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Unemployment Insurance:
Available Unemployment Benefits
and Legislative Activity
Julie M. Whittaker
SpecialistKatelin P. Isaacs
Analyst in Income Security
Alison M. Shelton
AnalystJulie M. Whittaker
Specialist in Income Security
Katelin P. IsaacsAlison M. Shelton
Analyst in Income Security
May 5July 26, 2010
Congressional Research Service
7-5700
www.crs.gov
RL33362
CRS Report for Congress
Prepared for Members and Committees of Congress
c11173008
.
Unemployment Insurance: Available Unemployment Benefits and Legislative Activity
Summary
Various benefits may be available to unemployed workers to provide income support. When
eligible workers lose their jobs, the Unemployment Compensation (UC) program may provide up
to 26 weeks of income support through the payment of regular UC benefits. Unemployment
benefits may be extended for up to 53 weeks by the temporarily authorized Emergency
Unemployment Compensation (EUC08) program and additionally extended for up to a further 13 or 20
weeks weeks
by the permanent Extended Benefit (EB) program if certain economic situations exist
within the state. under certain state economic conditions.
Certain groups of workers who lose their jobs because of international
competition may qualify
for income support through Trade Adjustment Act (TAA) programs.
Unemployed workers may be
eligible to receive Disaster Unemployment Assistance (DUA)
benefits if they are not eligible for
regular UC and if their unemployment may be directly
attributed to a declared major disaster.
The authorization for the EUC08 program expires on June 2November 30, 2010. Those beneficiaries receiving
receiving tier I, II, III, or IV EUC08 benefits before May 29November 27, 2010, are “grandfathered” for
their remaining
weeks of eligibility for that particular tier only. There will be no new entrants into
any tier of the
EUC08 program after May 29, 2010. If an individual is eligible to continue to receive his or her
remaining EUC08 tier benefit after May 29, 2010, that individual would not be entitled to tier II
benefits once those tier I benefits were exhaustedNovember 27, 2010. There are no proposals that would
create a tier V of EUC08 benefits (see the section in this report on “Policy Proposals that Target
Unemployment Benefit Exhaustees” for additional measures to address the needs of the long-term
unemployed).
The American Recovery and Reinvestment Act of 2009 (ARRA), P.L. 111-5, contained provisions
several
provisions affecting unemployment benefits:. ARRA temporarily increased benefits by $25 per
week (Federal
Additional Compensation, or FAC); extended the EUC08 program through the end of 2009;
2009;
temporarily provided for 100% federal financing of the EB program through January 1, 2010EB; and allowed
states the option of
temporarily easing EB eligibility requirements. ARRA also suspended income
taxation on the
first $2,400 of unemployment benefits received in 2009. In addition, states would
do not owe or accrue
interest, through December 2010, on federal loans to states for the payment of
unemployment unemployment
benefits. ARRA also provided for a special transfer of up to $7 billion in federal
monies to state
unemployment programs as “incentive payments” for changing certain state UC
laws as well as
transferred $500 million to the states for administering unemployment programs.
P.L. 111-92
expanded the number of weeks available in the EUC08 program through the creation
of two
additional tiers. P.L. 111-118 extended the EUC08 program, 100% federal financing of the
EB program, and the $25 FAC benefit through the end of February 2010.and P.L. 111-144 extended
the EUC08 program, 100% federal
financing of the EB program, and the $25 FAC benefit to
April 5, 2010.
On March 10, 2010, the Senate passed H.R. 4213, the Tax Extenders Act of 2010. H.R. 4213
would extend the availability of EUC08, 100% federal financing of EB, and the $25 FAC
benefits, through the end of December 2010. Because the original bill was amended by the Senate
in the nature of a substitute (S.Amdt. 3336), the Senate-passed version must now go back to the
House for consideration.
On April 15EB, and the FAC through the end of February 2010 and April 5, 2010, respectively.
P.L. 111-157 extended these three UC provisions through the week ending on or before June 2,
2010.
On July 22, 2010, the President signed P.L. 111-157, the Continuing Extension205, the American Jobs and Closing Tax
Loopholes Act of 2010, into
law. P.L. 111-157205 extends the availability of EUC08, and 100%
federal financing of EB, and the $25
FAC benefits, until the week ending on or before June 2, 2010 until November 30, 2010. P.L. 111-205 does not, however, extend the
authorization for the $25 FAC benefit, which expired on May 29, 2010 (May 30, 2010, in New
York state).
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Unemployment Insurance: Available Unemployment Benefits and Legislative Activity
Contents
Introduction ................................................................................................................................1
Unemployment Compensation ....................................................................................................2
Authorization..................................................................................................................2
Appropriation and Outlays ..............................................................................................2
Administration ................................................................................................................3
Eligibility for Regular Unemployment Compensation ...........................................................3
Broad Federal Guidelines Result in Different State Requirements....................................3
Base Period.....................................................................................................................3
Qualifying Wages or Employment...................................................................................4
2009 Stimulus Provisions Relating to Regular Unemployment Compensation .................5
Data Collection Considerations .......................................................................................6
Determination and Duration of Regular Unemployment Compensation .................................6
UC Benefit Financing: Unemployment Taxes on Employers..................................................8
Federal Unemployment Tax Act ......................................................................................8
ARRA Temporary Changes Federal Financing of Unemployment Benefits......................9
State Unemployment Tax Acts.........................................................................................9
Outstanding Loans from the Federal Unemployment Account ....................................... 12
Emergency Unemployment Compensation ProgramFederal Additional Compensation.................................................................. 12
EUC08 Benefit Amounts, Tiers and Duration ............................ 12
Emergency Unemployment Compensation Program.......................................... 14
Tier I........................ 13
EUC08 Benefit Amounts, Tiers and Duration ...................................................................... 14
Tier I............................... 14
Tier II .............................................................................................. 14
Tier II ............................. 14
Tier III .............................................................................................. 15
Tier III ............................ 14
Tier IV.............................................................................................. 15
Tier IV............................ 14
Special Case: Exhausted Tier II EUC08 Benefits Before November 8, 2009 ........................ 15
No Retroactive Payments for Special Case .............................................................................................. 15
Tier I EUC08 Eligibility Requirements................................................................................ 16
First Claimed Regular UC Benefits On or After May 7, 2006 ........................................ 16
Exhausted Regular UC Benefit...................................................................................... 16
“20 Weeks” of Full-Time Insured Employment or Equivalent........................................ 16
Tier II EUC08 Eligibility Requirements .............................................................................. 16
Exhausted Tier I EUC08 Benefit ................................................................................... 16
Tier III EUC08 Eligibility Requirements ............................................................................. 17
Exhausted Tier II EUC08 Benefit .................................................................................. 17
At or After the Period of Tier II EUC08 Exhaustion, the State Must Currently
Have At Least 6% Unemployment Rate...................................................................... 17
No Retroactive Payments .............................................................................................. 17
Tier IV EUC08 Eligibility Requirements ............................................................................. 17
Exhausted Tier I, Tier II, and Tier III EUC08 Benefits ................................................... 17
At or After the Period of Tier III EUC08 Exhaustion, the State Must Currently
