II 

112TH CONGRESS 

1ST SESSION S. 386 

To provide assistance to certain employers and States in 2011 and 2012, 

to improve the long-term solvency of the Unemployment Compensation 

program, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 17, 2011 

Mr. DURBIN (for himself, Mr. REED, and Mr. BROWN of Ohio) introduced the 

following bill; which was read twice and referred to the Committee on Finance 

A BILL 

To provide assistance to certain employers and States in 

2011 and 2012, to improve the long-term solvency of 

the Unemployment Compensation program, and for other 

purposes. 

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; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Unemployment Insurance Solvency Act of 2011’’. 

6 (b) TABLE OF CONTENTS.—The table of contents of 

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Extension of assistance for States with advances. 

Sec. 3. Reduction in the rate of employer taxes. 


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Sec. 4. Modifications of employer credit reductions. 

Sec. 5. Increase in the taxable wage base. 

Sec. 6. Voluntary State agreements to abate principal on Federal loans. 

Sec. 7. Rewards and incentives for solvent States and employers in those 

States. 

1 SEC. 2. EXTENSION OF ASSISTANCE FOR STATES WITH AD2 VANCES. 

3 (a) IN GENERAL.—Section 1202(b)(10)(A) of the So4 cial Security Act (42 U.S.C. 1322(b)(10)(A)) is amended 

5 by striking ‘‘2010’’ and inserting ‘‘2012’’ in the matter 

6 preceding clause (i). 

7 (b) EFFECTIVE DATE.—The amendment made by 

8 this section shall take effect as if included in the enact9 ment of section 2004 of the Assistance for Unemployed 

10 Workers and Struggling Families Act (Public Law 111– 

11 5; 123 Stat. 443). 

12 SEC. 3. REDUCTION IN THE RATE OF EMPLOYER TAXES. 

13 (a) IN GENERAL.—Section 3301 of the Internal Rev14 enue Code of 1986 is amended— 

15 (1) in paragraph (1), by striking ‘‘2010 and the 

16 first 6 months of calendar year 2011’’ and inserting 

17 ‘‘2013’’; and 

18 (2) in paragraph (2), by striking ‘‘6.0 percent 

19 in the case of the remainder of calendar year 2011’’ 

20 and inserting ‘‘5.78 percent in the case of calendar 

21 year 2014’’. 

22 (b) EFFECTIVE DATE.—The amendments made by 

23 this section shall take effect on the earlier of— 


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1 (1) the date of the enactment of this Act; or 

2 (2) July 1, 2011. 

3 SEC. 4. MODIFICATIONS OF EMPLOYER CREDIT REDUC4 TIONS. 

5 (a) LIMIT ON TOTAL CREDITS.—Section 3302(c) of 

6 the Internal Revenue Code of 1986 is amended— 

7 (1) in paragraph (1), by striking ‘‘90 percent of 

8 the tax against which such credits are allowable’’ 

9 and inserting ‘‘an amount equal to 5.4 percent of 

10 the total wages (as defined in section 3306(b)) paid 

11 by such taxpayer during the calendar year with re12 spect to employment (as defined in section 

13 3306(c))’’; and 

14 (2) in paragraph (2)— 

15 (A) by striking subparagraphs (B) and (C) 

16 and the flush matter following subparagraph 

17 (C); 

18 (B) by striking ‘‘(2) If’’ and inserting 

19 ‘‘(2)(A) If’’; 

20 (C) by striking ‘‘(A)(i) in’’ and inserting 

21 ‘‘(i) in’’; 

22 (D) in clause (i) of subparagraph (A), as 

23 redesignated by subparagraph (C), by striking 

24 ‘‘5 percent of the tax imposed by section 3301 

25 with respect to the wages paid by such taxpayer 


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1 during such taxable year which are attributable 

2 to such State’’ and inserting ‘‘an amount equal 

3 to 0.3 percent of the total wages (as defined in 

4 section 3306(b)) paid by such taxpayer during 

5 the calendar year with respect to employment 

6 (as defined in section 3306(c))’’; 

7 (E) in clause (ii) of subparagraph (A)— 

8 (i) by moving such clause 2 ems to 

9 the left; 

10 (ii) by striking ‘‘5 percent, for each 

11 such succeeding taxable year, of the tax 

12 imposed by section 3301 with respect to 

13 the wages paid by such taxpayer during 

14 such taxable year which are attributable to 

15 such State;’’ and inserting ‘‘an amount 

16 equal to 0.3 percent of the total wages (as 

17 defined in section 3306(b)) paid by such 

18 taxpayer during the calendar year with re19 spect to employment (as defined in section 

