I
106TH CONGRESS
1ST SESSION
H. R. 3174
To amend the Internal Revenue Code of 1986, the Social Security Act,
the Wagner-Peyser Act, and the Federal-State Extended Unemployment
Compensation Act of 1970 to improve the method by which Federal
unemployment taxes are collected and to improve the method by which
funds are provided from Federal unemployment tax revenue for employ-
ment security administration, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
OCTOBER 28, 1999
Mr. MCCRERY (for himself, Mr. BOEHNER, Mr. SHAW, Mr. HERGER, Mr.
BAKER, Mr. RAMSTAD, Mr. SUNUNU, Mr. BACHUS, Mr. LATOURETTE,
Mr. OXLEY, Mr. COLLINS, Mr. PORTMAN, Mr. WATKINS, Mr.
HAYWORTH, Mr. MCINNIS, Mr. LEWIS of Kentucky, Ms. PRYCE of Ohio,
Mr. TRAFICANT, Mr. SESSIONS, Mr. CHAMBLISS, Mr. DICKEY, Mrs.
CUBIN, Mr. HANSEN, and Mr. STENHOLM) introduced the following bill;
which was referred to the Committee on Ways and Means, and in addi-
tion to the Committee on Education and the Workforce, for a period to
be subsequently determined by the Speaker, in each case for consider-
ation of such provisions as fall within the jurisdiction of the committee
concerned
A BILL
To amend the Internal Revenue Code of 1986, the Social
Security Act, the Wagner-Peyser Act, and the Federal-
State Extended Unemployment Compensation Act of
1970 to improve the method by which Federal unemploy-
ment taxes are collected and to improve the method
by which funds are provided from Federal unemployment
tax revenue for employment security administration, and
for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Employment Security Financing Act of 1999’’.
(b) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—AMENDMENTS TO THE INTERNAL REVENUE CODE OF
1986
Sec. 101. Repeal of surtax.
Sec. 102. Conforming amendments to section 3304(a).
Sec. 103. Additional requirements for approval of State laws.
Sec. 104. Amendment to section 3304(c).
Sec. 105. State unemployment fund defined.
Sec. 106. Definition of State ESAA.
Sec. 107. Collection of FUTA tax by State agencies.
Sec. 108. Payment of FUTA tax to State agencies.
Sec. 109. Repealer.
TITLE II—UNEMPLOYMENT TRUST FUND ACCOUNTS
Sec. 201. Establishment of unemployment accounts.
Sec. 202. Repeal of subsections (a) and (b) of section 901 of the Social Secu-
rity Act.
Sec. 203. Expenditures for administration.
Sec. 204. Transfer of amounts attributable to reduced credits.
Sec. 205. Establishment of revolving fund.
Sec. 206. Treatment of excess ESAA amounts.
Sec. 207. Treatment of excess FUA amounts.
Sec. 208. Repeal of reporting requirement.
Sec. 209. Treatment of extended unemployment compensation account.
Sec. 210. Treatment of amounts elected by ineligible States.
Sec. 211. Use of Reed Act funds.
Sec. 212. Provisions relating to establishment of Unemployment Trust Fund.
Sec. 213. Separate book accounts.
Sec. 214. Establishment of EUCA account excess and transfers.
Sec. 215. Repeal of interfund borrowing authority.
TITLE III—GRANTS TO STATES FOR EMPLOYMENT SECURITY
ADMINISTRATION
of the total wages (as defined in section 3306(b)) paid
by him during the calendar year with respect to employ-
ment (as defined in section 3306(c)).
SEC. 102. CONFORMING AMENDMENTS TO SECTION 3304(a).
(a) LIMITATION ON USE OF FUNDS.—Paragraph (4)
of section 3304(a) of the Internal Revenue Code of 1986
is amended to read as follows:
‘‘(4) all money withdrawn from the unemploy-
ment compensation benefit account of the unemploy-
ment fund of the State shall be used solely in the
payment of unemployment compensation, exclusive
of expenses of administration, and for refunds of
sums erroneously paid into such fund and refunds
paid in accordance with the provisions of section
3305(b); except that—
‘‘(A) an amount equal to the amount of
employee payments into the unemployment
compensation benefit account of a State may be
used in the payment of cash benefits to individ-
uals with respect to their disability, exclusive of
expenses of administration;
‘‘(B) the amounts specified by section
903(c)(2) of the Social Security Act may, sub-
ject to the conditions prescribed in such section,
be used for expenses incurred by the State for
administration of its unemployment compensa-
tion law and public employment offices;
‘‘(C) nothing in this paragraph shall be
construed to prohibit deducting an amount
from unemployment compensation otherwise
payable to an individual and using the amount
so deducted to apply for health insurance, or
the withholding of Federal, State, or local indi-
vidual income tax, if the individual elected to
have such deduction made and such deduction
was made under a program approved by the
Secretary of Labor;
‘‘(D) amounts may be deducted from un-
employment benefits and used to repay overpay-
ments as provided in section 303(g) of the So-
cial Security Act;
‘‘(E) amounts may be withdrawn for the
payment of short-time compensation under a
plan approved by the Secretary of Labor; and
‘‘(F) amounts may be withdrawn for the
payment of allowances under a self-employment
assistance program (as defined in section
3306(t));’’.
(b) EFFECTIVE DATE.—The amendments made by
this section shall take effect on January 1, 2000.
SEC. 103. ADDITIONAL REQUIREMENTS FOR APPROVAL OF
STATE LAWS.
(a) IN GENERAL.—Section 3304(a) of the Internal
Revenue Code of 1986 is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(18);
(2) by striking the period at the end of para-
graph (19) and inserting a semicolon; and
(3) by adding after paragraph (19) the fol-
lowing:
‘‘(20) funds provided to such State under title
IX of the Social Security Act for public employment
services shall be used—
‘‘(A) for determining whether individuals
claiming unemployment compensation under
State laws conforming to this section are avail-
able to accept suitable work and have not re-
fused suitable work as prescribed by the State
unemployment compensation law;
‘‘(B) for job search and placement services
to individuals claiming unemployment com-
pensation benefits and other job seekers includ-
ing counseling, testing, occupational and labor
market information, assessment, and referral to
employers; and
‘‘(C) for appropriate recruitment services
and special technical services for employers;
‘‘(21) the State agency responsible for adminis-
tration of the State unemployment compensation law
shall submit annual reports to the governor of the
State providing information on services and out-
comes, and such reports shall include information
with respect to—
‘‘(A) the proportion of the individuals
claiming compensation provided employment
services in accordance with titles III and IX of
the Social Security Act;
‘‘(B) the proportion of employers provided
employment services in accord with titles III
and IX of the Social Security Act;
‘‘(C) information regarding referrals and
placements provided in accord with titles III
and IX of the Social Security Act; and
‘‘(D) information on other services such as
counseling and testing provided in accord with
titles III and IX of the Social Security Act; and
‘‘(22) the State agency responsible for adminis-
tration of the State unemployment compensation law
shall, effective for calendar year 2001 and each cal-
endar year thereafter, collect the Federal unemploy-
ment tax imposed pursuant to section 3301 as the
agent of the Secretary of the Treasury.’’
