I 
110TH CONGRESS 
1ST SESSION H. R. 2233 
To provide for special transfers of funds to States to promote certain 
improvements in State unemployment compensation laws. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 9, 2007 
Mr. MCDERMOTT introduced the following bill; which was referred to the 
Committee on Ways and Means 
A BILL 
To provide for special transfers of funds to States to promote 
certain improvements in State unemployment compensa-
tion laws. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Unemployment Insur-
ance Modernization Act’’. 
SEC. 2. SPECIAL TRANSFERS TO STATE ACCOUNTS IN THE 
UNEMPLOYMENT TRUST FUND. 
(a) IN GENERAL.—Section 903 of the Social Security 
Act (42 U.S.C. 1103) is amended by adding at the end 
the following: 
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‘‘Special Transfers in Fiscal Years 2008 Through 2012 
for Modernization 
‘‘(f)(1)(A) In addition to any other amounts, the Sec-
retary of Labor shall provide for the making of unemploy-
ment compensation modernization incentive payments 
(hereinafter ‘incentive payments’) to the accounts of the 
States in the Unemployment Trust Fund, by transfer from 
amounts reserved for that purpose in the Federal unem-
ployment account, in accordance with succeeding provi-
sions of this subsection. 
‘‘(B) The maximum incentive payment allowable 
under this subsection with respect to any State shall, as 
determined by the Secretary of Labor, be equal to the 
amount obtained by multiplying $7,000,000,000 times the 
same ratio as is applicable under subsection (a)(2)(B) for 
purposes of determining such State’s share of any funds 
to be transferred under subsection (a) as of October 1, 
2007. 
‘‘(C) Of the maximum incentive payment determined 
under subparagraph (B) with respect to a State— 
‘‘(i) one-third shall be transferred to the ac-
count of such State upon a certification under para-
graph (4)(B) that the State law of such State meets 
the requirements of paragraph (2); and 
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‘‘(ii) the remainder shall be transferred to the 
account of such State upon a certification under 
paragraph (4)(B) that the State law of such State 
meets the requirements of paragraph (3). 
‘‘(2) The State law of a State meets the requirements 
of this paragraph if such State law— 
‘‘(A) uses a base period that includes the most 
recently completed calendar quarter before the start 
of the benefit year for purposes of determining eligi-
bility for unemployment compensation; or 
‘‘(B) provides that, in the case of an individual 
who would not otherwise be eligible for unemploy-
ment compensation under the State law because of 
the use of a base period that does not include the 
most recently completed calendar quarter before the 
start of the benefit year, eligibility shall be deter-
mined using a base period that includes such cal-
endar quarter. 
‘‘(3) The State law of a State meets the requirements 
of this paragraph if such State law includes provisions to 
carry out at least 2 of the following subparagraphs: 
‘‘(A) An individual shall not be denied regular 
unemployment compensation under any State law 
provisions relating to availability for work, active 
search for work, or refusal to accept work, solely be-
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cause such individual is seeking only part-time (and 
not full-time) work, except that the State law provi-
sions carrying out this subparagraph may exclude an 
individual if a majority of the weeks of work in such 
individual’s base period do not include part-time 
work. 
‘‘(B) An individual shall not be disqualified 
from regular unemployment compensation for sepa-
rating from employment if that separation is for 
compelling family reasons. For purposes of this sub-
paragraph, the term ‘compelling family reasons’ in-
cludes at least the following: 
‘‘(i) Domestic violence (verified by such 
reasonable and confidential documentation as 
the State law may require) which causes the in-
dividual reasonably to believe that such individ-
ual’s continued employment would jeopardize 
the safety of the individual or of any member 
of the individual’s immediate family. 
‘‘(ii) The illness or disability of a member 
of the individual’s immediate family. 
‘‘(iii) The need for the individual to accom-
pany such individual’s spouse— 
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‘‘(I) to a place from which it is im-
practical for such individual to commute; 
and 
‘‘(II) due to a change in location of 
the spouse’s employment. 
‘‘(C) Weekly unemployment compensation is 
payable under this subparagraph to any individual 
who is unemployed (as determined under the State 
unemployment compensation law), has exhausted all 
rights to regular and (if applicable) extended unem-
ployment compensation under the State law, and is 
enrolled and making satisfactory progress in a 
State-approved training program or in a job training 
program authorized under the Workforce Investment 
Act of 1998. Such program shall prepare individuals 
who have been separated from a declining occupa-
tion, or who have been involuntarily and indefinitely 
separated from employment as a result of a perma-
nent reduction of operations at the individual’s place 
of employment, for entry into a high-demand occu-
pation. The amount of unemployment compensation 
payable under this subparagraph to an individual for 
a week of unemployment shall be equal to the indi-
vidual’s average weekly benefit amount (including 
dependents’ allowances) for the most recent benefit 
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year, and the total amount of unemployment com-
pensation payable under this subparagraph to any 
individual shall be equal to at least 26 times the in-
dividual’s average weekly benefit amount (including 
dependents’ allowances) for the most recent benefit 
year. 
‘‘(4)(A) Any State seeking an incentive payment 
under this subsection shall submit an application therefor 
at such time, in such manner, and complete with such in-
formation as the Secretary of Labor may by regulation 
prescribe, including information relating to compliance 
with the requirements of paragraph (2) or (3), as well as 
how the State intends to use the incentive payment to im-
prove or strengthen the State’s unemployment compensa-
tion program. The Secretary of Labor shall, within 90 
days after receiving a complete application, notify the 
State agency of the State of the Secretary’s findings with 
respect to the requirements of paragraph (2) or (3) (or 
both). 