20 3306(c)), for each succeeding taxable 

21 year;’’; and 

22 (iii) by striking the semicolon at the 

23 end and inserting a period; and 

24 (F) by adding at the end the following new 

25 subparagraph: 


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1 ‘‘(B) The provisions of subparagraph (A) shall 

2 be applied with respect to the taxable year beginning 

3 January 1, 2011, or any succeeding taxable year by 

4 deeming January 1, 2013, to be the first January 1 

5 occurring after January 1, 2010. For purposes of 

6 subparagraph (A), consecutive taxable years in the 

7 period commencing January 1, 2013, shall be deter8 mined as if the taxable year which begins on Janu9 ary 1, 2013, were the taxable year immediately suc10 ceeding the taxable year which began on January 1, 

11 2010. No taxpayer shall be subject to credit reduc12 tions under this paragraph for taxable years begin13 ning January 1, 2011, and January 1, 2012.’’. 

14 (b) DEFINITIONS AND SPECIAL RULES.—Section 

15 3302(d) of the Internal Revenue Code of 1986 is amend16 ed— 

17 (1) by striking paragraphs (1), (4), (5), (6), 

18 and (7); and 

19 (2) by redesignating paragraphs (2) and (3) as 

20 paragraphs (1) and (2), respectively. 

21 (c) EFFECTIVE DATE.—The amendments made by 

22 this section shall take effect as if enacted on January 1, 

23 2011. 


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1 SEC. 5. INCREASE IN THE TAXABLE WAGE BASE. 

2 (a) IN GENERAL.—Section 3306 of the Internal Rev3 enue Code of 1986 is amended— 

4 (1) in subsection (b), by striking ‘‘$7,000’’ both 

5 places it appears and inserting ‘‘the applicable wage 

6 base amount (as defined in subsection (v)(1))’’; and 

7 (2) by adding at the end the following new sub8 section: 

9 ‘‘(v) APPLICABLE WAGE BASE AMOUNT.— 

10 ‘‘(1) IN GENERAL.—For purposes of subsection 

11 (b)(1), the term ‘applicable wage base amount’ 

12 means— 

13 ‘‘(A) for a calendar year before calendar 

14 year 2014, $7,000; 

15 ‘‘(B) for calendar year 2014, $15,000; and 

16 ‘‘(C) for calendar years beginning on or 

17 after January 1, 2015, the amount determined 

18 under paragraph (2). 

19 ‘‘(2) AMOUNT FOR CALENDAR YEAR 2015 AND

20 THEREAFTER.— 

21 ‘‘(A) AMOUNT.— 

22 ‘‘(i) IN GENERAL.—For purposes of 

23 paragraph (1)(C), the amount determined 

24 under this paragraph for a calendar year is 

25 an amount equal to the product of— 


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1 ‘‘(I) the amount of average wage 

2 growth for the year (as determined in 

3 accordance with subparagraph (B)); 

4 and 

5 ‘‘(II) the applicable wage base 

6 amount for the preceding calendar 

7 year. 

8 ‘‘(ii) ROUNDING.—If the amount de9 termined under clause (i) is not a multiple 

10 of $100, such amount shall be rounded to 

11 the next higher multiple of $100. 

12 ‘‘(B) AVERAGE WAGE GROWTH.— 

13 ‘‘(i) IN GENERAL.—For purposes of 

14 subparagraph (A), the amount of annual 

15 wage growth for a calendar year shall be 

16 determined by dividing the average annual 

17 wage in the United States for the 12- 

18 month period ending on the June 30 of the 

19 preceding calendar year by the average an20 nual wage in the United States for the 12- 

21 month period ending on the second prior 

22 June 30, and rounding such ratio to the 

23 fifth decimal place. 

24 ‘‘(ii) AVERAGE ANNUAL WAGE.—For 

25 purposes of clause (i), using data from the 


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1 Quarterly Census of Employment and 

2 Wages (or a successor program), the aver3 age annual wage for a 12-month period 

4 shall be determined by dividing the total 

5 covered wages subject to contributions 

6 under all State unemployment compensa7 tion laws for such period by the average 

8 covered employment subject to contribu9 tions under all State unemployment com10 pensation laws for such period, and round11 ing the result to the nearest whole dollar.’’. 

