I 

110TH CONGRESS 

1ST SESSION H. R. 2233 

To provide for special transfers of funds to States to promote certain 

improvements in State unemployment compensation laws. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 9, 2007 

Mr. MCDERMOTT introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL 

To provide for special transfers of funds to States to promote 

certain improvements in State unemployment compensation laws. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Unemployment Insur5 ance Modernization Act’’. 

6 SEC. 2. SPECIAL TRANSFERS TO STATE ACCOUNTS IN THE 

7 UNEMPLOYMENT TRUST FUND. 

8 (a) IN GENERAL.—Section 903 of the Social Security 

9 Act (42 U.S.C. 1103) is amended by adding at the end 

10 the following: 


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1 ‘‘Special Transfers in Fiscal Years 2008 Through 2012 

2 for Modernization 

3 ‘‘(f)(1)(A) In addition to any other amounts, the Sec4 retary of Labor shall provide for the making of unemploy5 ment compensation modernization incentive payments 

6 (hereinafter ‘incentive payments’) to the accounts of the 

7 States in the Unemployment Trust Fund, by transfer from 

8 amounts reserved for that purpose in the Federal unem9 ployment account, in accordance with succeeding provi10 sions of this subsection. 

11 ‘‘(B) The maximum incentive payment allowable 

12 under this subsection with respect to any State shall, as 

13 determined by the Secretary of Labor, be equal to the 

14 amount obtained by multiplying $7,000,000,000 times the 

15 same ratio as is applicable under subsection (a)(2)(B) for 

16 purposes of determining such State’s share of any funds 

17 to be transferred under subsection (a) as of October 1, 

18 2007. 

19 ‘‘(C) Of the maximum incentive payment determined 

20 under subparagraph (B) with respect to a State— 

21 ‘‘(i) one-third shall be transferred to the ac22 count of such State upon a certification under para23 graph (4)(B) that the State law of such State meets 

24 the requirements of paragraph (2); and 


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1 ‘‘(ii) the remainder shall be transferred to the 

2 account of such State upon a certification under 

3 paragraph (4)(B) that the State law of such State 

4 meets the requirements of paragraph (3). 

5 ‘‘(2) The State law of a State meets the requirements 

6 of this paragraph if such State law— 

7 ‘‘(A) uses a base period that includes the most 

8 recently completed calendar quarter before the start 

9 of the benefit year for purposes of determining eligi10 bility for unemployment compensation; or 

11 ‘‘(B) provides that, in the case of an individual 

12 who would not otherwise be eligible for unemploy13 ment compensation under the State law because of 

14 the use of a base period that does not include the 

15 most recently completed calendar quarter before the 

16 start of the benefit year, eligibility shall be deter17 mined using a base period that includes such cal18 endar quarter. 

19 ‘‘(3) The State law of a State meets the requirements 

20 of this paragraph if such State law includes provisions to 

21 carry out at least 2 of the following subparagraphs: 

22 ‘‘(A) An individual shall not be denied regular 

23 unemployment compensation under any State law 

24 provisions relating to availability for work, active 

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1 cause such individual is seeking only part-time (and 

2 not full-time) work, except that the State law provi3 sions carrying out this subparagraph may exclude an 

4 individual if a majority of the weeks of work in such 

5 individual’s base period do not include part-time 

6 work. 

7 ‘‘(B) An individual shall not be disqualified 

8 from regular unemployment compensation for sepa9 rating from employment if that separation is for 

10 compelling family reasons. For purposes of this sub11 paragraph, the term ‘compelling family reasons’ in12 cludes at least the following: 

13 ‘‘(i) Domestic violence (verified by such 

14 reasonable and confidential documentation as 

15 the State law may require) which causes the in16 dividual reasonably to believe that such individ17 ual’s continued employment would jeopardize 

18 the safety of the individual or of any member 

19 of the individual’s immediate family. 

20 ‘‘(ii) The illness or disability of a member 

21 of the individual’s immediate family. 