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall take effect on January 1, 2001.
SEC. 104. AMENDMENT TO SECTION 3304(c).
Subsection (c) of section 3304 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the
following: ‘‘No State shall be required to enact a State
law or to take any other action to meet the performance
measures or other standards established by the Secretary
of Labor pursuant to the Government Performance Re-
sults Act of 1993.’’
SEC. 105. STATE UNEMPLOYMENT FUND DEFINED.
(a) IN GENERAL.—Subsection (f) of section 3306 of
the Internal Revenue Code of 1986 is amended to read
as follows:
‘‘(f) For purposes of this chapter, the term ‘unem-
ployment fund’ means a special fund, established under
a State law and administered by a State agency, for the
payment of compensation. Any sums in the unemployment
benefit accounts of the State agency in the Unemployment
Trust Fund established by section 904 of the Social Secu-
rity Act shall be deemed to be a part of the unemployment
fund of the State, and no sums paid out of the Unemploy-
ment Trust Fund to the unemployment benefit account
of such State agency shall cease to be a part of the unem-
ployment fund of the State until expended by such State
agency. An unemployment fund shall be deemed to be
maintained during a taxable year only if throughout such
year, or such portion of the year as the unemployment
fund was in existence, no part of the moneys of such fund
was expended for any purpose other than the payment of
compensation and for refunds of sums erroneously paid
into such fund and refunds paid in accordance with the
provisions of section 3305(b); except that—
‘‘(1) an amount equal to the amount of em-
ployee payments into the unemployment compensa-
tion benefit account within the fund of a State may
be used in the payment of cash benefits drawn from
the unemployment compensation benefit account of
the State within the Unemployment Trust Fund to
individuals with respect to their disability, exclusive
of expenses of administration;
‘‘(2) the amounts specified by section 903(c)(2)
of the Social Security Act may, subject to the condi-
tions prescribed in such section, be used for ex-
penses incurred by the State for administration of
its unemployment compensation law, and public em-
ployment services;
‘‘(3) nothing in this subsection shall be con-
strued to prohibit deducting any amount from unem-
ployment compensation otherwise payable to an indi-
vidual and using the amount so deducted to pay for
health insurance, or the withholding of Federal,
State, or local individual income tax, if the indi-
vidual elected to have such deduction made and such
deduction was made under a program approved by
the Secretary of Labor;
‘‘(4) amounts may be deducted from unemploy-
ment benefits drawn from the State’s unemployment
compensation benefit account within the Unemploy-
ment Trust Fund and used to repay overpayments
as provided in section 303(g) of the Social Security
Act;
‘‘(5) amounts may be withdrawn from the
State’s unemployment compensation benefit account
within the Unemployment Trust Fund for the pay-
ment of short-time compensation under a plan ap-
proved by the Secretary of Labor; and
‘‘(6) amounts may be withdrawn from the
State’s unemployment compensation benefit account
within the Unemployment Trust Fund for the pay-
ment of allowances under a self-employment assist-
ance program (as defined in subsection (t)).’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on October 1, 2000.
SEC. 106. DEFINITION OF STATE ESAA.
(a) IN GENERAL.—Section 3306 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the
following:
‘‘(u) STATE EMPLOYMENT SECURITY ADMINISTRA-
TION ACCOUNT.—For purposes of this chapter, the term
‘State employment security administration account’ means
a special account within the Unemployment Trust Fund
established pursuant to section 904 of the Social Security
Act for the purpose of providing administrative funds to
pay the cost of services performed by the State agency
in accord with section 3304 and titles III and IX of the
Social Security Act. No sums paid out of the account to
the State agency shall cease to be a part of the Unemploy-
ment Trust Fund until expended by such State agency.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on October 1, 2000.
SEC. 107. COLLECTION OF FUTA TAX BY STATE AGENCIES.
(a) IN GENERAL.—Subsection (a) of section 3501 of
the Internal Revenue Code of 1986 is amended to read
as follows:
‘‘(a) GENERAL RULE.—(1) The taxes imposed by this
subtitle shall be collected by the Secretary and shall be
paid into the Treasury of the United States as internal-
revenue collections, except that effective for calendar year
2001 and calendar years thereafter the tax imposed by
section 3301 shall be collected by the State agencies re-
sponsible for administration of the State unemployment
law (or any other State agencies specifically identified by
State law) as agents for the Secretary. Amounts collected
by each State agency shall be paid into the treasury to
the credit of the State employment security administration
account of the State as prescribed in section 3301 and
titles III and IX of the Social Security Act. Effective for
calendar year 2001 and each calendar year thereafter, the
tax, including accounts receivable from prior years, shall
be collected by the State agencies responsible for adminis-
tration of the State unemployment compensation law as
agents for the Secretary of the Treasury. Amounts col-
lected for years prior to calendar year 2004 by each State
agency responsible for administration of the State unem-
ployment compensation law shall be immediately deposited
in the employment security administration account estab-
lished pursuant to section 904 of the Social Security Act.
Amounts collected for calendar year 2004 and years there-
after shall be immediately deposited in the State’s employ-
ment security administration account established pursuant
to section 904 of the Social Security Act. Amounts col-
lected after January 1, 2001, by the Internal Revenue
Service shall be immediately deposited in the employment
security transition account within the Unemployment
Trust Fund established pursuant to section 904 of the So-
cial Security Act.’’.
‘‘(2) The Secretary is authorized to enter into agree-
ments with the State agencies administering State unem-
ployment compensation laws to assist with the administra-
tion of chapter 23 of the Internal Revenue Code of 1986.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on October 1, 2000.
SEC. 108. PAYMENT OF FUTA TAX TO STATE AGENCIES.
(a) IN GENERAL.—The last sentence of section
6157(a) of the Internal Revenue Code of 1986 is amended
to read as follows: ‘‘The tax for any calendar quarter or
other period shall be computed as provided in subsection
(b) and the tax as so computed shall, except as otherwise
provided in subsection (c), be paid, effective for calendar
year 2001 and calendar years thereafter, to the State
agency responsible for administration of the State unem-
ployment compensation law as the agent of the Secretary.
Such taxes shall be paid quarterly.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on October 1, 2000.
SEC. 109. REPEALER.
Paragraph (2) of section 6201(b) of the Internal Rev-
enue Code of 1986 is repealed.
TITLE II—UNEMPLOYMENT
TRUST FUND ACCOUNTS
SEC. 201. ESTABLISHMENT OF UNEMPLOYMENT ACCOUNTS.
(a) IN GENERAL.—Title IX of the Social Security Act
(42 U.S.C. 1395 et seq.) is amended by adding at the end
the following:
‘‘STATE EMPLOYMENT SECURITY ADMINISTRATION
ACCOUNTS
‘‘SEC. 911. There are hereby established in the Un-
employment Trust Fund, the following accounts:
‘‘(1) A State employment security administra-
tion account for each State.