12 (b) EFFECTIVE DATE.—The amendments made by 

13 this section shall take effect on the date of the enactment 

14 of this Act. 

15 SEC. 6. VOLUNTARY STATE AGREEMENTS TO ABATE PRIN16 CIPAL ON FEDERAL LOANS. 

17 (a) IN GENERAL.—Section 1203 of the Social Secu18 rity Act (42 U.S.C. 1323) is amended— 

19 (1) by inserting ‘‘(a) ADVANCES.—’’ after 

20 ‘‘1203’’; and 

21 (2) by adding at the end the following new sub22 section: 

23 ‘‘(b) VOLUNTARY ABATEMENT AGREEMENTS.— 

24 ‘‘(1) IN GENERAL.—The governor of any State 

25 that has outstanding repayable advances from the 


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1 Federal unemployment account pursuant to sub2 section (a) may apply to the Secretary of Labor to 

3 enter into a voluntary principal abatement agree4 ment. 

5 ‘‘(2) CONTENTS OF APPLICATION.—An applica6 tion described in paragraph (1) shall include a plan 

7 that, based upon reasonable economic projections, 

8 describes how the State will, within a reasonable pe9 riod of time— 

10 ‘‘(A) repay the outstanding principal on its 

11 remaining advance to the Federal unemploy12 ment account, less the amount of the principal 

13 abatement pursuant to paragraph (4); and 

14 ‘‘(B) restore the solvency of the State’s ac15 count in the Unemployment Trust Fund to an 

16 average high cost multiple of 1.0, as calculated 

17 and defined by the United States Department 

18 of Labor. 

19 ‘‘(3) REQUIREMENT FOR PLAN.—A plan de20 scribed in paragraph (2) shall be premised on the 

21 existing unemployment compensation law of the 

22 State and may take into consideration the enactment 

23 of any changes in law scheduled to become effective 

24 during the life of the plan. 


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1 ‘‘(4) AGREEMENT.—Upon review of the applica2 tion and satisfaction that the State’s plan will meet 

3 the repayment and solvency goals described in para4 graph (2), the Secretary of Labor may enter into a 

5 principal abatement agreement with the State. Such 

6 an agreement shall be for a period of no more than 

7 7 years. 

8 ‘‘(5) CALCULATION.—Under any voluntary 

9 abatement agreement under this subsection, the 

10 amount of principal abatement shall be calculated as 

11 follows: 

12 ‘‘(A) The State’s repayable advances as of 

13 the date of the enactment of this subsection or 

14 December 31, 2011, whichever is earlier, shall 

15 be multiplied by a loan forgiveness multiplier. 

16 ‘‘(B) The State’s loan forgiveness multi17 plier shall be calculated on the same basis as 

18 the temporary increase of Medicaid FMAP 

19 under section 5001(c)(2)(A) of division B of the 

20 American Recovery and Reinvestment Act of 

21 2009, using the State’s additional FMAP tier 

22 as of December 31, 2010. In the case of a State 

23 that meets the criteria described in— 


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1 ‘‘(i) clause (i) of such section 

2 5001(c)(2)(A), the loan multiplier shall be 

3 0.2; 

4 ‘‘(ii) clause (ii) of such section 

5 5001(c)(2)(A), the loan multiplier shall be 

6 0.4; and 

7 ‘‘(iii) clause (iii) of such section 

8 5001(c)(2)(A), the loan multiplier shall be 

9 0.6. 

10 ‘‘(C) The annual amount of principal 

11 abatement shall equal one-seventh of the total 

12 amount of principal abatement. 

13 ‘‘(6) CERTIFICATION.—Under any voluntary 

14 abatement agreement under this subsection, the 

15 State shall certify that during the period of the 

16 agreement— 

17 ‘‘(A) the method governing the computa18 tion of regular unemployment compensation 

19 under the State law of the State will not be 

20 modified in a manner such that the average 

21 weekly benefit amount of regular unemployment 

22 compensation which will be payable during the 

23 period of the agreement will be less than the av24 erage weekly benefit amount of regular unem25 ployment compensation which would have otherVerDate Mar 15 2010 18:51 Feb 18, 2011 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S386.IS S386

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1 wise been payable under the State law as in ef2 fect on the date of the enactment of this sub3 section; 

4 ‘‘(B) State law will not be modified in a 

5 manner such that any unemployed individual 

6 who would be eligible for regular unemployment 

7 compensation under the State law in effect on 

8 such date of enactment would be ineligible for 

9 regular unemployment compensation during the 

10 period of the agreement or would be subject to 

11 any disqualification during the period of the 

12 agreement that the individual would not have 

13 been subject to under the State law in effect on 

14 such date of enactment; 

