I

106TH CONGRESS

1ST SESSION H. R. 1830

To enhance the Federal-State Extended Benefit program, to provide incentives

to States to implement procedures that will expand eligibility for unemployment compensation, to strengthen administrative financing of the

unemployment compensation program, to improve the solvency of State

accounts in the Unemployment Trust Fund, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MAY 17, 1999

Mr. LEVIN (for himself, Mr. ENGLISH, Mr. KLECZKA, Mr. HILLIARD, Mr.

THOMPSON of Mississippi, Mr. KUCINICH, and Ms. SCHAKOWSKY) introduced the following bill; which was referred to the Committee on Ways

and Means

A BILL

To enhance the Federal-State Extended Benefit program,

to provide incentives to States to implement procedures

that will expand eligibility for unemployment compensation, to strengthen administrative financing of the unemployment compensation program, to improve the solvency

of State accounts in the Unemployment Trust Fund,

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,
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1 SECTION 1. SHORT TITLE.

2 This Act may be cited as the ‘‘Unemployment Com3 pensation Amendments of 1999’’.

4 SEC. 2. AMENDMENTS TO EXTENDED BENEFIT PROGRAM.

5 (a) REPEAL OF CERTAIN STATE LAW REQUIRE6 MENTS.—Section 202 of the Federal-State Extended Un7 employment Compensation Act of 1970 (26 U.S.C. 3304

8 note) is amended—

9 (1) by striking paragraphs (3), (4), (5), (6),

10 and (7) of subsection (a); and

11 (2) by repealing subsection (c).

12 (b) ESTABLISHMENT OF MANDATORY TRIGGERS

13 BASED ON TOTAL UNEMPLOYMENT.—

14 (1) STATE ‘ON’ AND ‘OFF’ INDICATORS.—Sub15 section (d) of section 203 of such Act is amended to

16 read as follows:

17 ‘‘State ‘On’ and ‘Off’ Indicators

18 ‘‘(d) For purposes of this section—

19 ‘‘(1) There is a State ‘on’ indicator for a week

20 if—

21 ‘‘(A)(i) the average rate of total unemploy22 ment in such State (seasonally adjusted) for the

23 period consisting of the most recent three

24 months for which data for all States are pub25 lished before the close of the week equals or ex26 ceeds 7.5 percent, and
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1 ‘‘(ii) the average rate of total unemploy2 ment in such State (seasonally adjusted) for the

3 3-month period referred to in clause (i) equals

4 or exceeds 110 percent of such average for ei5 ther (or both) of the corresponding 3-month pe6 riods ending in the two preceding calendar

7 years; or

8 ‘‘(B) the average rate of total unemploy9 ment for such State (seasonally adjusted) for

10 the period consisting of the most recent 3

11 months for which data for all States are pub12 lished before the close of the week equals or ex13 ceeds 10 percent.

14 ‘‘(2) There is a State ‘off’ indicator for a week

15 unless the requirements of subparagraph (A) or (B)

16 of paragraph (1) are satisfied.’’.

17 (2) DETERMINATION OF RATES OF TOTAL UN18 EMPLOYMENT AND INSURED UNEMPLOYMENT.—

19 Subsection (e) of section 203 of such Act is amended

20 to read as follows:

21 ‘‘Determination of Rates of Total Unemployment and

22 Insured Unemployment

23 ‘‘(e)(1) For purposes of this Act, determinations of

24 the rate of total unemployment in any State for any period
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1 (and of any seasonal adjustments) shall be made by the

2 Secretary.

3 ‘‘(2)(A) For purposes of subsection (f)(2), the rate

4 of insured unemployment for any thirteen-week period

5 shall be determined by reference to the average monthly

6 covered employment under the State law for the first four

7 of the most recent six calendar quarters ending before the

8 close of such period.

9 ‘‘(B) For purposes of subsection (f)(2), the term ‘rate

10 of insured unemployment’ means the percentage arrived

11 at by dividing—

12 ‘‘(i) the average weekly number of individuals

13 filing claims for regular compensation for weeks of

14 unemployment with respect to the specified period,

15 as determined on the basis of the reports made by

16 the State agency to the Secretary, by

17 ‘‘(ii) the average monthly covered employment

18 for the specified period.