‘‘(A) There is hereby appropriated to the
Unemployment Trust Fund for credit to the
employment security administration account for
each State—
‘‘(i) for the fiscal year ending Sep-
tember 30, 2005, and for each fiscal year
thereafter, an amount equal to 100 percent
of the Federal unemployment tax, includ-
ing interest, penalties and additions to the
tax, received from collection of the tax and
covered into the State’s account; and
‘‘(ii) any amounts transferred to the
account pursuant to this section and sec-
tions 901, 902, and 903.
‘‘(B) At the end of the month following
January 1, 2004, and each month thereafter,
the Secretary of the Treasury shall transfer 2
percent of the amount collected and deposited
that month into each State employment security
administration account pursuant to subpara-
graph (A)(i) to the supplemental employment
security administration account established pur-
suant to this section and section 904.
‘‘(C) At the end of the month following
January 1, 2004, and each month thereafter,
the Secretary of the Treasury shall transfer 2
percent of the amount collected and deposited
that month into each State employment security
administration account pursuant to subpara-
graph (A)(i) to the Secretary of Labor employ-
ment security administration account estab-
lished pursuant to this section and section 904.
‘‘(2)(A) A supplemental employment security
administration account for the administration of em-
ployment security programs in accordance with this
title, title III, and section 3304 of the Internal Rev-
enue Code of 1986 by States whose average civilian
labor force populations number less than 1,000,000.
‘‘(B) There is hereby appropriated to the Un-
employment Trust Fund for credit to the supple-
mental 
employment 
security 
administration
account—
‘‘(i) for the fiscal year ending September
30, 2005, and for each fiscal year thereafter, an
amount equal to 100 percent of the amount
transferred pursuant to paragraph (1)(B); and
‘‘(ii) for fiscal years 2001 through 2004,
amounts transferred to the account pursuant to
subparagraphs 
(C) 
and 
(D) 
of 
section
901(f)(3).
‘‘(3)(A) The Secretary of Labor employment se-
curity administration account for the Secretary of
Labor in carrying out administrative duties as pre-
scribed in this title, title III, and chapter 23 of the
Internal Revenue Code of 1986.
‘‘(B) There is hereby appropriated to the Un-
employment Trust Fund for credit to the Secretary
of Labor employment security administration ac-
count, for the fiscal year ending September 30,
2005, and for each fiscal year thereafter an amount
equal to 100 percent of the amount transferred pur-
suant to paragraph (1)(C).
‘‘USE OF SPECIAL ADMINISTRATIVE FUNDS
‘‘Authorization of Funding for State Spending
‘‘SEC. 912. (a) There are hereby authorized to be
made available for expenditure out of the employment se-
curity administration accounts maintained by the Sec-
retary of the Treasury for each State for fiscal years 2001
through 2004 such amounts as are requested by the
States from their respective State employment security ad-
ministration accounts, subject to appropriation by the leg-
islative body of each State, to be used only for those pur-
poses listed in section 901(f)(3)(C)(ii). Such amounts
shall be available for State appropriation in addition to
amounts otherwise appropriated by Congress.
‘‘Authorization of Supplemental Spending for Small
States Administration
‘‘(b) There are hereby authorized to be made avail-
able for expenditure by States whose average civilian labor
force populations number less than 1,000,000, out of the
supplemental employment security administration ac-
count, $5,000,000 for each of fiscal years 2001 through
2004 
only 
for 
those 
purposes 
listed 
in 
section
901(f)(3)(C)(ii). Such amounts shall be available for State
appropriation in addition to amounts otherwise appro-
priated by Congress.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on October 1, 2000.
SEC. 202. REPEAL OF SUBSECTIONS (a) AND (b) OF SECTION
901 OF THE SOCIAL SECURITY ACT.
(a) IN GENERAL.—Subsections (a) and (b) of section
901 of the Social Security Act (42 U.S.C. 1101) are re-
pealed.
(b) EFFECTIVE DATE.—This section shall take effect
on October 1, 2004.
SEC. 203. EXPENDITURES FOR ADMINISTRATION.
(a) IN GENERAL.—Section 901(c) of the Social Secu-
rity Act (42 U.S.C. 1101(c)) is amended to read as fol-
lows:
‘‘Administrative Expenditures
‘‘(c)(1) There are hereby authorized to be made avail-
able for expenditure out of the employment security ad-
ministration accounts maintained by the Secretary of the
Treasury for the States, effective for the Federal fiscal
year beginning October 1, 2004, and each fiscal year
thereafter, such amounts as are requested by the States
from their respective State employment security adminis-
tration accounts, subject to appropriation by the legisla-
tive body of each State (not in excess of 140 percent of
the amount appropriated to the State agency from Federal
employment security funds for the 12-month period end-
ing September 30 of the previous fiscal year), only for the
purpose of—
‘‘(A) assisting the State in the administration
of its unemployment compensation laws as provided
in title III (including administration pursuant to
agreements under any Federal unemployment com-
pensation law),
‘‘(B) providing public employment services in
accordance with section 7 of the Wagner-Peyser Act,
‘‘(C) carrying into effect section 4103 of title
38, United States Code,
‘‘(D) collection of amounts due under chapter
23 of the Internal Revenue Code of 1986, and
‘‘(E) administration of statistical programs es-
sential for development of estimates of the gross do-
mestic product and other national statistical series,
including those related to employment and unem-
ployment.
Amounts requested by the State but not appropriated by
the State legislative body for the fiscal year for which such
amounts are requested shall be transferred to the State’s
unemployment compensation benefit account as of the be-
ginning of the following Federal fiscal year.
‘‘(2) There are hereby authorized to be made avail-
able for expenditure by States whose average civilian labor
force populations number less than 1,000,000, amounts
out of the supplemental employment security administra-
tion account for the fiscal year ending September 30,
2005, and for each year thereafter. Such amounts shall
be allocated to the States by the Council of States with
Lesser Populations (established under paragraph (3)),
subject to appropriation by the legislative body of each
State, only for those purposes listed in section 901(c)(1).
‘‘(3)(A) The Council of States with Lesser Popu-
lations is hereby established for the purpose of deter-
mining the methodology by which amounts available from
the supplemental employment security administration ac-
count are to be allocated. The council shall be composed
of 1 representative appointed by the Governor of each
State with an average civilian labor force which numbers
less than 1,000,000 for the calendar year ending prior to
the Federal fiscal year for which allocations are to be
made. The council shall be reconstituted each year prior
to the beginning of the ensuing Federal fiscal year.
‘‘(B) The council shall determine amounts to be allo-
cated to the States, except that no State’s allocation for
any fiscal year, when added to the amount available pursu-
ant to section 901(c)(1), shall be less than the amount
appropriated to such State from the employment security
administration account for fiscal year 1995, plus an ad-
justment for increased administrative costs incurred after
1995.
‘‘(C) The council shall notify the Secretary of the
Treasury prior to each fiscal year of the amounts to be
allocated to each State. If the council fails to determine
amounts to be allocated for a fiscal year, such amounts
shall be carried over and maintained in the supplemental
employment security administration account and may be
allocated by the council for following Federal fiscal years.
