at least 20 hours per week;
            ``(20) compensation is payable to an eligible individual in 
        an amount which is not less than the amount determined by 
        applying a base period ending at the close of the calendar 
        quarter most recently completed before the date of the 
        individual's application for benefits;
            ``(21) except as provided in paragraphs (6) and (13), 
        compensation shall not be denied in such State to any otherwise 
        eligible individual solely on the basis that such individual is 
        a seasonal worker;
            ``(22)(A) if any individual leaves employment because of 
        sexual harassment, for purposes of determining such 
        individual's eligibility for compensation for any subsequent 
        week for which such individual meets the State law requirements 
        relating to availability for work and active search for work, 
        such individual shall be treated as having left such employment 
        for good cause, and
            ``(B) for purposes of subparagraph (A), `sexual harassment' 
        shall be considered to have been shown upon the demonstration 
        of facts sufficient to establish a prima facie case that the 
        individual involved was victimized by sexual harassment in 
        violation of title VII of the Civil Rights Act of 1964;
            ``(23) if any individual leaves employment because of loss 
        of adequate child care for a dependent child under the age of 
        13, for purposes of determining such individual's eligibility 
        for compensation for any subsequent week for which such 
        individual meets the State law requirements relating to 
        availability for work and active search for work--
                    ``(A) such individual shall be treated as having 
                left such employment for good cause, and
                    ``(B) any failure to return to such employment or 
                to otherwise meet such State law requirements, while 
                the lack of such child care continues, shall be 
                disregarded;
            ``(24) if any individual leaves employment because the 
        individual is a victim of domestic violence, for purposes of 
        determining such individual's eligibility for compensation for 
        any subsequent week for which such individual meets the State 
        law requirements relating to availability for work and active 
        search for work--
                    ``(A) such individual shall be treated as having 
                left such employment for good cause, and
                    ``(B) any failure to return to such employment or 
                to otherwise meet such State law requirements while the 
                risk of further domestic violence is significant shall 
                be disregarded;
            ``(25) the State law provides for the distribution to 
        unemployed individuals information packets explaining 
        unemployment insurance eligibility conditions in that State;
            ``(26) the State periodically reviews and adopts the best 
        practices of other States in addressing contract and temporary 
        worker issues, including--
                    ``(A) clarifying the definitions of employee and 
                independent contractor,
                    ``(B) specifying employer liability for payroll 
                taxes,
                    ``(C) licensing, bonding, or regulating the 
                employee leasing industry, and
                    ``(D) the strategic targeting of audits;
            ``(27) compensation shall not be denied in such State to 
        any otherwise eligible individual solely on the basis that such 
        individual was employed at the applicable minimum wage for not 
        less than 20 hours a week for 30 weeks in the base period;
            ``(28) compensation is payable to any individual who is a 
        parent of a child by blood or adoption and who takes an unpaid 
        leave of absence from the employer at any time during the first 
        year after--
                    ``(A) in the case of a child by blood, the birth of 
                such child, and
                    ``(B) in the case of a child by adoption by such 
                individual, the adoption of such child; and''.
    (b) Unemployment Compensation Not Reduced by Exempt Trust 
Rollovers.--Paragraph (15) of section 3304(a) of such Code is amended 
by inserting ``(other than a rollover described in section 402(c), 
403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16))'' after ``periodic 
payment'' the first place it appears.

SEC. 102. EXPANSION OF UNEMPLOYMENT TAX WAGE BASE.

    (a) In General.--Paragraph (1) of section 3306(b) of the Internal 
Revenue Code of 1986 is amended by striking ``$7,000'' and inserting 
``the contribution and benefit base (as determined under section 230 of 
the Social Security Act)''.
    (b) Decrease in FUTA Tax Rate.--Section 3301 of such Code is 
amended by striking ``equal to--'' and all that follows through 
``thereafter;'' and inserting ``equal to 5.59 percent''.

