II 

110TH CONGRESS 

1ST SESSION S. 1871 

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

improvements in State unemployment compensation laws. 

IN THE SENATE OF THE UNITED STATES 

JULY 25, 2007 

Mr. KENNEDY (for himself, Ms. SNOWE, Mr. ROCKEFELLER, Mr. WARNER, 

and Ms. CANTWELL) introduced the following bill; which was read twice 

and referred to the Committee on Finance 

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’’. 


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

2 UNEMPLOYMENT TRUST FUND. 

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

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

5 the following: 

6 ‘‘Special Transfers in Fiscal Years 2008 Through 2012 

7 ‘‘(f)(1)(A) In addition to any other amounts, the Sec8 retary of Labor shall provide for the making of unemploy9 ment compensation modernization incentive payments (in 

10 this subsection referred to as ‘incentive payments’) to the 

11 accounts of the States in the Unemployment Trust Fund, 

12 by transfer from amounts reserved for that purpose in the 

13 Federal unemployment account, in accordance with suc14 ceeding provisions of this subsection. 

15 ‘‘(B) Subject to paragraph (5), the maximum incen16 tive payment allowable under this subsection with respect 

17 to any State shall, as determined by the Secretary of 

18 Labor, be equal to the amount obtained by multiplying 

19 $7,000,000,000 times the same ratio as is applicable 

20 under subsection (a)(2)(B) for purposes of determining 

21 such State’s share of any funds to be transferred under 

22 subsection (a) as of October 1, 2007. 

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

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

25 ‘‘(i) one-third shall be transferred upon a cer26 tification under paragraph (4)(B) that the State law 


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1 of such State meets the requirements of paragraph 

2 (2); and 

3 ‘‘(ii) the remainder shall be transferred upon a 

4 certification under paragraph (4)(B) that the State 

5 law of such State meets the requirements of para6 graph (3). 

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

8 of this paragraph if such State law— 

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

10 recently completed calendar quarter before the start 

11 of the benefit year for purposes of determining eligi12 bility for unemployment compensation; or 

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

14 who would not otherwise be eligible for unemploy15 ment compensation under the State law because of 

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

17 most recently completed calendar quarter before the 

18 start of the benefit year, eligibility shall be deter19 mined using a base period that includes such cal20 endar quarter. 

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

22 of this paragraph if such law includes provisions to carry 

23 out at least 2 of the following subparagraphs: 

24 ‘‘(A) An individual shall not be denied com25 pensation under any State law provisions relating to 


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1 availability for work, active search for work, or re2 fusal to accept work, solely because such individual 

3 is seeking only part-time (and not full-time) work, 

4 except that such law may provide for the provisions 

5 carrying out this subparagraph to require up to, but 

6 not to exceed, a majority of weeks of work of such 

7 individual’s base period to consist of part-time em8 ployment. 

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

10 from compensation for separating from work for 

11 compelling family reasons, which, for purposes of 

12 this subparagraph, shall include at least the fol13 lowing: 

14 ‘‘(i) A separation from employment in 

15 which domestic violence causes the individual 

16 reasonably to believe that such separation is 

17 necessary for the safety of the individual or the 

18 individual’s family, as verified by such reason19 able and confidential documentation that may 

20 be required by the State. 

21 ‘‘(ii) A separation from employment result22 ing from the illness or disability of a member 

23 of the individual’s immediate family. 


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1 ‘‘(iii) A separation from employment re2 sulting from the individual’s need to accompany 

3 a spouse— 

4 ‘‘(I) to a place from which it is im5 practical for such individual to commute; 

6 and 

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

8 the spouse’s employment. 

9 ‘‘(C) Weekly unemployment compensation is 

10 payable under this subparagraph to any individual 

11 who is unemployed (as determined under the State 

12 unemployment compensation law), has exhausted all 

13 rights to regular and (if applicable) extended unem14 ployment compensation under the State law, and is 

15 enrolled and making satisfactory progress in a 

16 State-approved training program or in a job training 

17 program authorized under the Workforce Investment 

18 Act of 1998. Such program shall prepare individuals 

19 who have been separated from a declining occupa20 tion, or who have been involuntarily and indefinitely 

21 separated from employment as a result of a perma22 nent reduction of operations at the individual’s place 

23 of employment, for entry into a high-demand occu24 pation. In addition, such program may prepare other 

25 unemployed individuals deemed eligible by the State. 