Have At Least 8.5% Unemployment Rate................................................................... 17
No Retroactive Payments .............................................................................................. 18
EUC08 Financing ............................................................................................................... 18
EUC08 and EB Interactions ................................................................................................ 18
Extended Benefit Program ........................................................................................................ 18
EB Triggers May be Reviewed in 2010 ............................................................................... 19
EB Eligibility Requirements Beyond Requirements for Regular UC .................................... 21
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2009 Stimulus Provisions Affecting EB Level and Duration ................................................ 22
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2009 Stimulus Provisions Affecting EB Financing............................................................... 23
Short-time Compensation (Work Sharing) ................................................................................. 23
Policy Proposals that Target Unemployment Benefit Exhaustees ............................................... 24
Legislative Issues ...................................................................................................................... 2426
111th Congress..................................................................................................................... 2426
2010 Budget.................................................................................................................. 2426
P.L. 111-5, The American Recovery and Reinvestment Act of 2009 ............................... 2526
P.L. 111-92, The Worker, Homeownership and Business Assistance Act of 2009............ 2728
P.L. 111-118, The Department of Defense Appropriations Act ....................................... 2729
P.L. 111-144, The Temporary Extension Act of 2010 ..................................................... 2729
P.L. 111-157, The Continuing Extension Act of 2010..................................................... 2729
P.L. 111-205, the American Jobs and Closing Tax Loopholes Act of 2010...................... 29
Current Legislation ....................................................................................................... 2729
Figures
Figure A-1. Unemployment Insurance: Available Unemployment Benefits ................................ 2931
Tables
Table 1. State Unemployment Compensation Benefits Amounts, January 2010............................6
Table 2. State Unemployment Taxes: Taxable Wage Base and Rates, January 2010................... 10
Table 3. Revenue and Spending Associated With Unemployment Compensation,
FY2001-FY2010.................................................................................................................... 12
Table B-1. Emergency Unemployment Compensation Program: Public Law, Benefits,
Effective Dates, and Financing............................................................................................... 3032
Appendixes
Appendix A. Unemployment Insurance Benefits ....................................................................... 2931
Appendix B. Summary of EUC08 Program ............................................................................... 3032
Contacts
Author Contact Information ...................................................................................................... 3133
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Unemployment Insurance: Available Unemployment Benefits and Legislative Activity
Introduction
A variety of benefits may be available to unemployed workers to provide them with income
support during a spell of unemployment. The cornerstone of this income support is the joint
federal-state Unemployment Compensation (UC) program, which may provide income support
through the payment of UC benefits for up to a maximum of 26 weeks.1 Other programs that may
provide workers with income support are more specialized. They may target special groups of
workers, be automatically triggered by certain economic conditions, be temporarily created by
Congress with a set expiration date, or target typically ineligible workers through a disaster
declaration.
UC benefits may be extended at the state level by the permanent Extended Benefit (EB) program
if high unemployment exists within the state. Once regular unemployment benefits are exhausted,
the EB program may provide up to an additional 13 or 20 weeks of benefits, depending on worker
eligibility, state law, and economic conditions in the state. The EB program is funded 50% by the
federal government and 50% by the states, although the 2009 stimulus package (P.L. 111-5, as
amended) temporarily provides for 100% federal funding of the EB program.
A temporary unemployment insurance program, the Emergency Unemployment Compensation
(EUC08) program, began in July 2008. The authorization for the EUC08 program expires on June
2
November 30, 2010. Those beneficiaries receiving tier I, II, III, or IV EUC08 benefits before May 29, 2010
(May 30
November 27, 2010 (November 28, 2010, in New York), are “grandfathered” for their remaining
weeks of eligibility for that
particular tier only. There will be no new entrants into any tier of the
EUC08 program after May
29November 27, 2010. If an individual is eligible to continue to receive his or
her remaining EUC08 tier I
benefit after May 29November 27, 2010, that individual wouldwill not be entitled
to tier II benefits once those tier
I benefits wereare exhausted. This was the eighth time Congress has
created a federal temporary
program that has extended unemployment compensation during an
economic slowdown.2 The
EUC08 benefit is 100% federally funded. State UC agencies
administer the EUC08 benefit along
with regular UC benefits. See Appendix A for a diagram of
the various unemployment benefits
available to workers.
If an unemployed worker is not eligible to receive UC benefits and the worker’s unemployment
may be directly attributed to a declared major disaster, a worker may be eligible to receive
Disaster Unemployment Assistance (DUA) benefits. The disaster declaration will include
information on whether DUA benefits are available. For information on Disaster Unemployment
Assistance, see CRS Report RS22022, Disaster Unemployment Assistance (DUA), by Julie M.
Whittaker and Alison M. Shelton.
Certain groups of workers who lose their jobs because of international competition may qualify
for additional or supplemental support through Trade Adjustment Act (TAA) programs or (for
certain workers aged 50 or older) through Reemployment Trade Adjustment Assistance (RTAA).
This report does not describe the TAA or RTAA programs. (Please see CRS Report RS22718,
1
Montana provides 28 weeks and Massachusetts provides 30 weeks of regular unemployment benefits.
2
The other temporary programs became effective in 1958, 1961, 1972, 1975, 1982, 1991, and 2002. For details on
these programs, see CRS Report RL34340, Extending Unemployment Compensation Benefits During Recessions, by
Julie M. Whittaker.
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Trade Adjustment Assistance for Workers (TAA) and Reemployment Trade Adjustment Assistance
(RTAA), by John J. Topoleski, for information on these programs.)
This report describes four kinds of unemployment benefits: regular UC, EB, EUC08, and DUA.
The report explains their basic eligibility requirements, benefits, and financing structure.
Unemployment Compensation
UC is a joint federal-state program financed by federal taxes under the Federal Unemployment
Tax Act (FUTA) and by state payroll taxes under the State Unemployment Tax Acts (SUTA). The
UC program has a direct impact on almost every business in the United States as most businesses
are subject to state and federal unemployment taxes. An estimated $6.0 billion in federal
unemployment taxes and $44.9 billion in state unemployment taxes will be collected in FY2010.
In FY2010, states will spend an estimated $66.7 billion on regular UC benefits and the state share
of the EB program. The federal government will spend additional amounts described in section
“Appropriation and Outlays” below. Approximately 131.7 million jobs are covered by the UC
program. At the end of the week of April 10, 2010, 5.0 million unemployed workers received UC.
The average weekly UC benefit was $310 in March307 in June 2010 (and this amount is supplemented by
the $25 weekly federal additional compensation [FAC] program payment the
$25 weekly Federal Additional Compensation, or FAC, program payment for workers who were
receiving UC benefits before May 29, 2010; see section on “Federal Additional Compensation”
below for more details on FAC expiration and “grandfathering”).
Originally, the intent of the UC program, among other things, was to help counter economic
fluctuations such as recessions. 3 This intent is reflected in the current UC program’s funding and
benefit structure. When the economy grows, UC program revenue rises through increased tax
revenues while UC program spending falls as fewer workers are unemployed. The effect of
collecting more taxes than are spent dampens demand in the economy. This also creates a surplus
of funds or a “cushion” of available funds for the UC program to draw upon during a recession.