SEC. 103. DETERMINATIONS OF WHETHER INDIVIDUALS ARE EMPLOYEES FOR 
              PURPOSES OF EMPLOYMENT TAXES.

    (a) Repeal of Prior Audit Safe Harbor With Respect to 
Determinations of Employment Status.--
            (1) In general.--Paragraph (2) of section 530(a) of the 
        Revenue Act of 1978 is amended by striking subparagraph (B) and 
        redesignating subparagraph (C) as subparagraph (B).
            (2) Conforming amendments.--Section 530(e) of such Act is 
        amended--
                    (A) in paragraph (2) by striking subparagraph (A) 
                and redesignating subparagraphs (B) and (C) as 
                subparagraphs (A) and (B), respectively,
                    (B) in paragraph (4)(B) by striking ``subparagraph 
                (A), (B), or (C)'' and inserting ``subparagraph (A) or 
                (B)''.
    (b) Repeal of Prohibition Against Regulations and Rulings on 
Employment Status.--Section 530 of the Revenue Act of 1978 is amended 
by striking subsection (b).

SEC. 104. REPEAL OF DETERMINATION OF EMPLOYER'S LIABILITY FOR CERTAIN 
              EMPLOYMENT TAXES.

    (a) In General.--Section 3509 of the Internal Revenue Code of 1986 
is repealed.
    (b) Clerical Amendment.--The table of sections for chapter 25 of 
such Code is amended by striking the item relating to section 3509.

SEC. 105. EFFECTIVE DATES.

    (a) In General.--Except as provided by subsection (b), the 
amendments made by this title--
            (1) shall take effect on January 1, 2004, and
            (2) in the case of sections 103 and 104, shall apply to 
        periods beginning after December 31, 2003.
    (b) Exception.--In the case of any State the legislature of which 
has not been in session for at least 30 calendar days (whether or not 
successive) between the date of the enactment of this Act and December 
31, 2003, the amendments made by section 101 shall take effect 30 
calendar days after the first day on which such legislature is in 
session on or after January 1, 2004.

      TITLE II--ENCOURAGING JOB MOBILITY AND ADEQUATE COMPENSATION

SEC. 201. SEPARATION FROM WORK DUE TO A MOVE RELATING TO SPOUSE'S OR 
              DOMESTIC PARTNER'S NEW PRINCIPAL PLACE OF WORK NOT A BAR 
              TO RECEIVING UNEMPLOYMENT COMPENSATION; REPLACEMENT 
              RATIOS FOR LOWER PAID WORKERS WHO BECOME UNEMPLOYED.

