I
105TH CONGRESS
2D SESSION
H. R. 3697
To enhance the Federal-State Extended Benefit program, to provide incentives
to States to implement procedures that will expand eligibility for unem-
ployment 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
APRIL 21, 1998
Mr. LEVIN (for himself, Mr. ENGLISH of Pennsylvania, and Mr. RANGEL) in-
troduced 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 compensa-
tion, to strengthen administrative financing of the unem-
ployment compensation program, to improve the solvency
of State accounts in the Unemployment Trust Fund,
and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
HR 3697 IH
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Unemployment Com-
pensation Amendment of 1998’’.
SEC. 2. AMENDMENTS TO EXTENDED BENEFIT PROGRAM.
(a) REPEAL
OF CERTAIN STATE LAW REQUIRE-
MENTS.—
(1) Section 202(a) of the Federal-State Ex-
tended Unemployment Compensation Act of 1970
(26 U.S.C. 3304 note) is amended by striking para-
graphs (3), (4), (5), (6), and (7).
(2) Subsection (c) of section 202 of such Act is
repealed.
(b) ESTABLISHMENT
OF MANDATORY TRIGGERS
BASED ON TOTAL UNEMPLOYMENT.—
(1) Section 203(d) of such Act is amended to
read as follows:
‘‘(d) For purposes of this section—
‘‘(1) There is a State ‘on’ indicator for a week
if—
‘‘(A)(i) the average rate of total unemploy-
ment in such State (seasonally adjusted) for the
period consisting of the most recent three
months for which data for all States are pub-
lished before the close of the week equals or ex-
ceeds 7.5 percent, and
HR 3697 IH
‘‘(ii) the average rate of total unemploy-
ment in such State (seasonally adjusted) for the
3-month period referred to in clause (i) equals
or exceeds (110 percent of such average for ei-
ther (or both) of the corresponding 3-month pe-
riods ending in the two preceding calendar
years; or
‘‘(B) the average rate of total unemploy-
ment for such State (seasonally adjusted) for
the period consisting of the most recent 3
months for which data for all States are pub-
lished before the close of the week equals or ex-
ceeds 10 percent.
‘‘(2) There is a State ‘off’ indicator for a week
unless the requirements of subparagraphs (A) or (B)
of paragraph (1) are satisfied.’’.
(2) Section 203(e) of such Act is amended—
(A) by amending the heading to read ‘‘DE-
TERMINATION
OF RATES
OF TOTAL UNEM-
PLOYMENT
AND INSURED UNEMPLOYMENT’’,
and
(B) in paragraph (1) by—
(i) striking ‘‘subsection (d)’’ and in-
serting ‘‘subsection (f)(2)’’,
HR 3697 IH
(ii) redesignating subparagraphs (A)
and (B) as clauses (i) and (ii), and
(iii) redesignating paragraph (1) as
paragraph (2)(B);
(C) in paragraph (2) by—
(i) by striking ‘‘subsection (d)’’ and
inserting ‘‘subsection (f)(2)’’, and
(ii) by redesignating paragraph (2) as
paragraph (2)(C); and
(D) by inserting the following new para-
graphs (1) and (2)(A):
‘‘(1) For purposes of this Act, determinations
of the rate of total unemployment in any State for
any period (and of any seasonal adjustments) shall
be made by the Secretary.
‘‘(2)(A) For purposes of subsection (f)(2), the
rate of insured unemployment for any thirteen-week
period shall be determined by reference to the aver-
age monthly covered employment under the State
law for the first four of the most recent six calendar
quarters.’’.
(c) REQUIREMENTS FOR SUPPLEMENTAL BENEFITS
DURING
HIGH
UNEMPLOYMENT
PERIODS.—Section
202(b)(3)(B) of such Act is amended to read as follows:
HR 3697 IH
‘‘(B) For purposes of subparagraph (A),
the term ‘high unemployment period’ means
any period during which an extended benefit pe-
riod would be in effect if—
‘‘(i) section 203(d)(1)(A)(i) was ap-
plied by substituting ‘10 percent’ for ‘7.5
percent’;
‘‘(ii) section 203(d)(1)(B) was applied
by substituting ‘12.5 percent’ for ‘10 per-
cent’; or
‘‘(iii) in the event a State has enacted
the indicator specified in section 203(f)(1),
section 203(f)(1)(A)(i) was applied by sub-
stituting ‘8 percent’ for ‘6.5 percent’.