22 ‘‘(iii) The need for the individual to accom23 pany such individual’s spouse— 


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1 ‘‘(I) to a place from which it is im2 practical for such individual to commute; 

3 and 

4 ‘‘(II) due to a change in location of 

5 the spouse’s employment. 

6 ‘‘(C) Weekly unemployment compensation is 

7 payable under this subparagraph to any individual 

8 who is unemployed (as determined under the State 

9 unemployment compensation law), has exhausted all 

10 rights to regular and (if applicable) extended unem11 ployment compensation under the State law, and is 

12 enrolled and making satisfactory progress in a 

13 State-approved training program or in a job training 

14 program authorized under the Workforce Investment 

15 Act of 1998. Such program shall prepare individuals 

16 who have been separated from a declining occupa17 tion, or who have been involuntarily and indefinitely 

18 separated from employment as a result of a perma19 nent reduction of operations at the individual’s place 

20 of employment, for entry into a high-demand occu21 pation. The amount of unemployment compensation 

22 payable under this subparagraph to an individual for 

23 a week of unemployment shall be equal to the indi24 vidual’s average weekly benefit amount (including 

25 dependents’ allowances) for the most recent benefit 


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1 year, and the total amount of unemployment com2 pensation payable under this subparagraph to any 

3 individual shall be equal to at least 26 times the in4 dividual’s average weekly benefit amount (including 

5 dependents’ allowances) for the most recent benefit 

6 year. 

7 ‘‘(4)(A) Any State seeking an incentive payment 

8 under this subsection shall submit an application therefor 

9 at such time, in such manner, and complete with such in10 formation as the Secretary of Labor may by regulation 

11 prescribe, including information relating to compliance 

12 with the requirements of paragraph (2) or (3), as well as 

13 how the State intends to use the incentive payment to im14 prove or strengthen the State’s unemployment compensa15 tion program. The Secretary of Labor shall, within 90 

16 days after receiving a complete application, notify the 

17 State agency of the State of the Secretary’s findings with 

18 respect to the requirements of paragraph (2) or (3) (or 

19 both). 

20 ‘‘(B) If the Secretary of Labor finds that the State 

21 law provisions (disregarding any State law provisions 

22 which are not then currently in effect as permanent law 

23 or which are subject to discontinuation under certain con24 ditions) meet the requirements of paragraph (2) or (3), 

25 as the case may be, the Secretary of Labor shall thereupon 


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1 make a certification to that effect to the Secretary of the 

2 Treasury, together with a certification as to the amount 

3 of the incentive payment to be transferred to the State 

4 account pursuant to that finding. The Secretary of the 

5 Treasury shall make the appropriate transfer within 30 

6 days after receiving such certification. 

7 ‘‘(C)(i) No certification of compliance with the re8 quirements of paragraph (2) or (3) may be made with re9 spect to any State whose State law is not otherwise eligible 

10 for certification under section 303 or approvable under 

11 section 3304 of the Federal Unemployment Tax Act. 

12 ‘‘(ii) No certification of compliance with the require13 ments of paragraph (3) may be made with respect to any 

14 State whose State law is not in compliance with the re15 quirements of paragraph (2). 

16 ‘‘(iii) No application under subparagraph (A) may be 

17 considered if submitted before October 1, 2007, or after 

18 the latest date necessary (as specified by the Secretary of 

19 Labor in regulations) to ensure that all incentive pay20 ments under this subsection are made before October 1, 

21 2012. 

22 ‘‘(5)(A) Except as provided in subparagraph (B), any 

23 amount transferred to the account of a State under this 

24 subsection may be used by such State only in the payment 

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1 ployment (including for dependents’ allowances and for 

2 unemployment compensation under paragraph (3)(C)), ex3 clusive of expenses of administration. 

4 ‘‘(B) A State may, subject to the same conditions as 

5 set forth in subsection (c)(2) (excluding subparagraph (B) 

6 thereof, and deeming the reference to ‘subsections (a) and 

7 (b)’ in subparagraph (D) thereof to include this sub8 section), use any amount transferred to the account of 

9 such State under this subsection for the administration 

10 of its unemployment compensation law and public employ11 ment offices. 