‘‘(D) Amounts allocated by the council, but not ap-
propriated by the State legislative body for the fiscal year
for which allocation was made, shall be transferred to the
State employment security administration accounts of all
States as of the beginning of the following Federal fiscal
year. Each State’s share of the funds to be transferred
shall bear the same ratio to the total amount to be so
transferred as the amount of wages subject to tax under
section 3301 of the Internal Revenue Code of 1986 during
the preceding calendar year which are determined by the
Secretary of Labor to be attributable to the State, bears
to the total amount of wages subject to such tax during
such year.
‘‘(4)(A) There are hereby authorized to be made
available for expenditure out of the Secretary of Labor
employment security administration account for the fiscal
year ending September 30, 2005, and for each fiscal year
thereafter such amounts (not in excess of 140 percent of
the amount appropriated by Congress for the Department
of Labor from the employment security administration ac-
count for the prior year) as Congress may deem appro-
priate for the necessary expenses of the Department of
Labor for the performance of its functions under—
‘‘(i) this title and titles III and XII,
‘‘(ii) chapter 23 of the Internal Revenue Code
of 1986,
‘‘(iii) chapter 41 (except section 4103) of title
38, United States Code,
‘‘(iv) Federal unemployment compensation laws
effective as of October 1, 1999,
‘‘(v) administration of statistical programs es-
sential for development of estimates of the gross do-
mestic product and other national statistical series,
including those related to employment and unem-
ployment,
‘‘(vi) establishment and maintenance of the em-
ployment security system in accordance with the
Wagner-Peyser Act, and
‘‘(vii) payments of the Federal share of annual
amortization costs of the unfunded liability for the
State employment security agencies with inde-
pendent retirement plans as determined by the Sec-
retary of Labor.
‘‘(B) Amounts appropriated under this paragraph, if
not obligated within the fiscal year for which appropriation
was made, shall be transferred at the close of the fiscal
year to the State employment security administration ac-
counts. Each State’s share shall be provided as in section
903(a)(2)(B).
‘‘(C) The term ‘necessary expenses’, as used in this
paragraph, shall include the expense of reimbursing a
State for salaries and other expenses of employees of such
State temporarily assigned or detailed to duty with the
Department of Labor and of paying such employees for
travel expenses, transportation of household goods, and
per diem in lieu of subsistence while away from their reg-
ular duty stations in the State, at rates authorized by law
for civilian employees of the Federal Government.
‘‘(5) The Secretary of the Treasury is directed, for
the fiscal year ending September 30, 2005, and each fiscal
year thereafter, to pay from the Secretary of Labor em-
ployment security Administration Account into the treas-
ury as miscellaneous receipts the amount determined by
the Secretary of Labor to be allocated to the treasury de-
partment to cover costs of the Department of the Treasury
for the performance of its functions under—
‘‘(A) this title and titles III and XII, including
the expenses of banks for servicing unemployment
benefit payment and clearing accounts which are off-
set by the maintenance of balances of treasury funds
with such banks,
‘‘(B) chapter 23 of the Internal Revenue Code
of 1986, and
‘‘(C) any Federal unemployment compensation
law with respect to which responsibility for adminis-
tration is vested in the Secretary of Labor.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on October 1, 2000.
SEC. 204. TRANSFER OF AMOUNTS ATTRIBUTABLE TO RE-
DUCED CREDITS.
(a) IN GENERAL.—Section 901(d) of the Social Secu-
rity Act (42 U.S.C. 1101(d)) is amended to read as fol-
lows:
‘‘Additional Tax Attributable to Reduced Credits
‘‘(d)(1) The Secretary of the Treasury is directed to
transfer from the unemployment compensation benefit ac-
count of each State subject to the reduced credits provi-
sion of section 3302(c)(3) of the Internal Revenue Code
of 1986—
‘‘(A) to the Federal unemployment account, an
amount equal to the amount by which—
the moneys were credited to the unemployment compensa-
tion benefit account of the State.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on October 1, 2000.
SEC. 205. ESTABLISHMENT OF REVOLVING FUND.
(a) IN GENERAL.—Section 901(e) of the Social Secu-
rity Act (42 U.S.C. 1101(e)) is amended to read as fol-
lows:
‘‘Revolving Fund
‘‘(e)(1) There is hereby established in the treasury
a revolving fund within the Federal unemployment ac-
count established pursuant to section 904 which shall be
available to make the advances authorized by this sub-
section. There are hereby authorized to be appropriated,
without fiscal year limitation, to such revolving fund such
amounts as may be necessary for the purposes of this sec-
tion.
‘‘(2) The Secretary of the Treasury is directed to ad-
vance at the request of a State from the revolving fund
to the State employment security administration account
maintained for the State such amounts as may be re-
quested for the purposes set forth in this title, title III,
and section 3304 of the Internal Revenue Code of 1986.
‘‘(3) Advances to the State employment security ad-
ministration account of a State made under this sub-
section shall bear interest until repaid at a rate equal to
the average rate of interest (computed as of the end of
the calendar month next preceding the date of such ad-
vance) borne by all interest-bearing obligations of the
United States then forming a part of the public debt; ex-
cept that where such average rate is not a multiple of 1⁄8
of 1 percent, the rate of interest shall be the multiple of
1⁄8 of 1 percent next lower than such average rate.
‘‘(4) Advances to the State employment security ad-
ministration account of a State made under this sub-
section, plus interest accrued thereon, shall be repaid by
the State, and may be repaid at the request of a State
by the transfer, from the State employment security ad-
ministration account of such State to the revolving fund.
Any amount transferred as a repayment under this para-
graph shall be credited against, and shall operate to re-
duce, any balance of advances (plus accrued interest) re-
payable under this subsection.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on October 1, 2000.
SEC. 206. TREATMENT OF EXCESS ESAA AMOUNTS.
Section 901 of the Social Security Act (42 U.S.C.
1101 et seq.) is amended by adding at the end the fol-
lowing:
‘‘Treatment of Excess ESAA Amounts
‘‘(f)(1) The Secretary of the Treasury shall determine
as of the close of the fiscal year ending September 30,
2002, and each fiscal year thereafter, the excess and the
net balance of amounts in the State employment security
administration account maintained for each State.
‘‘(2) The excess in the State employment security ad-
ministration account for each State as of the close of any
fiscal year is the amount by which the net balance in such
account as of such time (after the application of sections
902 and 903 and paragraph (3)(B) of this subsection) ex-
ceeds the net balance in the State employment security
administration account for such State as of the close of
the previous fiscal year.
‘‘(3)(A) The excess in the State employment security
administration account of each State determined as pro-
vided in paragraph (2) as of the close of any fiscal year
ending after September 30, 2006, not to exceed 140 per-
cent of the net balance at the close of the previous fiscal
year, shall be retained (as of the beginning of the suc-
ceeding fiscal year) in the State employment security ad-
ministration account for the State.