(d) AMENDMENTS TO ALTERNATIVE TRIGGER.—Sec-
tion 203(f) of such Act is amended—
(1) in paragraph (1), by striking ‘‘Effective
with respect to compensation for weeks of employ-
ment beginning after March 6, 1993, the’’ and in-
serting ‘‘In lieu of applying the indicator specified in
subsection (d)(1)(A), a’’;
(2) by amending paragraph (2) to read as fol-
lows:
‘‘(2) A State may by law provide for the pur-
pose of beginning or ending any extended period
HR 3697 IH
under this section that, in addition to the indicators
specified in subsection (d) and paragraph (1) of this
subsection, there is a State ‘on’ indicator for a week
if the rate of insured unemployment under State law
for the period consisting of such week and the imme-
diately preceding twelve weeks equals or exceeds 6
percent.’’.
SEC. 3. MODIFICATION IN FEDERAL UNEMPLOYMENT
ACCOUNT CEILING.
Section 902(a)(2) of the Social Security Act (42
U.S.C. 1102(a)(2)) is amended by inserting ‘‘except that
for the close of fiscal year 1998 the amount shall be equal
to the amount certified for the close of fiscal year 1997’’
before the period.
SEC. 4. SPECIAL DISTRIBUTIONS TO THE STATES.
(a) IN GENERAL.—Section 903(a)(3) of the Social
Security Act (42 U.S.C. 1103(a)(3)) is amended—
(1) in subparagraph (A)—
(A) by inserting ‘‘1998,’’ before ‘‘1999’’,
and
(B) by amending clauses (i) and (ii) to
read as follows:
‘‘(i) be subject to subparagraphs (B)
and (C) to the extent such amounts are
not in excess of the sum of—
HR 3697 IH
‘‘(I) $20,000,000 (except that
this subclause shall not be applicable
to the close of fiscal year 2001), plus
‘‘(II) the amount determined by
the Secretary of Labor to be the dif-
ference between the amount necessary
for the proper and efficient adminis-
tration of the unemployment com-
pensation program for the succeeding
fiscal year (taking into account work-
load and other appropriate factors)
and—
‘‘(aa) in the case of the close
of 
fiscal 
year 
1998,
$2,420,000,000;
‘‘(bb) in the case of the close
of each of fiscal years 1999,
2000, and 2001, $2,412,000,000;
‘‘(ii) be subject to subparagraph (D)
to the extent such amounts are in excess of
the sum of subclauses (I) and (II) of
clause (i)’’;
(2) in subparagraph (B) by striking ‘‘(A)((i)’’
and inserting ‘‘(A)(i)(II)’’;
HR 3697 IH
(3) by redesignating subparagraphs (B) and
(C) as subparagraphs (C) and (D), respectively; and
(4) by inserting the following new subparagraph
(B):
‘‘(B) The Secretary of Labor shall reserve
the amount specified in subparagraph (A)(i)(I)
(at the close of fiscal years 1998, 1999, and
2000) to award grants to the States in fiscal
years 1999, 2000, and 2001 to assist in the im-
plementation of alternative base periods for de-
termining the eligibility of claimants. Such al-
ternative base periods shall reduce the period of
time between the end of the base period for a
claimant and the filing of a claim for compensa-
tion. The amounts reserved pursuant to this
subparagraph shall be available to the Secretary
of Labor for obligation through fiscal year
2001.’’.
(b) CONFORMING AMENDMENT.—Section 903(c)(2)
of the Social Security Act (42 U.S.C. 1103(c)(2)) is
amended in the last sentence by inserting ‘‘1999,’’ before
‘‘2000’’.
HR 3697 IH
SEC. 5. SOLVENCY REQUIREMENTS.
(a) SOLVENCY TARGET.—Section 903(b) of the So-
cial Security Act (42 U.S.C. 1103(b)) is amended by add-
ing the following new paragraph:
‘‘(3)(A) If the Secretary of Labor finds that on
December 31, 2001, a State has not achieved, or
made substantial progress toward achieving, the sol-
vency target established pursuant to subparagraph
(B), then the amount available under this section for
transfer to such State account for the succeeding fis-
cal year shall, in lieu of being so transferred, be
transferred to the States meeting the requirements
of this subsection. The transfers shall be made to
such States based on the share of funds of each such
State under subsection (a)(2), except that for pur-
poses of this subparagraph the ratio under sub-
section (a)(2) shall be adjusted by excluding the
wages attributable to the States failing to meet the
requirements of this subparagraph.
‘‘(B)(i) For December 31, 2001, the solvency
target shall be an average high cost multiple of 1.0.