In a recession, UC tax revenue falls and UC program spending rises as more workers lose their
jobs and receive UC benefits. The increased amount of UC payments to unemployed workers
dampens the economic effect of earnings losses by injecting additional funds into the economy.
Authorization
The underlying framework of the UC system is contained in the Social Security Act (the Act).
Title III of the Act authorizes grants to states for the administration of state UC laws, Title IX
authorizes the various components of the federal Unemployment Trust Fund (UTF), and Title XII
authorizes advances or loans to insolvent state UC programs.
Appropriation and Outlays
The federal government appropriates funds for federal and state UC program administration, the
federal share of EB payments, the EUC08 program, and federal loans to insolvent state UC
programs. In FY2009, states received $4.32 billion from the federal government for the
administration of their UC programs, $4.12 billion for the federal share of EB payments, and
$32.66 billion for the temporary, federally financed EUC08 program. In FY2010, a preliminary
3
See, for example, President Franklin Roosevelt’s remarks at the signing of the Social Security Act at
http://www.ssa.gov/history/fdrstmts.html#signing.
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administration of their UC programs, $4.12 billion for the federal share of EB payments, and
$32.66 billion for the temporary, federally financed EUC08 program. In FY2010, a preliminary
estimate (which doesestimate (which did not include the extensionextensions of EUC08 and 100% federal financing of the EB
program after February 2010) is that the states will receive an estimated $5.87 billion from the
federal government for the administration of their UC programs, $10.5 billion for the federal
share of EB payments, and $43.57 billion for the temporary EUC08 program.
Administration
The U.S. Department of Labor (DOL) administers the federal portion of the UC system, which
operates in each state, the District of Columbia, Puerto Rico, and the Virgin Islands. Federal law
sets broad rules that the 53 state programs must follow. These include the broad categories of
workers that must be covered by the program, the method for triggering the EB and EUC08
programs, the floor on the highest state unemployment tax rate to be imposed on employers
(5.4%), and how the states will repay UTF loans. If the states do not follow these rules, their
employers may lose a portion of their state unemployment tax credit when their federal income
tax is calculated. The federal tax pays for both federal and state administrative costs, the federal
share of the EB program, the EUC08 program, loans to insolvent state UC accounts, and state
employment services. The 2009 stimulus package provided a total of $500 million in additional
funds to states to help with administrative costs of the regular UC program, the EB program, and
the EUC08 program.
Eligibility for Regular Unemployment Compensation
Broad Federal Guidelines Result in Different State Requirements
Whereas federal laws and regulations provide broad guidelines on UC benefit coverage,
eligibility, and benefit determination, the specifics of regular UC benefits are determined by each
state. This results in essentially 53 different programs. States determine UC benefit eligibility,
payments, and duration through state laws and program regulations. Generally, UC eligibility is
based on attaining qualified wages and employment in covered work over a 12-month period
(called a base period) prior to unemployment.
Base Period
The base period is the time period during which wages earned or hours/weeks worked are
examined to determine a worker’s monetary entitlement to UC. Almost all states use the first four
of the last five completed calendar quarters preceding the filing of the claim as their base period.
This may result in a lag of up to five months between the end of the base period and the date a
worker becomes unemployed. As a result there are some instances when workers with substantial
labor market attachment are ineligible for UC benefits. In particular, recent entrants to the
workforce, or re-entrants, may be ineligible under this definition. Federal law allows states to
develop expanded definitions of the base period.
A list of states’ base periods can be found at http://www.workforcesecurity.doleta.gov/unemploy/
pdf/uilawcompar/2010/monetary.pdf, Table 3-2.
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Alternative Base Period
Almost two-thirds of states useallow the use of an alternative base period (ABP) for workers failing
to qualify
under the regular base period. For example, if the worker fails to qualify using wages and
and employment in the first four of the last five completed calendar quarters, then the state might use
use wages and employment in the last four completed calendar quarters.
Extended Base Period
Several states allow workers who have no wages in the current base period to use older wages
and employment under certain conditions. These conditions typically involve illness or injury. For
example, a worker who was injured on the job and who has collected workers’ compensation
benefits may use wages and employment preceding the date of the worker’s injury to establish
eligibility.
Base Period Provisions in the 2009 Stimulus Package
The 2009 stimulus package (P.L. 111-5) provided up to $7 billion to states as an incentive to
make changes to their unemployment programs. As of May 5, 2010, $2.8 billion of this fund had
been distributed to states. One-third of a state’s share of this amount would beis contingent on state
law law
allowing use of a base period that includes the most recently completed calendar quarter
before before
the start of the benefit year for the purpose of determining UC eligibility. The remaining
two-thirds twothirds of a state’s share of the $7 billion would beis contingent on qualifying for the first onethirdone-third payment
(by adopting an alternative base period definition), plus adopting two of four
additional additional
provisions (described in section “2009 Stimulus Provisions Relating to Regular
Unemployment Unemployment
Compensation” below).4
Qualifying Wages or Employment
All states require a worker to have earned a certain amount of wages or to have worked for a
certain period of time (or both) within the base period to be monetarily eligible to receive any UC
benefits. The methods that states use to determine monetary eligibility vary greatly.
Multiple of High-Quarter Wages. Under this method, workers must earn a certain dollar amount
in the quarter with the highest earnings of their base period. Workers must also earn total baseperiod wages that are a multiple—typically 1.5—of the high-quarter wages. For example, if a
worker earns $5,000 in the high quarter, the worker must earn at least another $2,500 in the rest
of the base period. States require earnings in more than one quarter to minimize the likelihood
that workers with high earnings in only one quarter receive benefits. Although the worker might
be monetarily eligible through the earnings accrued in one quarter, these “multiple of high quarter
wages” states do not deem those workers to be substantially attached to the labor market.
Multiple of Weekly Benefit Amount. Under this method, the state first computes the worker’s
weekly benefit amount. The worker must have earned a multiple—often 40—of this amount
4
For more information on unemployment modernization provisions in the American Recovery and Reinvestment Act
of 2009 (P.L. 111-5), please see CRS Report R40368, Unemployment Insurance Provisions in the American Recovery
and Reinvestment Act of 2009, by Alison M. Shelton and Julie M. Whittaker.
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during the base period. For example, if a worker’s weekly benefit amount equals $100, then the
worker will need base period earnings of 40 times $100, or $4,000, before any UC would be paid.
Most states also require wages in at least two quarters. Some states have weighted schedules that
require varying multiples for varying weekly benefits.
Flat Qualifying Amount. States using this method require a certain dollar amount of total wages to
be earned during the base period. This method is used by most states with an annual-wage
requirement for determining the weekly benefit and by some states with a high-quarter
wage/weekly benefit requirement.
Weeks/Hours of Employment. Under this method, the worker must have worked a certain number
of weeks/hours at a certain weekly/hourly wage.