‘‘(B) If the Secretary of Labor finds that the State 
law provisions (disregarding any State law provisions 
which are not then currently in effect as permanent law 
or which are subject to discontinuation under certain con-
ditions) meet the requirements of paragraph (2) or (3), 
as the case may be, the Secretary of Labor shall thereupon 
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make a certification to that effect to the Secretary of the 
Treasury, together with a certification as to the amount 
of the incentive payment to be transferred to the State 
account pursuant to that finding. The Secretary of the 
Treasury shall make the appropriate transfer within 30 
days after receiving such certification. 
‘‘(C)(i) No certification of compliance with the re-
quirements of paragraph (2) or (3) may be made with re-
spect to any State whose State law is not otherwise eligible 
for certification under section 303 or approvable under 
section 3304 of the Federal Unemployment Tax Act. 
‘‘(ii) No certification of compliance with the require-
ments of paragraph (3) may be made with respect to any 
State whose State law is not in compliance with the re-
quirements of paragraph (2). 
‘‘(iii) No application under subparagraph (A) may be 
considered if submitted before October 1, 2007, or after 
the latest date necessary (as specified by the Secretary of 
Labor in regulations) to ensure that all incentive pay-
ments under this subsection are made before October 1, 
2012. 
‘‘(5)(A) Except as provided in subparagraph (B), any 
amount transferred to the account of a State under this 
subsection may be used by such State only in the payment 
of cash benefits to individuals with respect to their unem-
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ployment (including for dependents’ allowances and for 
unemployment compensation under paragraph (3)(C)), ex-
clusive of expenses of administration. 
‘‘(B) A State may, subject to the same conditions as 
set forth in subsection (c)(2) (excluding subparagraph (B) 
thereof, and deeming the reference to ‘subsections (a) and 
(b)’ in subparagraph (D) thereof to include this sub-
section), use any amount transferred to the account of 
such State under this subsection for the administration 
of its unemployment compensation law and public employ-
ment offices. 
‘‘(6) Out of any money in the Federal unemployment 
account not otherwise appropriated, the Secretary of the 
Treasury shall reserve $7,000,000,000 for incentive pay-
ments under this subsection. Any amount so reserved shall 
not be taken into account for purposes of any determina-
tion under section 902, 910, or 1203 of the amount in 
the Federal unemployment account as of any given time. 
Any amount so reserved for which the Secretary of the 
Treasury has not received a certification under paragraph 
(4)(B) by the deadline described in paragraph (4)(C)(iii) 
shall, upon the close of fiscal year 2012, become unre-
stricted as to use as part of the Federal unemployment 
account. 
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‘‘(7) For purposes of this subsection, the terms ‘ben-
efit year’, ‘base period’, and ‘week’ have the respective 
meanings given such terms under section 205 of the Fed-
eral-State Extended Unemployment Compensation Act of 
1970 (26 U.S.C. 3304 note). 
‘‘Special Transfers in Fiscal Years 2008 Through 2012 
for Administration 
‘‘(g)(1) Notwithstanding any other provision of this 
section, the total amount available for transfer to the ac-
counts of the States pursuant to subsection (a) as of the 
beginning of each of fiscal years 2008, 2009, 2010, 2011, 
and 2012 shall be equal to the total amount which (dis-
regarding this subsection) would otherwise be so available, 
increased by $100,000,000. 
‘‘(2) Each State’s share of any additional amount 
made available by this subsection shall be determined, cer-
tified, and computed in the same manner as described in 
subsection (a)(2) and shall be subject to the same limita-
tions on transfers as described in subsection (b). For pur-
poses of applying subsection (b)(2), the balance of any ad-
vances made to a State under section 1201 shall be cred-
ited against, and operate to reduce (but not below zero)— 
‘‘(A) first, any additional amount which, as a 
result of the enactment of this subsection, is to be 
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transferred to the account of such State in a fiscal 
year; and 
‘‘(B) second, any amount which (disregarding 
this subsection) is otherwise to be transferred to the 
account of such State pursuant to subsections (a) 
and (b) in such fiscal year. 
‘‘(3) Any additional amount transferred to the ac-
count of a State as a result of the enactment of this sub-
section— 
‘‘(A) may be used by the State agency of such 
State only in the payment of expenses incurred by 
it for— 
‘‘(i) the administration of the provisions of 
its State law carrying out the purposes of sub-
section (f)(2) or any subparagraph of sub-
section (f)(3); 
‘‘(ii) improved outreach to individuals who 
might be eligible for regular unemployment 
compensation by virtue of any provisions of the 
State law which are described in clause (i); 
‘‘(iii) the improvement of unemployment 
benefit and unemployment tax operations; and 
‘‘(iv) staff-assisted reemployment services 
for unemployment compensation claimants; and 
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‘‘(B) shall be excluded from the application of 
subsection (c). 
‘‘(4) The total additional amount made available by 
this subsection in a fiscal year shall be taken out of the 
amounts remaining in the employment security adminis-
tration account after subtracting the total amount which 
(disregarding this subsection) is otherwise required to be 
transferred from such account in such fiscal year pursuant 
to subsections (a) and (b).’’. 
(b) REGULATIONS.—The Secretary of Labor may 
prescribe any regulations necessary to carry out the 
amendment made by subsection (a). 
SEC. 3. EXTENSION OF FUTA TAX. 
Section 3301 of the Internal Revenue Code of 1986 
(relating to rate of tax) is amended— 
(1) by striking ‘‘2007’’ in paragraph (1) and in-
serting ‘‘2012’’, and 
(2) by striking ‘‘2008’’ in paragraph (2) and in-
serting ‘‘2013’’. 
Æ 
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