For purposes of this subparagraph, the average high
cost multiple represents the number of years a State
could pay unemployment compensation (based on
the reserve ratio of such State) if the State paid
such compensation at a rate equivalent to the aver-
HR 3697 IH
age benefit cost rate such State paid in the three
calendar years during the preceding 20 calendar
years (or, if longer, during the period consisting of
the preceding three recessions as determined by the
National Bureau of Economic Research) that the
benefit cost rates were the highest. For purposes of
making this determination—
‘‘(I) the term ‘reserve ratio’ means the
ratio determined by dividing the balance in the
State account at the end of the calendar year
by the total covered wages in the State for such
year;
‘‘(II) the term ‘benefit cost rate’ means the
rate determined by dividing the unemployment
compensation paid during a calendar year by
the total covered wages in the State for such
year; and
‘‘(III) the ratio and rates determined
under subclauses (I) and (II) shall exclude the
wages and unemployment compensation paid by
employers covered under section 3309 of the In-
ternal Revenue Code of 1986.
‘‘(ii) For December 31, 2001, substantial
progress towards achieving the solvency target shall
mean that a State has reduced any difference be-
HR 3697 IH
tween 1.0 and the average high cost multiple of such
State (if such multiple is less than 1.0) that the Sec-
retary found to exist on December 31, 1998, by an
amount equal to or exceeding 5 percent of such dif-
ference.
‘‘(iii) The Secretary may adjust the solvency
target specified in clause (i), or the criteria for de-
termining whether there is substantial progress to-
wards achieving the solvency target specified in
clause (ii), for States that experience significant in-
creases in unemployment during the period between
December 31, 1998 and December 31, 2001. The
Secretary shall establish objective criteria for mak-
ing such adjustments.
‘‘(iv) A State shall include, as part of the an-
nual State plan relating to the administration of
grants under this title, such information as the Sec-
retary may request relating to the manner in which
the State intends to achieve the solvency target es-
tablished pursuant to this paragraph.’’.
(b) DISTRIBUTION
TO
THE STATES
FOR FISCAL
YEAR 2003.—Section 903(a)of the Social Security Act (42
U.S.C. 1103(a)) is amended by adding the following para-
graph:
HR 3697 IH
‘‘(4) Notwithstanding any other provisions of
this section, with respect to any excess amount (re-
ferred to in paragraph (1)) remaining in the employ-
ment security administration account as of the close
of fiscal year 2002, such amount shall—
‘‘(A) to the extent of any amount not in
excess of $2,600,000,000 be subject to para-
graphs (1) and (2), and
‘‘(B) to the extent of any amount in excess
of $2,600,000,000 be retained in the employ-
ment security administration account.’’.
SEC. 6. EXTENSION OF SELF-EMPLOYMENT ASSISTANCE.
Paragraph (2) of section 507(e) of the North Amer-
ican Free Trade Agreement Implementation Act (26
U.S.C. 3306 note) is amended by striking ‘‘5 years after
the date of enactment of this Act’’ and inserting ‘‘on De-
cember 8, 2008’’.
SEC. 7. TREATMENT OF SHORT-TIME COMPENSATION PRO-
GRAMS.
(a) GENERAL RULE.—Section 3306 of the Internal
Revenue Code of 1986 (26 U.S.C. 3306) is amended by
adding at the end thereof the following new subsection:
‘‘(u) SHORT-TIME COMPENSATION PROGRAM.—For
purposes of this chapter, the term ‘short-time compensa-
tion program’ means a program under which—
HR 3697 IH
‘‘(4) amounts may be withdrawn for the pay-
ment of short-time compensation under a short-time
compensation program (as defined under subsection
(u));’’.
(3) Section 303(a)(5) of the Social Security Act
(42 U.S.C. 503(a)(5)) is amended by striking ‘‘the
payment of short-time compensation under a plan
approved by the Secretary of Labor’’ and inserting
‘‘the payment of short-time compensation under a
short-time compensation program (as defined in sec-
tion 3306(u) of the Internal Revenue Code of
1986).’’.
SEC. 8. EFFECTIVE DATE.
(a) IN GENERAL.—Except as provided in subsection
(b), the provisions of this Act shall take effect on the date
of enactment.
(b) EXTENDED BENEFIT AMENDMENTS.—
(1) Except as provided in paragraph (2), the
provisions of section 2 of this Act shall take effect
for the weeks beginning after the date that is two
years after the date of enactment of this Act.
(2) Pursuant to the enactment of appropriate
provisions of the State law the provisions of section
2 may take effect for weeks which begin earlier than
HR 3697 IH
the weeks specified in paragraph (1), but not earlier
than 60 days after the enactment of this Act.
Æ