‘‘(B) The amount of the excess determined not to be
retained as provided in paragraph (3)(A) as of the close
of any fiscal year ending after September 30, 2006, shall
be transferred (as of the beginning of the succeeding fiscal
year) to the unemployment compensation benefit account
of the State in the Unemployment Trust Fund.
‘‘(C)(i) At the close of each of fiscal years 2001
through 2004, there shall be transferred to the supple-
mental employment security administration account, out
of the employment security administration account,
$5,000,000 only for—
‘‘(I) determining whether individuals claiming
unemployment compensation under State laws con-
forming to section 3304 of the Internal Revenue
Code of 1986 are available to accept suitable work
and have not refused suitable work as prescribed by
the State unemployment compensation law;
‘‘(II) job search and placement services to indi-
viduals claiming unemployment compensation bene-
fits and other job seekers including counseling, test-
ing, occupational and labor market information, as-
sessment, and referral to employers;
‘‘(III) appropriate recruitment services and spe-
cial technical services for employers; and
‘‘(IV) collection of the Federal unemployment
tax imposed pursuant to section 3301 of the Inter-
nal Revenue Code of 1986.
‘‘(ii) At the close of each of fiscal years 2001 through
2004, there shall be transferred to the State employment
security administration accounts, out of the employment
security administration account, $245,000,000 only for—
‘‘(I) determining whether individuals claiming
unemployment compensation under State laws con-
forming to section 3304 of the Internal Revenue
Code of 1986 are available to accept suitable work
and have not refused suitable work as prescribed by
the State unemployment compensation law;
‘‘(II) job search and placement services to indi-
viduals claiming unemployment compensation bene-
fits and other job seekers including counseling, test-
ing, occupational and labor market information, as-
sessment, and referral to employers;
‘‘(III) appropriate recruitment services and spe-
cial technical services for employers; and
‘‘(IV) collection of the Federal unemployment
tax imposed pursuant to chapter 23 of the Internal
Revenue Code of 1986.
‘‘(iii) Each State’s share of the funds to be trans-
ferred to the State employment security administration ac-
counts shall be determined as provided in section
903(a)(2)(B).
‘‘(D) As of the close of the fiscal year ending Sep-
tember 30, 2004, 96 percent of the amount in the employ-
ment security administration account shall be transferred
as of October 1, 2004, to the State employment security
administration accounts of the States, 2 percent shall be
transferred as of October 1, 2004, to the supplemental
employment security administration account, and 2 per-
cent shall be transferred as of October 1, 2004, to the
Secretary of Labor employment security administration
account. Each State’s share of the funds to be transferred
to the State employment security administration accounts
shall be determined as provided in section 903(a)(2)(B).
‘‘(E) As of October 31, 2000, and the end of each
month thereafter, 96 percent of the amount in the employ-
ment security transition account shall be transferred to
the State employment security administration accounts of
the States, 2 percent shall be transferred to the supple-
mental employment security administration account, and
2 percent shall be transferred to the Secretary of Labor
employment security administration account. Each State’s
share of the funds to be transferred to the State employ-
ment security administration accounts shall be determined
as provided in section 903(a)(2)(B).
‘‘(4) For the purposes of this section, the net balance
in the employment security administration account and
the State employment security administration account
maintained for each State as of any time is the amount
in such account as of such time reduced by the sum of
the balance of advances (plus interest accrued thereon)
then repayable to the revolving fund established by sub-
section (e) of this section. The net balance in the State
employment security administration account maintained
for each State as of the beginning of any fiscal year shall
be determined after the disposition of the excess in such
account as of the close of the preceding fiscal year.’’.
SEC. 207. TREATMENT OF EXCESS FUA AMOUNTS.
(a) IN GENERAL.—Section 902 of the Social Security
Act (42 U.S.C. 1102) is amended by striking subsections
(a) and (b) and inserting the following:
‘‘Treatment of Excess Amounts in the Federal
Unemployment Account
‘‘(a) The amount, if any, by which the amount in the
Federal unemployment account as of the close of the fiscal
year ending September 30, 2004, and any fiscal year
thereafter exceeds the amount (determined by the Sec-
retary of Labor) equal to 0.25 percent of the total wages
subject (determined without limitation on amount) to con-
tributions under all State unemployment compensation
laws for the calendar year ending during the fiscal year
for which the excess is determined shall be transferred to
the State employment security administration account of
each State as of the beginning of the following fiscal year.
‘‘State Allocation Formula
‘‘(b) Each State’s share of the funds to be transferred
under subsection (a) shall be determined as provided in
section 903(a)(2)(B).’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall take effect on September 30, 2004.
SEC. 208. REPEAL OF REPORTING REQUIREMENT.
Section 902(c) of the Social Security Act (42 U.S.C.
1102(c)) is repealed.
SEC. 209. TREATMENT OF EXTENDED UNEMPLOYMENT
COMPENSATION ACCOUNT.
(a) IN GENERAL.—Section 903(a) of the Social Secu-
rity Act (42 U.S.C. 1103(a)) is amended to read as fol-
lows:
‘‘Transfer of Excess Amounts in Extended
Unemployment Compensation Account
‘‘(a)(1) As of the close of the fiscal year ending Sep-
tember 30, 2004, and the close of each subsequent fiscal
year, the excess in the extended unemployment compensa-
tion account (as determined under section 905(b)) shall
be transferred by the Secretary of the Treasury to the em-
ployment security administration accounts of the States.
‘‘(2) Each State’s share of the excess to be distrib-
uted to the employment security administration accounts
of the States at the close of a fiscal year pursuant to para-
graph (1)—
‘‘(A) shall be determined by the Secretary of
Labor and certified by such Secretary to the Sec-
retary of the Treasury before any transfer is made,
and
‘‘(B) shall bear the same ratio to the total
amount to be so transferred as—
‘‘(i) the amount of wages subject to tax
under section 3301 of the Internal Revenue
Code of 1986 during the preceding calendar
year which are determined by the Secretary of
Labor to be attributable to the State, bears to
‘‘(ii) the total amount of wages subject to
such tax during such calendar year.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on September 30, 2004.
SEC. 210. TREATMENT OF AMOUNTS ELECTED BY INELI-
GIBLE STATES.
(a) IN GENERAL.—Section 903(b) of the Social Secu-
rity Act (42 U.S.C. 1103(b)) is amended to read as fol-
lows:
‘‘Treatment of Amounts Elected by Ineligible States
‘‘(b)(1) If the Secretary of Labor finds that on Octo-
ber 1 of any fiscal year—
‘‘(A) a State is not eligible for certification
under section 303, or
‘‘(B) the law of a State is not approvable under
section 3304 of the Internal Revenue Code of 1986,
then the amount available for transfer to such
State’s unemployment compensation benefit account
in the Unemployment Trust Fund shall, in lieu of
being so transferred, be transferred to the Federal
unemployment account as of the beginning of such
October 1. If, during the fiscal year beginning on
such October 1, the Secretary of Labor finds and
certifies to the Secretary of the Treasury that such
State is eligible for certification under section 303,
and the law of such State is approvable under sec-
tion 3304 of such Code, the Secretary of the Treas-
ury shall transfer such amount from the Federal un-
employment account to the unemployment com-
pensation benefit account of such State in the Un-
employment Trust Fund. If the Secretary of Labor
does not so find and certify to the Secretary of the
Treasury before the close of such fiscal year then
the amount which was available for transfer to such
State’s unemployment compensation benefit account
as of October 1 of such fiscal year shall (as of the
close of such fiscal year) become part of the Federal
unemployment account.