    (a) Revenues From Individual Income Taxes Attributable to 
Unemployment Compensation To Be Credited to Unemployment Accounts of 
Qualifying States.--
            (1) In general.--There is hereby appropriated to accounts 
        of certified States in the Unemployment Trust Fund (as 
        described in section 903 of the Social Security Act (42 U.S.C. 
        1103)) amounts equivalent to the amount of tax liabilities 
        under chapter 1 of the Internal Revenue Code of 1986 which is 
        attributable to the application of section 85 of such Code to 
        payments from such accounts.
            (2) Transfers.--The amounts appropriated by paragraph (1) 
        to any such account shall be transferred from time to time (but 
        not less frequently than quarterly) from the general fund of 
        the Treasury on the basis of estimates made by the Secretary of 
        the Treasury, in consultation with the Secretary of Labor, of 
        the amounts referred to in such paragraph. Any such quarterly 
        payment shall be made on the first day of such quarter and 
        shall take into account unemployment compensation estimated to 
        be received from such account during such quarter. Proper 
        adjustments shall be made in the amounts subsequently 
        transferred to the extent prior estimates were in excess of or 
        less than the amounts required to be transferred.
            (3) Certified states.--For purposes of this subsection, the 
        term `certified State' means a State for which a certification 
        under subsection (d) is in effect.
            (4) Reports.--The Secretary of the Treasury shall submit 
        annual reports to the Congress on--
                    (A) the transfers made under this subsection during 
                the year, and the methodology used in determining the 
                amount of such transfers and the account to which made, 
                and
                    (B) the anticipated operation of this subsection 
                during the next 5 years.
    (b) Conditions for Approval of State Laws.--The Secretary of Labor 
shall (for purposes of this section) approve any State law submitted to 
the Secretary under this section, within 30 days of such submission, 
which the Secretary finds provides that--
            (1) compensation shall not be denied to any individual by 
        reason of such individual's separating from employment, if--
                    (A) that separation is related to a change in such 
                individual's spouse's place of residence in connection 
                with the commencement of work by the spouse (as an 
                employee or as a self-employed individual) at a new 
                principal place of work;
                    (B) the spouse's new principal place of work 
                satisfies the condition under subsection (c)(1) of 
                section 217 of the Internal Revenue Code of 1986 
                (relating to the minimum distance required, between a 
                taxpayer's former residence and new principal place of 
                work, in order to qualify for a moving expenses 
                deduction under such section); and
                    (C) the separating individual has both the former 
                residence and the new residence as his principal place 
                of abode; and
            (2) in the case of any individual who becomes entitled to 
        receive compensation from such State, and whose average weekly 
        wages (for the period on the basis of which such individual 
        qualifies for such compensation, determined without any 
        limitation on amount) do not exceed 50 percent of the average 
        weekly wages subject (determined without any limitation on 
        amount) to contributions under the unemployment compensation 
        law of such State (as determined by the Secretary based on the 
        data the Secretary considers most appropriate), compensation 
        shall be computed in a manner that results in a wage 
        replacement ratio for such individual that is at least equal to 
        the sum of--
                    (A) 50 percent, plus
                    (B) \1/4\ of 1 percent times the percentage by 
                which such individual's average weekly wages (for the 
                aforementioned period) are less than the average weekly 
                wages subject to contributions under the unemployment 
                compensation law of such State (as so determined).
The condition under paragraph (2) shall not be considered met if, in 
order to satisfy such paragraph, the State modifies its State law in a 
way that, as determined by the Secretary, has the general effect of 
reducing the replacement ratio for individuals whose average weekly 
wages equal or exceed the 50-percent threshold described in such 
paragraph, except for good cause shown.
    (c) Notification.--The Secretary of Labor shall, upon approving 
such law for purposes of this section, notify the governor (or, if 
none, the chief executive officer) of the State of the Secretary's 
approval.
    (d) Certification.--On October 31 of each year, the Secretary of 
Labor shall certify to the Secretary of the Treasury each State whose 
law the Secretary of Labor has previously approved for purposes of this 
section, except that the Secretary of Labor shall not certify any State 
which, after reasonable notice and opportunity for hearing to the State 
agency, the Secretary of Labor finds has amended its law so that it no 
longer contains the provisions specified in subsection (b) or has with 
respect to the 12-month period ending on such October 31 failed to 
comply substantially with either provision of such subsection.
    (e) Notice of Noncertification.--If at any time the Secretary of 
Labor has reason to believe that a State whose law the Secretary has 
previously approved for purposes of this section may not be certified 
under subsection (d), the Secretary shall promptly so notify the 
governor (or, if none, the chief executive officer) of such State.
    (f) Definitions.--For purposes of this section--
            (1) the terms ``State'', ``State law'', ``State agency'', 
        ``compensation'', and ``week'' have the respective meanings 
        given such terms under section 205 of the Federal-State 
        Extended Unemployment Compensation Act of 1970;
            (2) the terms ``wages'' and ``contributions'' have the 
        respective meanings given such terms under section 3306 of the 
        Internal Revenue Code of 1986;
            (3) the term ``wage replacement ratio'' shall have such 
        meaning as the Secretary of Labor shall by regulation prescribe 
        consistent with the purposes of this section; and
            (4) the term ``spouse'' shall include a domestic partner, 
        as defined under regulations of the Secretary of Labor.