2009 Stimulus Provisions Relating to Regular Unemployment Compensation
The American Recovery and Reinvestment Act of 2009 (P.L. 111-5, the 2009 stimulus package),
as amended, provides for a supplementary benefit payment of $25 per week for unemployment
compensation programs (regular UC, EB, EUC, TAA and DUA) through June 2May 29, 2010. The
supplemental $25 weekly benefit will beis grandfathered for individuals who have not exhausted
benefits as of June 2before May 29, 2010, although no supplementary compensation is payable for any week
beginning after October 5, 2010. States will not be allowed to alter the method of computing
December 11, 2010 (see section on “Federal Additional Compensation” below for
more details on FAC expiration and “grandfathering”). States are not be allowed to alter the
method of computing unemployment compensation in such a manner that the weekly benefit
amount would be less than
the benefit amount that would have been payable under state law as of
December 31, 2008. The
$25 weekly additional benefit is financed by the federal government
through general revenues.
The stimulus package also provided up to $7 billion to states as an incentive to make changes to
their unemployment programs. One-third of this amount will beis contingent on states allowing use
of a
base period that includes the most recently completed calendar quarter before the start of the
benefit year for the purpose of determining UC eligibility. The remaining two-thirds of a state’s
share of the $7 billion will beis contingent on the state qualifying for the first one-third payment,
and and
state law containing at least two of four additional provisions. These additional provisions
include:
1. making unemployment compensation available to workers seeking part-time
work;
2. making unemployment compensation available to individuals who quit their jobs
voluntarily for compelling family reasons (domestic violence, illness or disability
of an immediate family member, spouse relocating for a new job);
3. providing at least 26 additional weeks of unemployment benefits to workers who
have exhausted all rights to regular benefits but are 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; and
4. providing dependents’ allowances to all individuals with a dependent at a level
equal to at least $15 per dependent per week.
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Data Collection Considerations
The wide variation seen in state UC program laws and regulations also exists among the states’
data collections. All states collect information on earnings by quarter for each worker. A handful
of states collect information on the number of weeks worked during the base period. Even fewer
states collect information on the numbers of hours worked during a quarter. As a result, most
states use information on quarters worked, quarterly earnings, and cumulative earnings in
determining eligibility and the amount of benefit.5 It does not appear that any state measures both
hours of work and weeks of work in the base period.
Determination and Duration of Regular Unemployment
Compensation
Generally, benefits are based on wages for covered work over a 12-month period (the “base
period” or “alternative base period,” described above). Most state benefit formulas replace half of
a claimant’s average weekly wage up to a weekly maximum. All states disregard some earnings
during unemployment as an incentive to take short-term or part-time work while searching for a
permanent position. Generally, the worker’s UC payment equals the difference between the
weekly benefit amount and earnings.
Table 1 lists the minimum and maximum UC benefits for each state. 6 Weekly maximums in
January 2010 ranged from $235 (Mississippi) to $629 (Massachusetts) and, in states that provide
dependents’ allowances, up to $943 (Massachusetts). In March 2010, the average weekly benefit
was $310 (and this amount is supplemented by the $25 weekly FAC program payment for
individuals receiving benefits prior to May 29, 2010; see section on “Federal Additional
Compensation” below for more details on FAC expiration and “grandfathering”). Benefits are
). Benefits
are available for up to 26 weeks (28 weeks in Montana and 30 weeks in Massachusetts). The
average average
regular UC benefit duration in December 2009 was 19 weeks. In April 2010,
approximately 5.0
million unemployed workers received regular state UC benefits in a given
week.
Table 1. State Unemployment Compensation Benefits Amounts, January 2010
(in dollars)
Minimum Weekly
UC Benefit
Amount
Minimum If
Dependents’
Allowancea
Maximum Weekly
UC Benefit
Amountb
Alabama
45
Alaska
56
Arizona
60
240
Arkansas
79
441
Maximum If
Dependents’
Allowancea
265
128
370
442
5
In the 2010 Comparison of State Unemployment Insurance Laws the following states used the measure of “weeks” in
determination of eligibility or benefit amount: New Jersey, Ohio, and Pennsylvania. Only Washington appears to use
the number of hours worked in eligibility or benefit determination.
6
The temporary, federally financed EUC08 program offers up to 53 additional weeks of unemployment benefits for
workers in states with certain economic conditions. The permanent federal-state EB program offers benefits for an
additional 13 to 20 weeks in states with unemployment rates above certain levels. The EB and EUC08 programs are
discussed later in this report.
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Minimum Weekly
UC Benefit
Amount
Minimum If
Dependents’
Allowancea
Maximum Weekly
UC Benefit
Amountb
Maximum If
Dependents’
Allowancea
California
40
450
Colorado
25
443
487
Connecticut
15
537
612
30
Delaware
20
330
District of Columbia
50
359
Florida
32
275
Georgia
44
330
Hawaii
5
559
Idaho
72
334
Illinois
51
Indiana
50
Iowa
56
Kansas
109
436
Kentucky
39
415
Louisiana
10
247
Maine
62
93
356
Maryland
25
65
410
77
385
531
390
67
374
459
534
Massachusetts
33
49
629
Michigan
117
147
362
Minnesota
38
377
Mississippi
30
235
Missouri
35
320
Montana
125
422
Nebraska
30
318
Nevada
16
400
New Hampshire
32
427
New Jersey
87
100
600
New Mexico
71
106.50
426
New York
64
405
North Carolina
43
505
North Dakota
43
431
Ohio
106
375
Oklahoma
16
430
Oregon
115
493
Pennsylvania
35
43
564
572
Rhode Island
68
118
546
682
South Carolina
20
326
South Dakota
28
309
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585
526
503
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Minimum Weekly
UC Benefit
Amount
Minimum If
Dependents’
Allowancea
Maximum Weekly
UC Benefit
Amountb
Tennessee
30
275
Texas
59
406
Utah
29
451
Vermont
64
425
Virginia
54
378
Washington
133
560
West Virginia
24
424
Wisconsin
54
363
Wyoming
31
438
Maximum If
Dependents’
Allowancea
Source: Congressional Research Service (CRS) table compiled from Significant Provisions of State Unemployment
Insurance Laws, January 2010, U.S. Department of Labor, Employment and Training Administration, at
http://www.workforcesecurity.doleta.gov/unemploy/content/sigpros/2010-2019/January2010.pdf.
a.
The figures for minimum and maximum benefits include dependents’ allowances for the maximum number
of dependents.
b.
If a state has dependents’ allowances and only one amount is given, the maximum is the same with or
without the allowance.
UC Benefit Financing: Unemployment Taxes on Employers
UC benefits are financed through employer taxes.7 The federal taxes on employers are under the
authority of the Federal Unemployment Tax Act (FUTA), and the state taxes are under the
authority given by the State Unemployment Tax Acts (SUTA). These taxes are deposited in the
appropriate accounts within the Unemployment Trust Fund (UTF).