‘‘(2) The amount which, but for this paragraph,
would be transferred to the unemployment compensation
benefit account of a State under subsection (a) of this sec-
tion or paragraph (1) of this subsection shall be reduced
(but not below zero) by the balance of advances made to
the State under section 1201. The sum by which such
amount is reduced shall—
‘‘(A) be transferred to or retained in (as the
case may be) the Federal unemployment account,
and
‘‘(B) be credited against, and operate to
reduce—
‘‘(i) first, any balance of advances made
before September 13, 1960, to the State under
section 1201, and
‘‘(ii) second, any balance of advances made
on or after September 13, 1960, to the State
under section 1201.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on October 1, 2000.
SEC. 211. USE OF REED ACT FUNDS.
(a) IN GENERAL.—Section 903(c) of the Social Secu-
rity Act (42 U.S.C. 1103(c)) is amended to read as fol-
lows:
‘‘Use of Reed Act Funds
‘‘(c)(1) Except as provided in paragraph (2),
amounts transferred to the unemployment compensation
benefit account of a State pursuant to subsections (a) and
(b) of this section shall be used only in the payment of
cash benefits to individuals with respect to their unem-
ployment, exclusive of expenses of administration.
‘‘(2) A State may, pursuant to a specific appropria-
tion made by the legislative body of the State, use money
withdrawn from its unemployment compensation benefit
account in the payment of expenses incurred by it for the
administration of its unemployment compensation law and
public employment services, if and only if—
‘‘(A) the purposes and amounts were specified
in the law making the appropriation,
‘‘(B) the appropriation law did not authorize
the obligation of such money after the close of the
2-year period which began on the date of enactment
of the appropriation law,
‘‘(C) the money is withdrawn and the expenses
are incurred after such date of enactment,
graph do not exceed the amount then in the State’s unem-
ployment compensation benefit account.
‘‘(C) Subparagraph (A) shall not apply if the State
has a balance of advances made to its unemployment com-
pensation benefit account under title XII.
‘‘(D) If the Secretary of Labor determines that the
requirements of this paragraph are met with respect to
any request, the Secretary shall notify the Governor of the
State that such requirements are met with respect to such
request and the amount restored under this paragraph.
Such restoration shall be as of the first day of the first
month following the month in which the notification is
made.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on October 1, 2000.
SEC. 212. PROVISIONS RELATING TO ESTABLISHMENT OF
UNEMPLOYMENT TRUST FUND.
(a) IN GENERAL.—Section 904(a) of the Social Secu-
rity Act (42 U.S.C. 1104(a)) is amended to read as fol-
lows:
‘‘Establishment, Etc.
‘‘(a) There is hereby established in the Treasury of
the United States a trust fund to be known as the Unem-
ployment Trust Fund (in this subchapter referred to as
the ‘Fund’). The Secretary of the Treasury is authorized
and directed to receive and hold in the Fund all moneys
deposited therein by a State agency from a State unem-
ployment fund. All moneys in the form of contributions
and payments in lieu of contributions under the State law
shall be deposited into the State’s unemployment com-
pensation benefit account established pursuant to this sec-
tion. All moneys collected by a State agency under chapter
23 of the Internal Revenue Code of 1986 and moneys
transferred or deposited under other sections of this title
or chapter 23 of the Internal Revenue Code of 1986 shall
be deposited into the State’s employment security adminis-
tration account. All moneys collected by the Internal Rev-
enue Service after January 1, 2001, under the provisions
of chapter 23 of the Internal Revenue Code of 1986 shall
be deposited into the employment security transition ac-
count of the Fund. Moneys collected by the Railroad Re-
tirement Board shall be deposited to the credit of the rail-
road unemployment insurance account or the railroad un-
employment insurance administration fund.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on October 1, 2000.
SEC. 213. SEPARATE BOOK ACCOUNTS.
(a) IN GENERAL.—Section 904(e) of the Social Secu-
rity Act (42 U.S.C. 1104(e)) is amended to read as fol-
lows:
‘‘Separate Book Accounts
‘‘(e) The Fund shall be invested as a single fund, but
the Secretary of the Treasury shall maintain a separate
book account for the employment security transition ac-
count, each State agency unemployment compensation
benefit account, the employment security administration
account until terminated on September 30, 2004, the em-
ployment security administration account for each State,
the supplemental employment security administration ac-
count, the Secretary of Labor employment security admin-
istration account, the Federal unemployment account, the
extended unemployment compensation account, the rail-
road unemployment insurance account, and the railroad
unemployment insurance administration fund and shall
credit quarterly (on March 31, June 30, September 30,
and December 31, of each year) to each account, on the
basis of the average daily balance of such account, a pro-
portionate part of the earnings of the Fund for the quarter
ending on such date. For the purpose of this subsection,
the average daily balance shall be computed—
‘‘(1) in the case of any State unemployment
compensation benefit account, by reducing (but not
below zero) the amount in the account by the bal-
ance of advances made to the State under section
1201, and
‘‘(2) in the case of the Federal unemployment
account—
‘‘(A) by adding to the amount in the ac-
count the aggregate of the reductions under
paragraph (1), and
‘‘(B) by subtracting from the sum so ob-
tained the balance of advances made under sec-
tion 1201 to the account.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on October 1, 2000.
SEC. 214. ESTABLISHMENT OF EUCA ACCOUNT EXCESS AND
TRANSFERS.
(a) IN GENERAL.—Section 905 of the Social Security
Act (42 U.S.C. 1105) is amended by striking subsections
(b) and (c) and inserting the following:
‘‘Determination of Excess and Transfers to Accounts
‘‘(b)(1) The Secretary of the Treasury shall deter-
mine as of the close of the fiscal year ending September
30, 2004, and the close of each subsequent fiscal year,
the excess in the extended unemployment compensation
account.
‘‘(2) The excess in the extended unemployment com-
pensation account as of the close of any fiscal year is the
amount (if any) by which the net balance in such account
as of such time exceeds the greater of—
‘‘(A) $14,400,000,000; or
‘‘(B) an amount equal to 0.25 percent of the
total wages subject (determined without limitation
on amount) to contributions under all State unem-
ployment compensation laws for the calendar year
ending during the fiscal year for which the excess is
determined.
‘‘(3) The excess determined under paragraph (2)
shall be transferred by the Secretary of the Treasury at
the close of the fiscal year ending September 30, 2004,
and at the close of each subsequent fiscal year, to the em-
ployment security administration accounts of the States
in the Unemployment Trust Fund as of the beginning of
the following fiscal year. Each State’s share shall be deter-
mined using the formula set forth in section 903(a)(2)(B).