        TITLE III--ENSURING SOLVENCY AND PREPARING FOR RECESSION

SEC. 301. INCREASE AND DECREASE IN EARNINGS CREDITED TO STATE ACCOUNTS 
              WHEN STATES MEET OR FAIL TO MEET FUNDING GOALS.

    (a) In General.--Section 904 of the Social Security Act (42 U.S.C. 
1104) is amended by adding at the end the following new subsection:

   ``Increase and Decrease in Amount of Earnings Allocated to State 
        Accounts When States Meet or Fail to Meet Funding Goals

    ``(h)(1) If the average daily balance in a State account in the 
Unemployment Trust Fund for any calendar quarter exceeds the funding 
goal of such State, the amount otherwise creditable to such account 
under subsection (e) for such quarter shall be increased by the 
interest premium on such excess. If the average daily balance in such a 
State account for any calendar quarter is less than the funding goal of 
such State, the amount otherwise creditable to such account under 
subsection (e) for such quarter shall be decreased by the interest 
penalty.
    ``(2) Paragraph (1) shall not apply with respect to any interest 
premium or interest penalty to the extent that such application would 
result in an increase or decrease of more than $2,500,000 in the amount 
creditable to any State account for any calendar quarter.
    ``(3) For purposes of this subsection, the term `interest premium' 
means, for any calendar quarter--
            ``(A) with respect to the State with the largest percentage 
        value of excess of the average daily balance in the State 
        account in the Unemployment Trust Fund over the funding goal of 
        such State, one-half of one percent of the amount of such 
excess, and
            ``(B) with respect to each other State, the product of--
                    ``(i) the amount of the excess of the average daily 
                balance in the State account in the Unemployment Trust 
                Fund over the funding goal of such State, and
                    ``(ii) the percentage which bears the same ratio to 
                one-half of one percent as--
                            ``(I) the percentage value of such excess, 
                        bears to
                            ``(II) the percentage value of the excess 
                        of the State referred to in subparagraph (A).
The Secretary shall make appropriate adjustments in the interest 
premium for any calendar quarter if the aggregate interest premiums 
payable for such quarter exceed the aggregate interest penalties for 
such quarter.
    ``(4) For purposes of this subsection, the term `interest penalty' 
means, for any calendar quarter--
            ``(A) with respect to the State with the largest percentage 
        value of excess of the funding goal of such State over the 
        average daily balance in the State account in the Unemployment 
        Trust Fund, one-half of one percent of the amount otherwise 
        creditable to such account under subsection (e), and
            ``(B) with respect to each other State, the product of--
                    ``(i) the amount otherwise creditable to such 
                account under subsection (e), and
                    ``(ii) the percentage which bears the same ratio to 
                one-half of one percent as--
                            ``(I) the percentage value of the excess of 
                        the funding goal of the State over such average 
daily balance of such State, bears to
                            ``(II) the percentage value of such excess 
                        of the State referred to in subparagraph (A).
    ``(5) For purposes of this subsection, the term `funding goal' 
means, for any State for any calendar quarter, the average of the 
unemployment insurance benefits paid by such State during each of the 3 
years, in the 20-year period ending with the calendar year containing 
such calendar quarter, during which the State paid the greatest amount 
of unemployment benefits.
    ``(6) For purposes of this subsection, the term `percentage value' 
means--
            ``(A) with respect to any excess of the average daily 
        balance in a State account in the Unemployment Trust Fund over 
        the funding goal of such State, the percentage which such 
        excess bears to such funding goal, and
            ``(B) with respect to any excess of such funding goal over 
        such average daily balance, the percentage which such excess 
        bears to such funding goal.''.
    (b) Conforming Amendments.--
            (1) Amounts credited to state accounts.--Subsection (e) of 
        section 904 of the Social Security Act (42 U.S.C. 1104(e)) is 
        amended in the first sentence by inserting ``(as modified by 
        subsection (h))'' after ``a proportionate part''.
            (2) Interest rate on repayment of advances determined 
        without regard to interest premiums or penalties on amounts 
        credited to state accounts.--Subparagraph (A) of section 
        1202(b)(4) of such Act (42 U.S.C. 1322(b)(4)) is amended by 
        inserting ``(determined without regard to section 904(h))'' 
        after ``preceding calendar year''.
    (c) Report.--Not later than 6 months after the date of the 
enactment of this Act, the Secretary of Labor shall submit to the 
Congress a report recommending sources of funding for the crediting of 
interest premiums under subsection (h) of section 904 of the Social 
Security Act (42 U.S.C. 1104), as added by this section, in the event 
that the imposition of interest penalties under such subsection is 
insufficient to fund such premiums.
    (d) Effective Date.--The amendments made by this section shall 
apply to calendar years beginning after December 31, 2005.