Federal Unemployment Tax Act
The net FUTA tax rate on employers in states with UC programs that are in compliance with all
federal rules is 0.8% on the first $7,000 of each worker’s earnings. The FUTA tax rate for
employers is 6.2% on the first $7,000 of each worker’s earnings, but a 5.4% credit against the
federal FUTA tax is available to employers in states with complying UC programs, bringing the
net FUTA tax down to 0.8%. (In tax year 2009, Michigan employers were required to pay a net
FUTA tax of 1.1% because of outstanding federal loans to their state’s UTF account.) The 0.8%
FUTA tax funds both federal and state administrative costs as well as the federal share of the EB
program, loans to insolvent state UC accounts, and state employment services. Federal law
defines which jobs a state UC program must cover, provides rules concerning state borrowing
from the UTF, and provides broad guidelines concerning benefit eligibility, in order for the state’s
employers to avoid paying the maximum FUTA tax rate (6.2%) on the first $7,000 of each
employee’s annual pay.
7
For a more detailed description of UC financing, see CRS Report RS22077, Unemployment Compensation (UC) and
the Unemployment Trust Fund (UTF): Funding UC Benefits, by Julie M. Whittaker.
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Federal law requires that a state must cover jobs in firms that pay at least $1,500 in wages during
any calendar quarter or employ at least one worker in each of 20 weeks in the current or prior
year. The FUTA tax is not paid by government or nonprofit employers, but state programs must
cover government workers and all workers in nonprofits that employ at least four workers in each
of 20 weeks in the current or prior year.8
Approximately $6.7 billion in FUTA taxes were collected in FY2009. The net balance in the
federal accounts of the UTF (the Employment Security Administration Account, the Extended
Unemployment Compensation Account for the EB and EUC08 programs, and the Federal
Unemployment Account for federal loans to the states) on February 1, 2010, was approximately
$6.0 billion. This figure includes $28 billion in general revenue advances to the UTF as of
February 1, 2010, “incentive monies” for states to modernize their UC programs under the
American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5), and is net of payments to
state accounts for administrative expenses and UTF lending to state accounts for the payment of
UC benefits.
Congress first passed a temporary FUTA surtax in 1976, and since 1983 the surtax has been
applied in its current form (0.2% on the first $7,000 of employee wages). P.L. 111-92 extended
the authorization of the FUTA surtax through June 2011.
ARRA Temporary Changes Federal Financing of Unemployment Benefits
ARRA (P.L. 111-5) made several important, albeit temporary, changes to the federal role in
financing unemployment benefit programs. Under ARRA (as amended), the federal government
temporarily uses UTF monies to finance 100% of EB payments through June 2, 2010 (under
November 30, 2010
(under permanent law EB payments are financed 50% by the federal government and 50% by
states).
The federal government also used UTF funds to finance a $500 million transfer to states for
for administering unemployment programs, and uses UTF funds for the $7 billion in incentive
monies to states for undertaking modernization of their unemployment programs. ARRA also
changed the financing of the EUC08 program, which from its implementation in July 2008 had
been financed from the UTF, but starting with enactment of ARRA (on February 17, 2009) has
been financed from general revenues of the Treasury. States continue to finance regular UC
through SUTA revenues.
State Unemployment Tax Acts
States levy their own payroll taxes (SUTA taxes) on employers to fund regular UC benefits and
the state share of the EB program. The state unemployment tax rate on an employer is
“experience rated” in all states, that is, the SUTA rate is based on the amount of UC paid to
former employees. Generally, the more UC benefits paid to its former employees, the higher the
tax rate of the employer, up to a maximum established by state law. The experience rating is
intended to ensure an equitable distribution of UC program taxes among employers in
relationship to their use of the UC program, and to and to
encourage a stable workforce. State ceilings
on taxable wages in January 2010 ranged from the
$7,000 FUTA federal ceiling (eight states) to $38,900 (Hawaii). The minimum SUTA rates ranged
8
Employers who are required to provide unemployment insurance coverage, but who are not required to pay the FUTA
tax, generally reimburse state governments for the benefit payments related to their workers. States are reimbursed for
expenditures related to federal workers by the federal government.
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$38,900 (Hawaii). The minimum SUTA rates ranged from 0% (11 states) to 1.84%
(Pennsylvania) in January 2010. Maximum SUTA rates ranged
from 5.4% (15 states) to 13.16%
(Pennsylvania) in January 2010. Approximately $31.1 billion in
SUTA taxes were collected in
FY2009.
State UC revenue is deposited in the U.S. Treasury. These deposits are counted as federal revenue
in the budget. State accounts within the UTF are credited for this revenue. The U.S. Treasury
reimburses states from the appropriate UTF state accounts for their benefit payments. These
payments do not require an annual appropriation, but the reimbursements do count as federal
budget outlays.
Table 2. State Unemployment Taxes:
Taxable Wage Base and Rates, January 2010
Wages Subject
to Tax ($)
Minimum State
Unemployment Tax (%)a
Maximum State
Unemployment Tax (%)a
Alabama
8,000
0.44
6.04
Alaska
34,100
1.00
5.40
Arizona
7,000
0.02
5.40
Arkansas
12,000
0.90
6.80
California
7,000
1.50
6.20
Colorado
10,000
0.00
5.40
Connecticut
15,000
1.90
6.80
Delaware
10,500
0.10
8.00
DC
9,000
1.30
6.60
Florida
7,000
0.12
5.40
Georgia
8,500
0.03
5.40
Hawaii
38,800
0.00
5.40
Idaho
33,200
0.45
5.40
Illinois
12,520
0.60
6.80
Indiana
9,500
1.10
5.60
Iowa
24,500
0.00
8.00
Kansas
8,000
0.00
7.40
Kentucky
8,000
1.00
10.00
Louisiana
7,700
0.10
6.20
Maine
12,000
0.44
5.40
Maryland
8,500
0.60
9.00
Massachusetts
14,000
1.26
12.27
Michigan
9,000
0.60
10.30
Minnesota
27,000
0.56
10.70
Mississippi
7,000
0.70
5.40
Missouri
13,000
0.00
9.75
Montana
26,000
0.00
6.12
State
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Wages Subject
to Tax ($)
Minimum State
Unemployment Tax (%)a
Maximum State
Unemployment Tax (%)a
Montana
26,000
0.00
6.12
Nebraska
9,000
0.00
5.40
Nevada
27,000
0.25
5.40
New Hampshire
10,000
0.10
6.50
New Jersey
29,700
0.30
5.40
New Mexico
20,800
0.03
5.40
New York
8,500
0.70
8.70
North Carolina
19,700
0.00
6.84
North Dakota
24,700
0.20
9.86
Ohio
9,000
0.30
9.00
Oklahoma
14,900
0.10
5.50
Oregon
32,100
0.90
5.40
Pennsylvania
8,000
1.84
13.16
Rhode Island
19,000
1.69
9.79
South Carolina
7,000
1.14
6.00
South Dakota
10,000
0.00
8.50
Tennessee
9,000
0.50
10.00
Texas
9,000
0.26
6.26
Utah
28,300
0.20
9.20
Vermont
10,000
0.80
6.50
Virginia
8,000
0.18
6.28
Washington
36,800
0.00
5.40
West Virginia
12,000
1.50
7.50
Wisconsin
12,000
0.00
8.50
Wyoming
22,800
0.30
9.10
State
Source: CRS table compiled from Significant Provisions of State Unemployment Insurance Laws, January 2010, U.S.