‘‘Transfers to State Accounts
‘‘(c) Amounts in the extended unemployment com-
pensation account shall be available for transfer to the un-
employment compensation benefit accounts of the States
in the Unemployment Trust Fund as provided in section
204(e) of the Federal-State Extended Unemployment
Compensation Act of 1970.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on October 1, 2000.
SEC. 215. REPEAL OF INTERFUND BORROWING AUTHORITY.
Section 910 of the Social Security Act (42 U.S.C.
1110) is repealed.
TITLE III—GRANTS TO STATES
FOR EMPLOYMENT SECURITY
ADMINISTRATION
SEC. 301. REPEAL OF SECTIONS 301 AND 302 OF THE SOCIAL
SECURITY ACT.
(a) IN GENERAL.—Sections 301 and 302 of the So-
cial Security Act (42 U.S.C. 501; 502) are repealed.
(b) EFFECTIVE DATE.—This section shall take effect
on October 1, 2004.
SEC. 302. STATE REQUIREMENTS.
(a) CONFORMITY REQUIREMENTS.—Section 303(a)
of the Social Security Act (42 U.S.C. 503(a)) is amended
by striking ‘‘The Secretary’’ through ‘‘for—’’ and insert-
ing the following: ‘‘As of October 31 each year, at the time
of the certification prescribed under section 3304(c) of the
Internal Revenue Code of 1986, the Secretary of Labor
shall certify whether each State’s law includes provision
for—’’.
(b) LIMITATION
ON USE
OF BENEFIT ACCOUNT
FUNDS.—Section 303(a)(5) of the Social Security Act (42
U.S.C. 503(a)(5)) is amended to read as follows:
‘‘(5) Expenditure of all money withdrawn from
the State’s Unemployment Compensation Benefit
Account within the unemployment fund of such
State, in the payment of unemployment compensa-
tion, exclusive of expenses of administration, and for
refunds of sums erroneously paid into such fund and
refunds paid in accordance with the provisions of
section 3305(b) of the Internal Revenue Code of
1986: Provided, That an amount equal to the
amount of employee payments into the Unemploy-
ment Compensation Benefit Account within the un-
employment fund of a State may be used in the pay-
ment of cash benefits to individuals with respect to
their disability, exclusive of expenses of administra-
tion: Provided further, That the amounts specified
by section 903(c)(2) may, subject to the conditions
prescribed in such section, be used for expenses in-
curred by the State for administration of its unem-
ployment compensation law and public employment
services: Provided further, That nothing in this para-
graph shall be construed to prohibit deducting an
amount from unemployment benefits and used to
repay overpayments as provided in subsection (g) of
this section: Provided further, That amounts may be
withdrawn for the payment of short-time compensa-
tion under a plan approved by the Secretary of
Labor: Provided further, That amounts may be with-
drawn for the payment of allowances under a self-
employment assistance program (as defined in sec-
tion 3306(t) of the Internal Revenue Code of 1986);
and’’.
(c) USE
OF
ADMINISTRATIVE
FUNDS.—Section
303(a)(8) of the Social Security Act (42 U.S.C. 503(a)(8))
is amended to read as follows:
‘‘(8) Expenditure of all moneys received pursu-
ant to title IX solely for the proper and efficient ad-
ministration of such State law and services specified
in such title and section 3304 of the Internal Rev-
enue Code of 1986; and’’.
(d) PROPER ADMINISTRATION REQUIREMENT.—Sec-
tion 303(a)(9) of the Social Security Act (42 U.S.C.
503(a)(9)) is amended to read as follows:
‘‘(9) The replacement, within a reasonable time,
of any moneys received pursuant to title IX, which,
because of any action or contingency, have been lost
or have been expended for purposes other than those
necessary for the proper administration of such
State law and the provision of services under such
title and section 3304 of the Internal Revenue Code
of 1986; and’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall take effect on October 1, 2004.
SEC. 303. INTERPRETATION OF METHODS OF ADMINISTRA-
TION REQUIREMENT.
(a) IN GENERAL.—Section 303(a) of the Social Secu-
rity Act (42 U.S.C. 503(a)) (as amended by section 302
of this Act) is amended—
(1) by striking the period at the end of para-
graph (10) and inserting ‘‘; and’’; and
(2) by adding at the end the following:
‘‘(11) States shall not be required to comply
with interpretations of the Secretary of Labor with
respect to methods of administration requirements
under paragraph (1) of this subsection, including
but not limited to requirements with respect to qual-
ity control, if such interpretations impose additional
administrative burdens on the States, unless Con-
gress enacts legislation which approves such inter-
pretation.’’
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall take effect on October 1, 2000.
TITLE 
IV—EXTENDED 
UNEM-
PLOYMENT COMPENSATION
SEC. 401. EXTENDED UNEMPLOYMENT 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—
(1) by striking paragraphs (3), (4), and (7);
(2) by redesignating paragraphs (5) and (6) as
paragraphs (3) and (4), respectively; and
(3) in paragraph (4) (as redesignated by para-
graph (2)), by striking ‘‘paragraphs (3), (4), and
(5)’’ and inserting ‘‘paragraph (3)’’.
(b) CONFORMING AMENDMENTS.—Section 204 of the
Federal-State Extended Unemployment Compensation Act
of 1970 (26 U.S.C. 3304 note) is amended—
(1) in subsection (a)—
(A) in paragraph (1), in the matter pre-
ceding subparagraph (A), by inserting ‘‘the un-
employment compensation benefit account of’’
after ‘‘be paid to’’;
(B) in paragraph (2), by inserting ‘‘unem-
ployment compensation account of a’’ after
‘‘made to any’’; and
(C) in paragraph (3), by inserting ‘‘unem-
ployment compensation benefit account of a’’
after ‘‘subsection to any’’;
(2) in subsection (d), by inserting ‘‘the unem-
ployment compensation benefit account of’’ after ‘‘be
paid to’’;
(3) in subsection (e)—
(A) by inserting ‘‘the unemployment com-
pensation benefit account of’’ after ‘‘Treasury
for payment to’’;
(B) by inserting ‘‘unemployment com-
pensation benefit’’ after ‘‘extended unemploy-
ment compensation account to the’’; and
(C) by adding at the end ‘‘Amounts main-
tained within the extended unemployment com-
pensation account shall be used only as set
forth in this Act and may not be transferred or
used to provide funds for benefits, goods, or
services other than those prescribed in this
Act.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on October 1, 2000.
TITLE 
V—FEDERAL 
EMPLOY-
MENT SECURITY SERVICE
SEC. 501. AMENDMENT TO STATEMENT OF PURPOSES.
(a) IN GENERAL.—Section 1 of the Wagner-Peyser
Act (29 U.S.C. 49) is amended to read as follows:
‘‘SECTION 1. In order to assist in the coordination
of public employment security services, the United States
Employment Security Service shall be established and
maintained within the Department of Labor.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on October 1, 2000.