SEC. 302. AMENDMENTS TO TRIGGER PROVISIONS OF EXTENDED BENEFIT PROGRAM.

    (a) Lowering of Extended Benefit ``On'' Indicator.--Section 203(d) 
of the Federal-State Extended Unemployment Compensation Act of 1970 (26 
U.S.C. 3304 note) is amended--
            (1) in paragraph (1)(B), by striking ``5 per centum'' and 
        inserting ``4 per centum'', and
            (2) in the first sentence following paragraph (2)--
                    (A) by striking ``5'' and inserting ``4'', and
                    (B) by striking ``6'' and inserting ``5''.
    (b) Alternative Trigger.--Section 203(f) of such Act is amended--
            (1) by striking ``(f)(1)'' and all that follows through 
        ``section--'' and inserting the following:
    ``(f)(1) Effective with respect to compensation for weeks of 
unemployment beginning after December 31, 2003, for purposes of this 
section--''; and
            (2) in the last sentence of paragraph (1), by striking 
        ``Notwithstanding the provision of any State law described in 
        this paragraph,'' and inserting ``Notwithstanding any other 
        provision of this subsection,''.
    (c) Effective Date.--The amendments made by this section shall 
apply for purposes of determining whether there are State ``on'' or 
``off'' indicators for weeks beginning on or after January 1, 2004.

SEC. 303. ELIMINATE SPECIAL FEDERAL ELIGIBILITY REQUIREMENTS FOR 
              EXTENDED COMPENSATION.

    (a) In General.--Section 202(a) of the Federal-State Extended 
Unemployment Compensation Act of 1970 (26 U.S.C. 3304 note) is amended 
by striking paragraphs (3) through (7).
    (b) Conforming Amendment.--Section 202(a)(2) of such Act is amended 
by striking ``Except'' and all that follows through ``title, the'' and 
inserting ``The''.
    (c) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply in the case of 
        compensation paid to individuals during eligibility periods 
        beginning on or after January 1, 2004.
            (2) Special rule for certain states.--In the case of any 
        State the legislature of which has not been in session for at 
        least 30 calendar days (whether or not successive) between the 
        date of the enactment of this Act and January 1, 2004, the 
        amendments made by this section shall apply in the case of 
        compensation paid to individuals during eligibility periods 
        beginning after the end of the first session of the State 
        legislature which begins on or after January 1, 2004.

 TITLE IV--IMPROVING ADMINISTRATIVE FUNDING FOR THE UNEMPLOYMENT SYSTEM

SEC. 401. FUNDING FOR ADMINISTRATION OF STATE UNEMPLOYMENT 
              COMPENSATION, STATE SYSTEMS OF PUBLIC EMPLOYMENT OFFICES 
              AND VETERANS EMPLOYMENT SERVICE PROGRAMS.