Department of Labor, Employment and Training Administration, at http://www.workforcesecurity.doleta.gov/
unemploy/content/sigpros/2010-2019/January2010.pdf.
a.
Tax rates apply only to experience-rated employers; states apply different rates to new employers.
Generally, during economic expansions, FUTA and SUTA revenue collections will exceed UC
outlays. During economic recessions, revenues generally will be less than UC outlays. For
example, UTF outlays significantly exceeded trust fund revenue in FY2001-FY2004, and again
starting in FY2008. From FY2005 to FY2007, UC revenue exceeded total UC outlays. Table 3
lists the total revenue and outlays associated with the UC program from FY2001 through FY2010
(estimated).
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Table 3. Revenue and Spending Associated With Unemployment Compensation,
FY2001-FY2010
(in billions of dollars)
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010a
27.8
27.5
33.2
39.3
41.8
43.0
41.2
39.4
37.8
51.3
6.9
6.6
6.5
6.6
6.7
7.1
7.3
7.2
6.7
6.8
20.8
20.9
26.7
32.7
35.1
35.9
33.7
32.2
31.1
44.5
31
53.8
57.4
40.9
35.0
34.3
34.7
41.7 117.2
27.3
42
42
36.9
31.2
30.2
31.4
38.1
75.3
84.1
b
0.16
0.32
0.16
0.00
0.20
0.00
0.02
4.1
17.8
Emergency UC
—
7.9
11
4.1
—
—
—
3.6
32.7
43.6
Federal Additional
Compensation
—
—
—
—
—
—
—
—
6.5
9.6
Administrative Costs
3.6
3.7
4.1
3.9
3.8
3.9
3.7
3.9
4.3
5.9
UC revenue, total
FUTA tax
State UC taxes
UC outlays, total
Regular benefits
Extended benefits
155.1
Source: U.S. Department of Labor, UI Outlook, January 2001-February 2010, and updates.
a.
Estimated for 2010. Estimates assumed authorization for EUC08, EB, 100% federal EB financing, and FAC
expired at the end of February.
b.
Less than $5 million.
Outstanding Loans from the Federal Unemployment Account
If a state trust fund account becomes insolvent, a state may borrow federal funds.9 DOL maintains
a list of all states with loans and includes the loan amounts.10 States are charged interest on loans
that are not repaid by the end of the fiscal year in which they were obtained.
The American Recovery and Reinvestment Act of 2009 (P.L. 111-5, the 2009 stimulus package)
temporarily waives interest payments, and no interest will accrue, on interest payments that come
due from the time the stimulus package was enacted (February 17, 2009) until December 31,
2010. Although states will not need to pay interest during this period, they must still repay the
principal on the underlying loans according to the schedule provided in federal law. If a state does
not pay back loaned funds within the prescribed
amount of time or make good progress as
determined by the U.S. Secretary of Labor, the state
unemployment tax credit will be reduced.
unemployment tax credit will be reduced.
Federal Additional Compensation
P.L. 111-5 created the Federal Additional Compensation (FAC), a $25 weekly benefit supplement
for individuals receiving benefits from all unemployment compensation programs: UC, EUC08,
the Extended Benefit (EB) program, Disaster Unemployment Assistance (DUA), and Trade
9
For detailed information on loans to the states within the UTF, see CRS Report RS22954, The Unemployment Trust
Fund (UTF): State Insolvency and Federal Loans to States, by Julie M. Whittaker.
10
See http://www.workforcesecurity.doleta.gov/unemploy/budget.asp#tfloans.
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Adjustment Assistance (TAA). The authorization for the FAC $25 weekly benefit expired on May
29, 2010. It has not been extended by recent legislation (P.L. 111-205).
If an unemployed individual was receiving any type of unemployment benefit—UC, EUC08, EB,
DUA, or TAA—prior to May 29, 2010 (May 30, 2010, for New York state), that individual will
continue to receive the weekly FAC until he or she has exhausted all unemployment benefits from
all unemployment programs (i.e., UC, EUC08, EB, DUA, and TAA) or until December 11, 2010
(December 12, 2010, for New York), whichever date comes first. Individuals who begin receiving
unemployment benefits after May 29, 2010 (May 30, 2010, for New York state) will not receive
the FAC.
Emergency Unemployment Compensation Program
On June 30, 2008, the President signed the Supplemental Appropriations Act of 2008 (P.L. 110252) into law. Title IV of this act created a new temporary unemployment insurance program, the
EUC08 program. This is the eighth time Congress has created a federal temporary program that
has extended unemployment compensation during an economic slowdown. Until February 16,
9
For detailed information on loans to the states within the UTF, see CRS Report RS22954, The Unemployment Trust
Fund (UTF): State Insolvency and Federal Loans to States, by Julie M. Whittaker.
10
See http://www.workforcesecurity.doleta.gov/unemploy/budget.asp#tfloans.
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2009, the EUC08 program was financed with funds within the UTF. However, with the passage of
P.L. 111-5, the EUC08 benefit is now 100% federally funded from general funds within the U.S.
Treasury. State UC agencies will administer the EUC08 benefit along with regular UC benefits.
On November 21, 2008, the President signed P.L. 110-449, the Unemployment Compensation
Extension Act of 2008, into law. P.L. 110-449 expanded the potential duration of the EUC08
benefit from up to 13 weeks of EUC08 to a maximum of 20 weeks. It also created a second tier of
benefits for workers in states with high unemployment of up to a maximum of an additional 13
weeks of tier II EUC08 benefits (for up to a cumulative 33 weeks of EUC08 benefits).
On February 27, 2009, the President signed the 2009 stimulus package, P.L. 111-5, known as the
American Economic Recovery and Reinvestment Act, or ARRA. ARRA authorized the EUC08
program through December 2009. The 2009 stimulus package also contained temporary
provisions for 100% federal financing of the EB program and to create an additional $25 weekly
benefit for those receiving regular UC, EUC08, or EB. EUC08 benefits have been financed from
the EUCA in the UTF. Starting from enactment of the 2009 stimulus package, however, EUC08
benefits are financed from general revenues through the termination of the EUC08 program.
On November 6, 2009, the President signed P.L. 111-92, the Worker, Homeownership, and
Business Assistance Act of 2009, into law. P.L. 111-92 expanded benefits available in the EUC08
program. Tier I benefits continue to be up to 20 weeks in duration and tier II benefits are now 14
weeks in duration (compared with 13 previously) and no longer are dependent on a state’s
unemployment rate. The new tier III benefit provides up to 13 weeks of EUC08 benefits to those
workers in states with an average unemployment rate of 6% or higher. The new tier IV benefit
may provide up to an additional six weeks of benefits if the state unemployment rate is at least
8.5%.11
11
For details on the EUC08 program, see CRS Report RS22915, Temporary Extension of Unemployment Benefits:
Emergency Unemployment Compensation (EUC08), by Katelin P. Isaacs, Julie M. Whittaker, and Alison M. Shelton.