19 ‘‘(C) Determinations under subsection (f)(2) shall be

20 made by the State agency in accordance with regulations

21 prescribed by the Secretary.’’.

22 (c) REQUIREMENTS FOR SUPPLEMENTAL BENEFITS

23 DURING HIGH UNEMPLOYMENT PERIODS.—

24 (1) IN GENERAL.—Subparagraph (B) of section

25 202(b)(3) of such Act is amended to read as follows:
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1 ‘‘(B) For purposes of subparagraph (A), the term

2 ‘high unemployment period’ means any period during

3 which an extended benefit period would be in effect if—

4 ‘‘(i)(I) section 203(d)(1)(A)(i) were applied by

5 substituting ‘10 percent’ for ‘7.5 percent’; and

6 ‘‘(II) section 203(d)(1)(B) were applied by sub7 stituting ‘12.5 percent’ for ‘10 percent’; and

8 ‘‘(ii) section 203(f)(1)(A)(i) were applied by

9 substituting ‘8 percent’ for ‘6.5 percent’.’’.

10 (2) TECHNICAL AMENDMENT.—Subsection (b)

11 of section 202 of such Act is amended by moving the

12 text of paragraph (3)(A) of such subsection 2 ems

13 to the left.

14 (d) AMENDMENTS TO ALTERNATIVE TRIGGER.—Sec15 tion 203(f) of such Act is amended—

16 (1) in paragraph (1), by striking ‘‘Effective

17 with respect to compensation for weeks of employ18 ment beginning after March 6, 1993, the’’ and in19 serting ‘‘In lieu of applying the indicator specified in

20 subsection (d)(1)(A), a’’;

21 (2) by amending paragraph (2) to read as fol22 lows:

23 ‘‘(2) A State may by law provide that, for the purpose

24 of beginning or ending any extended period under this sec-
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1 tion, in addition to the indicators specified in subsection

2 (d) and paragraph (1) of this subsection—

3 ‘‘(A) there is a State ‘on’ indicator for a week

4 if the rate of insured unemployment under State law

5 for the period consisting of such week and the imme6 diately preceding twelve weeks equals or exceeds 6

7 percent; and

8 ‘‘(B) there is a State ‘off’ indicator for a week

9 if the requirement set forth in subparagraph (A) is

10 not satisfied.

11 Notwithstanding the provision of any State law described

12 in this paragraph, any week for which there would other13 wise be a State ‘on’ indicator shall continue to be such

14 a week and shall not be determined to be a week for which

15 there is a State ‘off’ indicator.’’.

16 SEC. 3. SPECIAL DISTRIBUTIONS TO THE STATES.

17 Section 903(a)(3) of the Social Security Act (42

18 U.S.C. 1103(a)(3)) is amended—

19 (1) in subparagraph (A) by amending clauses

20 (i) and (ii) to read as follows:

21 ‘‘(i) be subject to subparagraphs (B)

22 and (C), to the extent such amounts are

23 not in excess of the sum of—

24 ‘‘(I) $20,000,000, plus
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1 ‘‘(II) the amount determined by

2 the Secretary of Labor to be the dif3 ference between the amount necessary

4 for the proper and efficient adminis5 tration of the unemployment com6 pensation program for the succeeding

7 fiscal year (taking into account work8 load and other appropriate factors)

9 and $2,419,000,000, and

10 ‘‘(ii) be subject to subparagraph (D),

11 to the extent such amounts are in excess of

12 the sum of subclauses (I) and (II) of

13 clause (i).’’;

14 (2) in subparagraph (B) by striking ‘‘(A)(i)’’

15 and inserting ‘‘(A)(i)(II)’’;

16 (3) by redesignating subparagraphs (B) and

17 (C) as subparagraphs (C) and (D), respectively; and

18 (4) by inserting after subparagraph (A) the fol19 lowing new subparagraph:

20 ‘‘(B) The Secretary of Labor shall reserve the

21 amount specified in subparagraph (A)(i)(I) (at the close

22 of fiscal years 1999, 2000, and 2001) to award grants

23 to the States in fiscal years 2000, 2001, and 2002 to as24 sist in the implementation of alternative base periods for

25 determining the eligibility of claimants. Such alternative
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1 base periods shall reduce the period of time between the

2 end of the base period for a claimant and the filing of

3 a claim for compensation. The amounts reserved pursuant

4 to this subparagraph shall be available to the Secretary

5 of Labor for obligation through fiscal year 2002.’’.

6 SEC. 4. SOLVENCY REQUIREMENTS.

7 Section 903(b) of the Social Security Act (42 U.S.C.

8 1103(b)) is amended by adding at the end the following

9 new paragraph:

10 ‘‘(3)(A) If the Secretary of Labor finds that, as of

11 December 31, 2001, a State has not achieved, or made

12 acceptable progress toward achieving, the solvency target

13 established pursuant to subparagraph (B), then, subject

14 to the limitation described in subparagraph (C), the

15 amount available under this section for transfer to such

16 State account for the succeeding fiscal year shall, in lieu

17 of being so transferred, be transferred to the States meet18 ing the requirements of this subsection. The transfers

19 shall be made to such States based on the share of funds

20 of each such State under subsection (a)(2), except that,

21 for purposes of this subparagraph, the ratio under sub22 section (a)(2) shall be adjusted by excluding the wages at23 tributable to the States failing to meet the requirements

24 of this subparagraph.
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1 ‘‘(B)(i) For December 31, 2001, the solvency target

2 shall be an average high cost multiple of 1.0. For purposes

3 of this subparagraph, the average high cost multiple rep4 resents the number of years a State could pay unemploy5 ment compensation (based on the reserve ratio of such

6 State) if the State paid such compensation at a rate equiv7 alent to the average benefit cost rate such State paid in

8 the three calendar years during the preceding 20 calendar

9 years (or, if longer, during the period consisting of the

10 preceding three recessions as determined by the National

11 Bureau of Economic Research) that the benefit cost rates

12 were the highest. For purposes of making this

13 determination—

14 ‘‘(I) the term ‘reserve ratio’ means the ratio de15 termined by dividing the balance in the State ac16 count at the end of the calendar year by the total

17 covered wages in the State for such year;

18 ‘‘(II) the term ‘benefit cost rate’ means the rate

19 determined by dividing the unemployment compensa20 tion paid during a calendar year by the total covered

21 wages in the State for such year; and

22 ‘‘(III) the ratio and rates determined under

23 subclauses (I) and (II) shall exclude the wages and

24 unemployment compensation paid by employers cov-
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1 ered under section 3309 of the Internal Revenue

2 Code of 1986.

3 ‘‘(ii) For December 31, 2001, acceptable progress to4 wards achieving the solvency target shall mean that a

5 State has reduced any difference between 1.0 and the av6 erage high cost multiple of such State (if such multiple

7 is less than 1.0) that the Secretary found to exist as of

8 December 31, 1998, by an amount equal to or exceeding

9 5 percent of such difference.

10 ‘‘(iii) The Secretary may adjust the solvency target

11 specified in clause (i), or the criteria for determining

12 whether there is acceptable progress towards achieving the

13 solvency target specified in clause (ii), for States that ex14 perience significant increases in unemployment during the

15 period between December 31, 1998, and December 31,

16 2001. The Secretary shall establish objective criteria for

17 making such adjustments.

18 ‘‘(iv) A State shall include, as part of the annual

19 State plan relating to the administration of grants under

20 this title, such information as the Secretary may request

21 relating to the manner in which the State intends to

22 achieve the solvency target established pursuant to this

23 paragraph.