    (a) In General.--Paragraph (1) of section 901(c) of the Social 
Security Act (42 U.S.C. 1101(c)(1)) is amended by striking all that 
precedes clause (i) of subparagraph (B) and inserting the following:
    ``(c)(1)(A) There are hereby appropriated out of the employment 
security administration account for each fiscal year--
            ``(i) the amount determined under subsection (g) for such 
        year for assisting the States in the administration of their 
        unemployment compensation laws as provided in title III 
        (including administration pursuant to agreements under any 
        Federal unemployment compensation law),
            ``(ii) the amount determined under subsection (h) for such 
        year for providing reemployment services, including 
        administering the work test for the State unemployment 
        compensation system and providing job finding and placement 
        services, to unemployment compensation claimants,
            ``(iii) the amount determined under subsection (i) for such 
        year for the establishment and maintenance of systems of public 
        employment offices in accordance with the Wagner-Peyser Act (29 
        U.S.C. 49 et seq.), and
            ``(iv) the amounts determined under sections 4103A(a)(1) 
        and 4104(a)(1) of title 38 of the United States Code for such 
        year for carrying out sections 4103A and 4104 of such title, 
        respectively.
The Secretary of Labor may reserve not more than 0.4 percent of the 
funds appropriated under clauses (i) and (ii), respectively, for any 
fiscal year to carry out national activities that benefit the Federal-
State unemployment compensation system as a whole, are interstate or 
multistate in nature, or are more efficiently and effectively performed 
on a centralized basis.
    ``(B) There are hereby authorized to be made available for 
expenditure out of the employment security administration account for 
each fiscal year such amounts (not in excess of the limit provided by 
paragraph (4) with respect to subparagraph (A)(iii)) as the Congress 
may deem appropriate for the necessary expenses of the Department of 
Labor for the performance of its functions under--''.
    (b) Funding Formulas.--Section 901 of the Social Security Act (42 
U.S.C. 1101) is amended by adding at the end the following:

 ``Amounts Appropriated for Administrative Costs of State Unemployment 
                         Compensation Programs

    ``(g)(1) For fiscal year 2004 and each fiscal year thereafter, the 
amount appropriated for funding costs of administering State 
unemployment compensation programs under subsection (c)(1)(A)(i), shall 
be the sum of--
            ``(A)(i) the amount determined under this clause for the 
        prior fiscal year (except that in determining funding for 
        fiscal year 2004, the amount for the prior fiscal year shall 
        equal $789) multiplied by the projected change in the gross 
        domestic product price index for the fiscal year for which the 
        determination is being made, multiplied by
            ``(ii) the projected average weekly number of individuals 
        filing claims for compensation (within the meaning of section 
        85(b) of the Internal Revenue Code of 1986) for such fiscal 
        year, except that an individual shall not be included in such 
        number solely by reason of filing a claim for assistance under 
        section 410(a) of the Robert T. Stafford Disaster Relief and 
        Emergency Assistance Act (42 U.S.C. 5177(a)); and
            ``(B)(i) the amount determined under this clause for the 
        prior fiscal year (except that in determining the funding for 
        fiscal year 2004, the amount for the prior fiscal year shall 
        equal $138) multiplied by the projected change in the gross 
        domestic product price index for the fiscal year for which the 
        determination is being made, multiplied by
            ``(ii) the average quarterly number of employers subject to 
        State unemployment compensation laws projected for such fiscal 
        year.
    ``(2) In addition to the amounts determined under paragraph (1) for 
a fiscal year, if the weekly average of insured unemployed individuals 
for such fiscal year (as projected using the economic assumptions 
released by the President during such fiscal year under section 1106 of 
title 31, United States Code, and excluding the same claimants as are 
excluded under paragraph (1)(A)(ii)) exceeds the projection used in 
such paragraph (1)(A)(ii), then additional amounts shall be 
appropriated under subsection (c)(1)(A)(i) for funding the costs of 
administering the State unemployment compensation programs equal to--
            ``(A)(i) the amount determined under this subparagraph for 
        the prior fiscal year (except that in determining funding for 
        fiscal year 2004, the amount for the prior fiscal year shall 
        equal $298) multiplied by the projected change in the gross 
        domestic product price index for the fiscal year for which the 
        determination is being made, multiplied by
            ``(ii) the difference between the weekly average of insured 
        unemployed individuals (as measured using the most recent 
        economic assumptions released by the President during such 
        fiscal year) and the weekly average of insured unemployed 
        individuals projected under paragraph (1)(A)(ii) for such 
        fiscal year.
The additional amounts made available pursuant to this paragraph for a 
fiscal year shall be available to be allocated to the States only to 
the extent that the projected weekly average of insured unemployed 
individuals for such fiscal year, as referred to in the preceding 
sentence (in the matter preceding subparagraph (A)) exceeds the 
projection used in paragraph (1)(A)(ii).