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On December 21, 2009, the President signed P.L. 111-118, the Department of Defense
Appropriations Act of 2010, into law. P.L. 111-118 extended the EUC08 program, 100% federal
financing of the EB program, and the $25 supplemental weekly benefit through February 28,
2010.
On March 2, 2010, the President signed P.L. 111-144, the Temporary Extension Act, which
extendsextended the EUC08 program, 100% federal financing of the EB program, and the $25 weekly
supplemental benefit until April 5, 2010.
On April 15, 2010, the President signed P.L. 111-157, the Continuing Extension Act of 2010 into
law. P.L. 111-157 extendsextended the availability of EUC08, 100% federal financing of EB, and the $25
FAC benefits, until the week ending on or before June 2, 2010.
See Appendix B for a summary of public laws, benefits, effective dates, and financing issues
related to the EUC08 program.
11
For details on the EUC08 program, see CRS Report RS22915, Temporary Extension of Unemployment Benefits:
Emergency Unemployment Compensation (EUC08), by Katelin P. Isaacs, Julie M. Whittaker, and Alison M. Shelton.
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On July 22, 2010, the President signed P.L. 111-205, the American Jobs and Closing Tax
Loopholes Act of 2010, into law. P.L. 111-205 extends the availability of EUC08 until the week
ending on or before November 30, 2010.
See Appendix B for a summary of public laws, benefits, effective dates, and financing issues
related to the EUC08 program.
Previous Temporary Unemployment Compensation Extensions
Previously, Congress acted seven times—in 1958, 1961, 1971, 1974, 1982, 1991, and 2002—to
establish similar temporary programs of extended UC benefits. These programs extended the
period an individual might claim UC benefits (ranging from an additional 6 to 33 weeks) and had
expiration dates.12 Some extensions took into account state economic conditions; many temporary
programs considered the state’s total TUR or the state’s IUR or both.
EUC08 Benefit Amounts, Tiers and Duration
The amount of the EUC08 benefit is the equivalent of the eligible individual’s weekly regular UC
benefit and includes any applicable dependents’ allowances. The 2009 stimulus package, as
amended, provides a federally financed, supplemental $25 per week benefit for unemployment
compensation, including EUC08 tier I-tier IV benefits, for those individuals receiving
unemployment benefits prior to May 29, 2010 (see section on “Federal Additional
Compensation” above for more details on FAC expiration and “grandfathering”).
Tier I
The maximum number of weeks an individual may be eligible for tier I EUC08 benefits is capped
at 20 weeks. Some individuals may be eligible for fewer weeks of the tier I EUC08 benefits if
their regular UC benefit entitlement was less than 26 weeks.
12
For more information on these programs, see CRS Report RL34340, Extending Unemployment Compensation
Benefits During Recessions, by Julie M. Whittaker.
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Tier II
Once an individual has exhausted tier I benefits, a second tier of EUC08 benefits may be
available if the individual remains unemployed and satisfies the EUC08 conditions to entitlement.
P.L. 111-92 expanded tier II benefits. They are now 14 weeks in duration (compared with 13
previously) and no longer are dependent on a state’s unemployment rate.
Tier III
The new tier III benefit provides up to 13 weeks of EUC08 benefits to those workers in states
with an average total unemployment rate of 6% or higher or in states with an average insured
unemployment rate of 4% or higher.
Tier IV
The new tier IV benefit may provide up to an additional six weeks of benefits if the state average
total unemployment rate is at least 8.5% or in states with an average insured unemployment rate
of at least of 6%.
12
For more information on these programs, see CRS Report RL34340, Extending Unemployment Compensation
Benefits During Recessions, by Julie M. Whittaker.
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Terminates June 2, 2010All Tiers Terminate November 30, 2010, with Grandfathering
All tiers of EUC08 benefits are temporary and will expire on June 2November 30, 2010. Those unemployed
individuals who had qualified for a tier I, II, III, or IV EUC08 benefit by May 29November 27, 2010,13 are
are “grandfathered” for their remaining weeks of eligibility for only that specific tier, and wouldwill
continue to receive payments for the number of weeks they were deemed eligible. However, there
will be no new entrants into any tier of the EUC08 program after the week that ends on June 2,
November 30, 2010. In other words, to be eligible for an EUC08 tier 1I benefit, an individual must exhaust his or
have exhausted his or her regular UC benefits before or during the week ending May 22November 20,
2010,14 so as to enter the first tier of
EUC08 benefits during the week ending June 2, 2010, and November 27, and
be grandfathered for tier 1I benefits
after June 2November 30, 2010.
If an individual is eligible to continue to receive the tier I benefit after May 29November 27, 2010, that
individual would not be entitled to tier II benefits once those tier I benefits were exhausted.
Similarly, if an individual is eligible to continue to receive the tier II benefit after May 29, 2010,
November 27,
2010, that individual would not be entitled to tier III benefits once those tier II benefits were
exhausted.
Likewise, if an individual is eligible to continue to receive the tier III benefit after May 29
November 27, 2010,
that individual would not be entitled to tier IV benefits once those tier III
benefits were
exhausted. No EUC08 benefits—regardless of tier—are payable for any week after November 6,
2010.
Special Case: Exhausted Tier II EUC08 Benefits Before November 8,
2009
If an individual had exhausted the tier II EUC08 benefit before November 23, 2008, the
individual may be eligible for up to a total of 14 weeks EUC08 benefits. Administratively this
will be two separate entitlements: an individual will potentially be entitled to an additional 1
week of tier II EUC08 benefits and up to 13 weeks of tier III benefits. This is a result of P.L. 11192, which expanded tier II from 13 to 14 weeks and dropped the state unemployment rate
requirement. Once the new full entitlement (of up to a total of 14 weeks) of tier II EUC08
benefits has been completed, the individual will then be considered to have exhausted the newly
expanded tier II EUC08 benefit. The individual may then be eligible for the additional 13 weeks
of tier III benefits. (Thus, generally for individuals who had exhausted EUC08 benefits before
November 8, 2009, the new entitlement for H.R. 3548 will be an additional 14 weeks of EUC08
benefits.)
P.L. 111-92 allows states to temporarily pay tier III benefits before tier II benefits if that will help
the states disburse benefits to individuals faster.
No Retroactive Payments for Special Case
There is no payment for the weeks of unemployment during the period when the individual had
exhausted the earlier EUC08 benefit and November 8, 2009. If that individual continues to be
13
14
May 30 exhausted. No EUC08 benefits—regardless of tier—are payable for any week after
April 30, 2011.
13
14
May 28, 2010, for New York state.
May 2321, 2010, for New York state.
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unemployed, the individual may be entitled to additional weeks of EUC benefits for the weeks of
unemployment that occur on or after November 8, 2009.