15 ‘‘(C) State law will not be modified in a 

16 manner such that the maximum amount of reg17 ular unemployment compensation that any un18 employed individual would be eligible to receive 

19 in a benefit year during the period of the agree20 ment will be less than the maximum amount of 

21 regular unemployment compensation that the 

22 individual would have been eligible to receive 

23 during a benefit year under the State law in ef24 fect on such date of enactment; and 


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1 ‘‘(D) upon a determination by the Sec2 retary of Labor that the State has modified 

3 State law in a manner inconsistent with the 

4 certification described in the preceding provi5 sions of this paragraph or has failed to comply 

6 with any certifications required by this para7 graph, the State shall be liable for any principal 

8 previously abated under the agreement. 

9 ‘‘(7) TRANSFER.—Under a voluntary abatement 

10 agreement under this subsection, a transfer of the 

11 annual amount of the principal abatement shall be 

12 made to the State’s account in the Unemployment 

13 Trust Fund on December 31st of the year in which 

14 the agreement is executed so long as the State has 

15 complied with the terms of the agreement. For each 

16 subsequent year that the Secretary of Labor certifies 

17 that the State is in compliance with the terms of the 

18 agreement, the annual amount of the State’s prin19 cipal abatement will be credited to its outstanding 

20 loan balance. If the loan balance reaches zero while 

21 the State still has a remaining principal abatement 

22 amount, the remaining amount shall be made as a 

23 positive balance transfer to the State’s account in 

24 the Unemployment Trust Fund. 


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1 ‘‘(8) REGULATIONS.—The Secretary of Labor 

2 shall promulgate such regulations as are necessary 

3 to implement this subsection. Such regulations shall 

4 include— 

5 ‘‘(A) standards prescribing a reasonable 

6 period of time for a State plan to reach a sol7 vency level equal to an average high cost mul8 tiple of 1.0, taking into account the economic 

9 conditions and level of insolvency of the State; 

10 and 

11 ‘‘(B) guidelines for insuring progress to12 ward solvency for States with agreements that 

13 include plans that require more than 7 years to 

14 reach an average high cost multiple of 1.0.’’. 

15 (b) EFFECTIVE DATE.—The amendments made by 

16 this section shall take effect on the date of the enactment 

17 of this Act. 

18 SEC. 7. REWARDS AND INCENTIVES FOR SOLVENT STATES 

19 AND EMPLOYERS IN THOSE STATES. 

20 (a) INCREASED INTEREST FOR SOLVENT STATES.— 

21 (1) IN GENERAL.—Section 904(e) of the Social 

22 Security Act (42 U.S.C. 1104(e)) is amended by 

23 adding at the end the following new flush sentences: 

24 ‘‘The separate book account for each State agency shall 

25 be augmented by 0.5 percent over the rate of interest proVerDate Mar 15 2010 18:51 Feb 18, 2011 Jkt 099200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\S386.IS S386

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1 vided in subsection (b) when the State maintains reserves 

2 in the account that equal or exceed an average high cost 

3 multiple of 1.0 as defined by the Secretary of Labor as 

4 of December 31st of the preceding year. The State may 

5 apply the additional funds to support State administration 

6 pursuant to the requirements in section 903(c).’’. 

7 (b) LOWER RATE OF TAX FOR SOLVENT STATES.— 

8 (1) IN GENERAL.—Section 3301 of the Internal 

9 Revenue Code of 1986, as amended by section 3, is 

10 amended by adding at the end the following new 

11 sentence: ‘‘For the second 6-month period of 2011 

12 or for each calendar year thereafter, in the case of 

13 a State that maintains reserves in the State’s sepa14 rate book account that equal or exceed an average 

15 high cost multiple of 1.0 as of December 31st of the 

16 year preceding the period or year involved, para17 graph (1) shall be applied for such period or year in 

18 the State by substituting ‘6.0 percent’ for ‘6.2 per19 cent’ or, as the case may be, paragraph (2) shall be 

20 applied for such period or year in the State by sub21 stituting ‘5.68 percent’ for ‘5.78 percent’.’’. 

22 (2) EFFECTIVE DATE.—The amendment made 

23 by this subsection shall take effect on the earlier 

24 of— 


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1 (A) the date of the enactment of this Act; 

2 or 

3 (B) July 1, 2011. 

Æ 


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