SEC. 502. PURPOSE OF EMPLOYMENT SECURITY SERVICE.
(a) IN GENERAL.—Section 3(a) of the Wagner-
Peyser Act (29 U.S.C. 49b(a)) is amended to read as fol-
lows:
‘‘(a) The Secretary shall assist in coordinating public
employment services throughout the country and assure
that the requirements of titles III and IX of the Social
Security Act and section 3304 of the Internal Revenue
Code of 1986 are met.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on October 1, 2000.
SEC. 503. TRANSFER OF REAL PROPERTY.
(a) IN GENERAL.—For the purpose of assisting in
the coordination of employment services in accordance
with the terms of the Wagner-Peyser Act (29 U.S.C. 49
et seq.), the Secretary of Labor is authorized without pay-
ment of compensation to transfer and assign to the States
in which it is located all property, including records, files,
and office equipment, used by the United States Employ-
ment Service in its administrative and local employment
offices in the respective States, except the records, files,
and property used in the Veterans Service and in the
Farm Placement Service maintained pursuant to such
Act.
(b) REPEAL.—The Act entitled ‘‘To provide for the
transfer of United States Employment Service records,
files, and property in local offices to the States’’, approved
August 11, 1939 (29 U.S.C. 49c(1)) is repealed.
(c) EFFECTIVE DATE.—This section shall take effect
on October 1, 2000.
SEC. 504. REPEAL OF FEDERAL APPROPRIATIONS AUTHOR-
ITY.
(a) IN GENERAL.—Sections 5 and 6 of the Wagner-
Peyser Act (29 U.S.C. 49d; 49e) are repealed.
(b) EFFECTIVE DATE.—This section shall take effect
on October 1, 2004.
SEC. 505. USE OF PUBLIC EMPLOYMENT SERVICE FUNDS.
(a) IN GENERAL.—Section 7(a) of the Wagner-
Peyser Act (29 U.S.C. 49f) is amended to read as follows:
‘‘(a) Funds provided to such State under title IX of
the Social Security Act for public employment services
shall be used—
‘‘(1) for determining whether individuals claim-
ing unemployment compensation under State laws
conforming to section 3304 of the Internal Revenue
Code of 1986 are available to accept suitable work
and have not refused suitable work as prescribed by
the State unemployment compensation law;
‘‘(2) for job search and placement services to
individuals claiming unemployment compensation
benefits and other job seekers including counseling,
testing, occupational and labor market information,
assessment, and referral to employers; and
‘‘(3) for appropriate recruitment services and
special technical services for employers, and may be
used for—
‘‘(A) evaluation of programs;
‘‘(B) developing linkages between services
funded under this Act and related Federal or
State legislation, including the provision of
labor exchange services at education sites;
‘‘(C) providing services for workers who
have received notice of permanent layoff or im-
pending layoff, or workers in occupations which
are experiencing limited demand due to techno-
logical change, impact of imports, or plant clo-
sures;
‘‘(D) developing and providing labor mar-
ket and occupational information; and
‘‘(E) developing a management informa-
tion system and compiling and analyzing re-
ports therefrom.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on October 1, 2004.
SEC. 506. REPEAL OF FEDERAL USE OF FUNDS REQUIRE-
MENTS.
(a) IN GENERAL.—Section 7 of the Wagner-Peyser
Act (29 U.S.C. 49f) (as amended by section 305 of the
Workforce Investment Act of 1998) is amended—
(1) by striking subsections (b), (c), and (d); and
(2) by redesignating subsection (e) as sub-
section (b).
(b) EFFECTIVE DATE.—This section shall take effect
on October 1, 2004.
SEC. 507. REPEAL OF FEDERAL PLANNING AND FISCAL RE-
QUIREMENTS.
(a) IN GENERAL.—Sections 8, 9, 12, 13, and 14 of
the Wagner-Peyser Act (29 U.S.C. 49g; 49h; 49k; 49l;
49l–1) (as amended by the Workforce Investment Act of
1998) are repealed.
(b) EFFECTIVE DATE.—This section shall take effect
on October 1, 2004.
TITLE VI—ADVANCES TO STATE
UNEMPLOYMENT COMPENSA-
TION BENEFIT ACCOUNTS
SEC. 601. TRANSFERS FROM THE FEDERAL UNEMPLOY-
MENT ACCOUNT.
(a) IN GENERAL.—Section 1201(b) of the Social Se-
curity Act (42 U.S.C. 1321(b)) is amended to read as fol-
lows:
‘‘(b) The Secretary of the Treasury shall, prior to
audit or settlement by the General Accounting Office,
transfer in monthly installments from the Federal unem-
ployment account to the unemployment compensation ben-
efit account of the State in the Unemployment Trust
Fund the amount certified under subsection (a) of this
section by the Secretary of Labor (but not exceeding that
portion of the balance in the Federal unemployment ac-
count at the time of the transfer which is not restricted
as to use pursuant to section 903). The amount of any
monthly installment so transferred shall not exceed the
amount estimated by the State to be required for the pay-
ment of compensation for the month with respect to which
such installment is made.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on October 1, 2000.
SEC. 602. USE OF TRANSFERRED FUNDS.
(a) IN GENERAL.—Section 1202(a) of the Social Se-
curity Act (42 U.S.C. 1322(a)) is amended to read as fol-
lows:
‘‘(a) The Governor of any State may at any time re-
quest that funds be transferred from the unemployment
compensation benefit account of such State in the Unem-
ployment Trust Fund to the Federal unemployment ac-
count in repayment of part or all of that balance of ad-
vances, made to such State under section 1201, specified
in the request, and the Secretary of the Treasury shall
promptly transfer such amount in reduction of such bal-
ance.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on October 1, 2000.
SEC. 603. DETERMINATION OF INTEREST RATE.
(a) IN GENERAL.—Section 1202(b) of the Social Se-
curity Act (42 U.S.C. 1322(b)) is amended by striking
paragraphs (4) and (5) and inserting the following:
‘‘(4) The interest rate determined under this
paragraph with respect to any calendar year is a
percentage (but not in excess of 10 percent) deter-
mined by dividing—
‘‘(A) the aggregate amount credited under
section 904 to State unemployment compensa-
tion benefit accounts on the last day of the last
calendar quarter of the immediately preceding
calendar year, by
‘‘(B) the aggregate of the average daily
balances of the State unemployment compensa-
tion benefit accounts for such quarter as deter-
mined under section 904(e).
‘‘(5) Interest required to be paid under para-
graph (1) shall not be paid (directly or indirectly) by
a State from amounts in its unemployment com-
pensation benefit account. If the Secretary of Labor
determines that any State action results in the pay-
ing of such interest directly or indirectly (by an
equivalent reduction in State unemployment taxes or
otherwise) from such unemployment compensation
benefit account, the Secretary of Labor shall not
certify such State’s unemployment compensation law
under section 3304 of the Internal Revenue Code of
1986. Such noncertification shall be made in accord-
ance with section 3304(c) of such Code.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on October 1, 2000.
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