  ``Amounts Appropriated to States for the Provision of Reemployment 
                                Services

    ``(h) For fiscal year 2004 and each fiscal year thereafter, the 
amount appropriated for funding costs of providing reemployment 
services to unemployment compensation claimants under subsection 
(c)(1)(A)(ii) shall be--
            ``(1) the amount determined under this paragraph for the 
        prior fiscal year (except that in determining funding for 
        fiscal year 2004, the amount for the prior fiscal year shall 
        equal $11.10) multiplied by the projected change in the gross 
        domestic product price index for the fiscal year for which the 
        determination is being made, multiplied by
            ``(2) the projected number of payments of unemployment 
        compensation representing first weeks compensated in a benefit 
        year for such fiscal year.

 ``Amounts Appropriated for Administration of State Public Employment 
                                Offices

    ``(i) For fiscal year 2004 and each fiscal year thereafter, the 
amount appropriated for funding the costs of administering the State 
system of public employment offices under subsection (c)(1)(A)(iii) 
shall be--
            ``(1) the amount determined under this paragraph for the 
        prior fiscal year (except that in determining funding for 
        fiscal year 2004, the amount for the prior fiscal year shall 
        equal $7.30) multiplied by the projected change in the gross 
        domestic product price index for the fiscal year for which the 
        determination is being made, multiplied by
            ``(2) the projected average monthly number of individuals 
        in the civilian labor force for such fiscal year.

    ``Calculation of Appropriated Amounts by the Secretary of Labor

    ``(j) For purposes of subsections (g), (h) and (i)--
            ``(1) each projection shall be made by the Secretary of 
        Labor using the economic assumptions released by the President 
        for such fiscal year, during the preceding fiscal year, under 
        section 1106 of title 31, United States Code, except as 
        otherwise provided under subsection (g)(2) or (h)(2), and
            ``(2) the projected change in the gross domestic product 
        price index for the fiscal year for which the determination is 
        being made shall equal the sum of 1 and the quotient of the 
        percent change in the gross domestic product price index 
        projected for such fiscal year divided by 100.