24 ‘‘(C) The requirements of subparagraph (A) shall

25 apply to excess (referred to in subsection (a)(1)) remain-
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1 ing in the employment security account at the close of fis2 cal year 2002 that are equal to or less than

3 $2,900,000,000. Such requirements shall not apply to any

4 such excess amounts that are greater than

5 $2,900,000,000.’’.

6 SEC. 5. TREATMENT OF SHORT-TIME COMPENSATION PRO7 GRAMS.

8 (a) GENERAL RULE.—Section 3306 of the Internal

9 Revenue Code of 1986 (26 U.S.C. 3306) is amended by

10 adding at the end the following new subsection:

11 ‘‘(u) SHORT-TIME COMPENSATION PROGRAM.—For

12 purposes of this chapter, the term ‘short-time compensa13 tion program’ means a program under which—

14 ‘‘(1) the participation of an employer is vol15 untary;

16 ‘‘(2) an employer reduces the number of hours

17 worked by employees in lieu of temporary layoffs;

18 ‘‘(3) such employees whose workweeks have

19 been reduced by at least 10 percent are eligible for

20 unemployment compensation;

21 ‘‘(4) the amount of unemployment compensa22 tion payable to any such employee is a pro rata por23 tion of the unemployment compensation which would

24 be payable to the employee if such employee were to25 tally unemployed;
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1 ‘‘(5) such employees are not required to meet

2 the availability for work or work search test require3 ments while collecting short-time compensation bene4 fits, but are required to be available for their normal

5 workweek;

6 ‘‘(6) eligible employees may participate in an

7 employer-sponsored training program to enhance job

8 skills if such program has been approved by the

9 State agency;

10 ‘‘(7) the State agency may require an employer

11 to continue to provide health benefits, and retire12 ment benefits under a defined benefit pension plan

13 (as defined in section 414(j)) to any employee whose

14 workweek is reduced pursuant to the program as

15 though the workweek of such employee had not been

16 reduced;

17 ‘‘(8) the State agency may require an employer

18 (or an employers’ association which is party to a col19 lective bargaining agreement) to submit a written

20 plan describing the manner in which the require21 ments of this subsection will be implemented and

22 containing such other information as the Secretary

23 of Labor determines is appropriate; and
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1 ‘‘(9) the program meets such other require2 ments as the Secretary of Labor determines are ap3 propriate.’’.

4 (b) CONFORMING AMENDMENTS.—

5 (1) Subparagraph (E) of section 3304(a)(4) of

6 such Code (26 U.S.C. 3304(a)(4)(E)) is amended to

7 read as follows:

8 ‘‘(E) amounts may be withdrawn for the

9 payment of short-time compensation under a

10 short-time compensation program (as defined

11 under section 3306(u));’’.

12 (2) Paragraph (5) of section 3306(f) of such

13 Code (26 U.S.C. 3306(f)(5)) is amended to read as

14 follows:

15 ‘‘(5) amounts may be withdrawn for the pay16 ment of short-time compensation under a short-time

17 compensation program (as defined under subsection

18 (u)); and’’.

19 (3) Section 303(a)(5) of the Social Security Act

20 (42 U.S.C. 503(a)(5)) is amended by striking ‘‘the

21 payment of short-time compensation under a plan

22 approved by the Secretary of Labor’’ and inserting

23 ‘‘the payment of short-time compensation under a

24 short-time compensation program (as defined in sec-
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1 tion 3306(u) of the Internal Revenue Code of

2 1986)’’.

3 SEC. 6. EFFECTIVE DATE.

4 (a) IN GENERAL.—Except as provided in subsection

5 (b), the provisions of this Act shall take effect on the date

6 of enactment of this Act.

7 (b) EXTENDED BENEFIT AMENDMENTS.—

8 (1) Except as provided in paragraph (2), the

9 provisions of section 2 of this Act shall take effect

10 for the weeks beginning on or after October 1, 2002.

11 (2) Pursuant to the enactment of appropriate

12 provisions of the State law, the provisions of section

13 2 may, with respect to such State, take effect for

14 weeks which begin earlier than the weeks specified

15 in paragraph (1), but not earlier than 60 days after

16 the date of enactment of this Act.

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