12 ‘‘(6) Out of any money in the Federal unemployment 

13 account not otherwise appropriated, the Secretary of the 

14 Treasury shall reserve $7,000,000,000 for incentive pay15 ments under this subsection. Any amount so reserved shall 

16 not be taken into account for purposes of any determina17 tion under section 902, 910, or 1203 of the amount in 

18 the Federal unemployment account as of any given time. 

19 Any amount so reserved for which the Secretary of the 

20 Treasury has not received a certification under paragraph 

21 (4)(B) by the deadline described in paragraph (4)(C)(iii) 

22 shall, upon the close of fiscal year 2012, become unre23 stricted as to use as part of the Federal unemployment 

24 account. 


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1 ‘‘(7) For purposes of this subsection, the terms ‘ben2 efit year’, ‘base period’, and ‘week’ have the respective 

3 meanings given such terms under section 205 of the Fed4 eral-State Extended Unemployment Compensation Act of 

5 1970 (26 U.S.C. 3304 note). 

6 ‘‘Special Transfers in Fiscal Years 2008 Through 2012 

7 for Administration 

8 ‘‘(g)(1) Notwithstanding any other provision of this 

9 section, the total amount available for transfer to the ac10 counts of the States pursuant to subsection (a) as of the 

11 beginning of each of fiscal years 2008, 2009, 2010, 2011, 

12 and 2012 shall be equal to the total amount which (dis13 regarding this subsection) would otherwise be so available, 

14 increased by $100,000,000. 

15 ‘‘(2) Each State’s share of any additional amount 

16 made available by this subsection shall be determined, cer17 tified, and computed in the same manner as described in 

18 subsection (a)(2) and shall be subject to the same limita19 tions on transfers as described in subsection (b). For pur20 poses of applying subsection (b)(2), the balance of any ad21 vances made to a State under section 1201 shall be cred22 ited against, and operate to reduce (but not below zero)— 

23 ‘‘(A) first, any additional amount which, as a 

24 result of the enactment of this subsection, is to be 


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1 transferred to the account of such State in a fiscal 

2 year; and 

3 ‘‘(B) second, any amount which (disregarding 

4 this subsection) is otherwise to be transferred to the 

5 account of such State pursuant to subsections (a) 

6 and (b) in such fiscal year. 

7 ‘‘(3) Any additional amount transferred to the ac8 count of a State as a result of the enactment of this sub9 section— 

10 ‘‘(A) may be used by the State agency of such 

11 State only in the payment of expenses incurred by 

12 it for— 

13 ‘‘(i) the administration of the provisions of 

14 its State law carrying out the purposes of sub15 section (f)(2) or any subparagraph of sub16 section (f)(3); 

17 ‘‘(ii) improved outreach to individuals who 

18 might be eligible for regular unemployment 

19 compensation by virtue of any provisions of the 

20 State law which are described in clause (i); 

21 ‘‘(iii) the improvement of unemployment 

22 benefit and unemployment tax operations; and 

23 ‘‘(iv) staff-assisted reemployment services 

24 for unemployment compensation claimants; and 


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1 ‘‘(B) shall be excluded from the application of 

2 subsection (c). 

3 ‘‘(4) The total additional amount made available by 

4 this subsection in a fiscal year shall be taken out of the 

5 amounts remaining in the employment security adminis6 tration account after subtracting the total amount which 

7 (disregarding this subsection) is otherwise required to be 

8 transferred from such account in such fiscal year pursuant 

9 to subsections (a) and (b).’’. 

10 (b) REGULATIONS.—The Secretary of Labor may 

11 prescribe any regulations necessary to carry out the 

12 amendment made by subsection (a). 

13 SEC. 3. EXTENSION OF FUTA TAX. 

14 Section 3301 of the Internal Revenue Code of 1986 

15 (relating to rate of tax) is amended— 

16 (1) by striking ‘‘2007’’ in paragraph (1) and in17 serting ‘‘2012’’, and 

18 (2) by striking ‘‘2008’’ in paragraph (2) and in19 serting ‘‘2013’’. 

Æ 


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