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1 The amount of unemployment compensation payable 

2 under this subparagraph to an individual for a week 

3 of unemployment shall be equal to the individual’s 

4 average weekly benefit amount (including depend5 ents’ allowances) for the most recent benefit year, 

6 and the total amount of unemployment compensa7 tion payable under this subparagraph to any indi8 vidual shall be equal to at least 26 times the individ9 ual’s average weekly benefit amount (including de10 pendents’ allowances) for the most recent benefit 

11 year. 

12 ‘‘(D) The maximum amount of compensation— 

13 ‘‘(i) payable to the individual during a ben14 efit year is equal to at least 26 times the indi15 vidual’s weekly benefit amount; or 

16 ‘‘(ii) the individual receives during a ben17 efit year exceeds half of the individual’s total 

18 wages during the base period. 

19 A State shall not be considered to satisfy clause (i) 

20 if it reduced the maximum weekly benefit amount of 

21 compensation payable to an individual during a ben22 efit year below the amount that was in effect as of 

23 the date of enactment of this subsection. 

24 ‘‘(E) Dependents’ allowances are provided to all 

25 individuals with a dependent (as defined by State 


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1 law) equal to at least $15 per dependent per week, 

2 subject to any aggregate limitation on such allow3 ances which the State law may establish (but which 

4 aggregate limitation on the total allowance for de5 pendents paid to an individual may not be less than 

6 the lesser of $50 for each week of unemployment or 

7 50 percent of the individual’s weekly benefit amount 

8 for the benefit year). 

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

10 under this subsection shall submit an application therefor 

11 at such time and in such manner as the Secretary of 

12 Labor shall by regulation prescribe. Such application shall 

13 include information on how the State intends to use incen14 tive payments to improve or strengthen the State’s unem15 ployment compensation program. The Secretary of Labor 

16 shall, within 90 days after receiving any such application, 

17 notify the State agency of the State as to the Secretary’s 

18 findings with respect to the requirements of paragraph (2) 

19 or (3) (as the case may be). 

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 or which are subject 

23 to discontinuation under certain conditions) meet the re24 quirements of paragraph (2) or (3) (as the case may be) 

25 and that unemployment compensation claimants have 


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1 begun to qualify for benefits under such requirements, the 

2 Secretary of Labor shall thereupon make a certification 

3 to that effect to the Secretary of the Treasury, together 

4 with a certification as to the amount of the incentive pay5 ment to be transferred to the State account pursuant to 

6 that finding. The Secretary of the Treasury shall make 

7 the appropriate transfer within 30 days after receiving 

8 such certification. 

9 ‘‘(C)(i) No certification of compliance with the re10 quirements of paragraph (2) or (3) may be made with re11 spect to any State whose State law is not otherwise eligible 

12 for certification under section 303 or approvable under 

13 section 3304 of the Federal Unemployment Tax Act. 

14 ‘‘(ii) No certification of compliance with the require15 ments of paragraph (3) may be made with respect to any 

16 State whose State law is not in compliance with the re17 quirements of paragraph (2). 

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

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

20 the latest date by which it must be submitted (as specified 

21 by the Secretary of Labor in regulations) to ensure that 

22 all incentive payments under this subsection are made be23 fore October 1, 2012. 

24 ‘‘(5)(A) If the Secretary of Labor determines, within 

25 30 days after the deadline described in paragraph 


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1 (4)(C)(iii), that there are amounts reserved for incentive 

2 payments under paragraph (7) for which the Secretary of 

3 the Treasury has not received a certification under para4 graph (4)(B), from such amounts— 

5 ‘‘(i) first, 10 percent of such amounts shall be 

6 made available for transfer to the accounts of States 

7 under subsection (g); and 

8 ‘‘(ii) second, from the remainder of such 

9 amounts, incentive payments that are in addition to 

10 those made under paragraph (1) shall be made to 

11 States described in subparagraph (E). 

12 ‘‘(B)(i) The amount of additional incentive payments 

13 to a State under subparagraph (A)(ii) shall be an amount 

14 equal to the sum of— 

15 ‘‘(I) the amount obtained by multiplying the 

16 total amount determined by the Secretary of Labor 

17 under subparagraph (A) (after application of clause 

18 (i) of such subparagraph) times the same ratio as is 

19 applicable under subsection (a)(2)(B) for purposes 

20 of determining such State’s share of any funds to be 

21 transferred under subsection (a) as of October 1, 

22 2007; and 

23 ‘‘(II) an amount equal to the total amount de24 termined by the Secretary of Labor under subpara25 graph (A) (after application of clause (i) of such 


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1 subparagraph) less the total amount of additional in2 centive payments under subclause (I) for all States, 

3 divided by the total number of States receiving addi4 tional incentive payments. 