        ``Special Rules Relating to Use of Amounts Appropriated

    ``(k)(1) Amounts appropriated under paragraphs (1)(A)(i)-(ii) and 
(6) of subsection (c) with respect to a fiscal year shall remain 
available for obligation by the States during such fiscal year and the 
first quarter of the following fiscal year, except that funds used for 
automation acquisitions shall remain available for obligation by the 
States through the end of the second fiscal year following the fiscal 
year in which such funds are appropriated.
    ``(2) Amounts reserved by the Secretary of Labor under the second 
sentence of subsection (c)(1)(A) may be obligated in contracts, grants, 
or agreements with non-State entities.
    ``(3) Amounts appropriated under paragraph (1)(A) and paragraph (6) 
of subsection (c) may be used by the States to fund integrated 
employment service and unemployment compensation automation efforts 
notwithstanding the cost allocation principles prescribed under Office 
of Management and Budget Circular No. A-87.''.
    (c) Funding for Improved Technology To Assist in Determining 
Benefit Eligibility.--Section 901(c) of the Social Security Act (42 
U.S.C. 1101(c)) is amended by adding at the end the following new 
paragraph:
    ``(6) In addition to amounts provided under paragraph (1)(A)(i)-
(ii), there is hereby appropriated out of the employment security 
administration account $60,000,000 for fiscal year 2004 for the purpose 
of assisting States in funding technology and other costs that 
accelerate access to wage and employment information in order to 
determine eligibility for unemployment compensation.''.
    (d) Conforming Amendments.--
            (1) Payments to states for reemployment services.--Section 
        302 of the Social Security Act (42 U.S.C. 502) is amended by 
        adding at the end the following:
    ``(d) The Secretary of Labor shall from time to time certify to the 
Secretary of the Treasury for payment to each State such amounts as the 
Secretary of Labor determines appropriate for providing reemployment 
services, including administering the work test for the State 
unemployment compensation system and providing job finding and 
placement services, to claimants for unemployment compensation.''.
            (2) Expenditure of funds for reemployment services.--
        Section 303(a)(8) of the Social Security Act (42 U.S.C. 
        503(a)(8)) is amended--
                    (A) by inserting ``subsections (a) and (b) of'' 
                after ``pursuant to''; and
                    (B) by inserting before the semicolon at the end 
                the following: ``and the expenditure of all moneys 
                received pursuant to section 302(d) of this title 
                solely for the purposes and in the amounts found 
                necessary by the Secretary of Labor for providing 
reemployment services to claimants for unemployment compensation''.
            (3) Replenishment of funds not used for reemployment 
        services.--Section 303(a)(9) of the Social Security Act (42 
        U.S.C. 503(a)(9)) is amended--
                    (A) by inserting ``subsections (a) and (b) of'' 
                after ``pursuant to''; and
                    (B) by inserting before the semicolon at the end 
                the following: ``and the replacement, within a 
                reasonable time, of any moneys received pursuant to 
                section 302(d) of this title which, because of any 
                action or contingency, have been lost or have been 
                expended for purposes other than, or in amounts in 
                excess of, those found necessary by the Secretary of 
                Labor for providing reemployment services to claimants 
                for unemployment compensation''.
            (4) Repeals.--The following provisions of the Social 
        Security Act are repealed:
                    (A) Paragraph (3) of section 901(c).
                    (B) The second sentence of section 901(f)(3)(A).
            (5) Amount of authorization under the wagner-peyser act.--
                    (A) Section 901(c)(4) of the Social Security Act 
                (42 U.S.C. 1101(c)(4)) is amended--
                            (i) by striking ``paragraphs (1)(A)(ii) 
                        and'' and inserting ``paragraph'';
                            (ii) by striking ``the proportion of the 
                        total cost of administering the system of 
                        public employment offices in accordance with 
                        the Act of June 6, 1933, as amended, and of''; 
                        and
                            (iii) by striking the last sentence.
                    (B) Section 901(c)(1)(B) of the Social Security Act 
                (42 U.S.C. 1101(c)(1)(B)) is amended by moving clauses 
                (i) through (v) 2 ems to the left, and by striking 
                clause (iii) and inserting the following:
            ``(iii) the Wagner-Peyser Act (29 U.S.C. 49 et seq.),''.
            (6) Appropriation reference in the wagner-peyser act.--
        Section 5 of the Wagner-Peyser Act (29 U.S.C. 49d) is amended--
                    (A) by striking all that precedes subsection (b) 
                and inserting the following:
    ``Sec. 5. (a) The amounts available to carry out sections 1 through 
13 of this Act shall be appropriated in accordance with section 901 of 
the Social Security Act.'';
                    (B) by striking subsection (b); and
                    (C) by redesignating subsection (c) as subsection 
                (b).
    (e) Budget Justification.--No funds may be expended under the 
amendments made by this section unless the Secretary of Labor includes 
in the Department of Labor's annual budget justification to Congress a 
detailed description of the specific activities for which the funds 
made available by such amendments have been used in the prior and 
current years (if applicable) and the activities and costs planned for 
the budget year.
    (f) Effective Date.--The amendments made by this section shall 
apply to fiscal year 2004 and subsequent fiscal years.
                                 <all>
```