5 ‘‘(ii) In no case may the amount of an additional in6 centive payment transferred to a State under this para7 graph exceed an amount equal to 2 times the total amount 

8 of the incentive payment transferred to the State under 

9 paragraph (1)(C). 

10 ‘‘(C) For each State described in subparagraph (E), 

11 the Secretary shall make a certification to that effect to 

12 the Secretary of the Treasury, together with a certification 

13 as to the amount of the additional incentive payment to 

14 be transferred to the State account pursuant this para15 graph. The Secretary of the Treasury shall make the ap16 propriate transfer within 30 days after receiving such cer17 tification. 

18 ‘‘(D) The Secretary of Labor shall certify to the Sec19 retary of the Treasury the amount to be made available 

20 for transfer under subparagraph (A)(i). 

21 ‘‘(E) For purposes of subparagraph (A), a State is 

22 described in this subparagraph if the Secretary of the 

23 Treasury received a certification under paragraph (4)(B) 

24 that the State law of such State meets the requirements 

25 of paragraphs (2) and (3). 


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1 ‘‘(6)(A) Except as provided in subparagraph (B), 

2 amounts transferred to a State account pursuant to para3 graphs (4)(B) and (5)(C) may be used only in the pay4 ment of cash benefits to individuals with respect to their 

5 unemployment. 

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

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

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

9 (b)’ in subparagraph (D) thereof to include this sub10 section), use any amount transferred to the account of 

11 such State under paragraphs (4)(B) and (5)(C) for the 

12 administration of its unemployment compensation law and 

13 public employment offices. 

14 ‘‘(7) Out of any money in the Federal unemployment 

15 account not otherwise appropriated, the Secretary of the 

16 Treasury shall reserve $7,000,000,000 to carry out this 

17 subsection. For purposes of section 902, the net balance 

18 in the Federal unemployment account as of any time is 

19 the amount in such account as of such time reduced by 

20 an amount equal to the total amount so reserved less the 

21 total of the incentive payments transferred under this sub22 section (and the total amount transferred under para23 graph (5)(A)(i)) as of such time. 


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1 ‘‘Special Transfers in Fiscal Years 2008 Through 2012 

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

3 section, the total amount available for transfer to the ac4 counts of the States pursuant to subsection (a) as of the 

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

6 and 2012 shall be equal to the total amount which (dis7 regarding this subsection) would otherwise be so available, 

8 increased by $100,000,000 (or, in the case of fiscal year 

9 2012, $100,000,000 plus the amount made available for 

10 transfer under subsection (f)(5)(A)(i)). 

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

12 made available by this subsection shall be determined, cer13 tified, and computed in the same manner as described in 

14 subsection (a)(2) and shall be subject to the same limita15 tions on transfers as described in subsection (b). For pur16 poses of applying subsection (b)(2), the balance of any ad17 vances made to a State under section 1201 shall be cred18 ited against, and operate to reduce (but not below zero)— 

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

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

21 transferred to the account of such State in a fiscal 

22 year; and 

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

24 this subsection) is otherwise to be transferred to the 


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1 account of such State pursuant to subsections (a) 

2 and (b) in such fiscal year. 

3 ‘‘(3) Any additional amount transferred to the ac4 count of a State as a result of the enactment of this sub5 section— 

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

7 State only in the payment of expenses incurred by 

8 it for— 

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

10 its State law carrying out the purposes of sub11 section (f)(2) or any subparagraph of sub12 section (f)(3); 

13 ‘‘(ii) improved outreach to individuals who 

14 might be eligible for compensation by virtue of 

15 any provisions of the State law which are de16 scribed in clause (i); 

17 ‘‘(iii) the improvement of unemployment 

18 benefit and unemployment tax operations; and 

19 ‘‘(iv) staff-assisted reemployment services 

20 for unemployment insurance claimants; and 

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

22 subsection (c). 

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

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

25 amounts remaining in the employment security adminisVerDate Aug 31 2005 01:50 Jul 27, 2007 Jkt 059200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\S1871.IS S1871

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1 tration account after subtracting the total amount which 

2 (disregarding this subsection) is otherwise required to be 

3 transferred from such account in such fiscal year pursuant 

4 to subsections (a) and (b).’’. 

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

6 prescribe any regulations necessary to carry out the 

7 amendment made by subsection (a). 

8 SEC. 3. EXTENSION OF FUTA TAX. 

9 Section 3301 of the Internal Revenue Code of 1986 

10 (relating to rate of tax) is amended— 

11 (1) by striking ‘‘2007’’ in paragraph (1) and in12 serting ‘‘2012’’, and 

13 (2) by striking ‘‘2008’’ in paragraph (2) and in14 serting ‘‘2013’’. 

Æ 


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