Tier I EUC08 Eligibility Requirements
First Claimed Regular UC Benefits On or After May 7, 2006
Applicants must have been eligible for regular UC benefits and have exhausted their rights to
regular UC compensation with respect to a benefit year that expired during or after the week of
May 6, 2007.15 For most states, this would apply to individuals who had filed UC claims with an
effective date of May 7, 2006 or later. For the state of New York this would apply to original
claims filed with an effective date of May 1, 2006 or later. 16
Exhausted Regular UC Benefit
The right to regular UC benefits for an individual must be exhausted to be eligible for EUC08
benefits. Although federal laws and regulations provide broad guidelines on regular UC benefit
coverage and eligibility determination, the specifics of regular UC benefits are determined by
each state. As noted earlier, this results in 53 different programs. 17 In particular, states determine
UC benefit eligibility, amount, and duration through state laws and program regulations.18
“20 Weeks” of Full-Time Insured Employment or Equivalent
In addition to all state requirements for regular UC eligibility, the EUC08 program requires
claimants to have at least 20 weeks of full-time insured employment or the equivalent in insured
wages in their base period. The definition of “20 weeks” is discussed in the “Methods for
Determining 20 Weeks of Full-Time Insured Employment” section of this report.
Tier II EUC08 Eligibility Requirements
Exhausted Tier I EUC08 Benefit
The right to tier I EUC08 benefits must be exhausted to be eligible for the tier II EUC08 benefits.
15
Arkansas has a unique approach to calculating a benefit year. In Arkansas, the benefit year begins the first day of the
quarter in which an individual files a valid UC claim. Thus, it is unlikely that many individuals in Arkansas who filed
UC claims before July 2006 would be eligible to receive EUC08 benefits.
16
Note that the effective date is not necessarily the actual date when an individual filed for UC. A claim filed on May
10, 2006, may have had an earlier effective date if a state allows retroactive claims.
17
The 50 states, the District of Columbia, Puerto Rico, and the Virgin Islands provide UC benefits to their workers.
18
Individuals in the Massachusetts and Montana UC programs may have regular UC durations that exceed 26 weeks.
Those additional weeks are not used to calculate EUC08 duration.
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Tier III EUC08 Eligibility Requirements
Exhausted Tier II EUC08 Benefit
The right to tier II EUC08 benefits must be exhausted to be eligible for the tier III EUC08
benefits. States have the ability to waive this requirement and pay tier III before tier II if doing so
would aid in prompt payment of EUC08 benefits.
At or After the Period of Tier II EUC08 Exhaustion, the State Must Currently
Have At Least 6% Unemployment Rate
The individual must have worked in a state with unemployment currently of at least 6% or an
IUR of at least 4%. If the state’s unemployment rate meets one of these conditions, a (still)
unemployed tier II benefit exhaustee would be eligible for tier III benefits at that time.
Each Monday the Department of Labor issues its “Emergency Unemployment Compensation
Trigger Notice” at http://www.workforcesecurity.doleta.gov/unemploy/claims_arch.asp. If the
status column for tier III within the notice is “on” for a particular state’s row, that state is
considered to be high unemployment for the purposes of EUC08 tier III benefits.
No Retroactive Payments
No retroactive EUC08 payments exist for the period during which the individual had exhausted
tier II benefits but the state did not meet the high unemployment criteria. However, once a state
reaches the 6.0% level (and it has been at least 13 weeks since tier III benefits were previously
available), a still unemployed tier II exhaustee would be able to receive tier III
benefits.
Tier IV EUC08 Eligibility Requirements
Exhausted Tier I, Tier II, and Tier III EUC08 Benefits
The right to tier I, tier II, and tier III EUC08 benefits must be exhausted to be eligible for the tier
IV EUC08 benefits.
At or After the Period of Tier III EUC08 Exhaustion, the State Must Currently
Have At Least 8.5% Unemployment Rate
The individual must have worked in a state with unemployment currently of at least 8.5% or an
IUR of at least 5%. If the state’s unemployment rate meets one of these conditions, a (still)
unemployed tier III benefit exhaustee would be eligible for tier IV benefits at that time.
Each Monday the Department of Labor issues its “Emergency Unemployment Compensation
Trigger Notice” at http://www.workforcesecurity.doleta.gov/unemploy/claims_arch.asp. If the
status column for tier IV benefits within the notice is “on” for a particular state’s row, that state is
considered to be high unemployment for the purposes of EUC08.
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No Retroactive Payments
No retroactive EUC08 payments exist for the period during which the individual had exhausted
tier IV benefits but the state did not meet the tier IV high unemployment criteria. However, once a
state reaches the 8.5% level (and it has been at least 13 weeks since tier IV benefits were most
recently available), a still unemployed tier III exhaustee would be able to receive
benefits.
EUC08 Financing
Until February 16, 2009, the EUC08 program was federally financed from the extended
unemployment compensation account (EUCA) within the Unemployment Trust Fund (UTF).
With the passage of the 2009 stimulus package (P.L. 111-5), however, EUC08 is now financed
from general funds of the U.S. Treasury through the expiration of the EUC08 program. States do
not need to repay these funds.
EUC08 and EB Interactions
The EUC08 program should not be confused with the similarly named EB program (see
description below). The EUC08 program is temporary and tiers 1I and 2II of EUC08 apply to all
states while tier III and IV of EUC08 apply to states with high and very high unemployment,
respectively. The EB program is permanently authorized and applies only to certain states on the
basis of state unemployment conditions specified in law.
The EUC08 program allows states to determine which benefit, EB or EUC08, is paid first. Most
states have opted to pay EUC08 benefits before EB. Alaska has opted to pay EB before EUC08
benefits.
An exception to the payment order may be made if an individual claimed EB for at least one
week of unemployment after exhausting the first two tiers of EUC08 and prior to the enactment
P.L. 111-92, which created new EUC08 tiers III and IV. P.L. 111-92 gives states the option of
paying EB to an otherwise eligible individual prior to the payment of any EUC08 benefits that are
payable on account of the Worker Assistance Act amendments to the EUC08 program (or vice
versa in the case of Alaska).
Extended Benefit Program
The EB program was established by the Federal-State Extended Unemployment Compensation
Act of 1970 (EUCA), P.L. 91-373 (26 U.S.C. 3304, note). EUCA may extend receipt of
unemployment benefits (extended benefits) at the state level if certain economic situations exist
within the state.
The EB program is triggered when a state’s IUR19 or TUR20 reaches certain levels. All states must
pay up to 13 weeks of EB if the IUR for the previous 13 weeks is at least 5% and is 120% of the
19
The IUR is the ratio of UC claimants divided by individuals in UC-covered jobs. The IUR is substantially different
than the TUR because it excludes several important groups: self-employed workers, unpaid family workers, workers in
certain not-for-profit organizations, and several other, primarily seasonal, categories of workers. In addition to those
(continued...)
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average of the rates for the same 13-week period in each of the two previous years. There are two
other optional thresholds that states may choose. (States may choose one, two, or none.) If the
state has chosen a given option, they would provide the following:
•
Option 1: an additional 13 weeks of benefits if the state’s IUR is at least 6%,
regardless of previous years’ averages.
•
Option 2: an additional 13 weeks of benefits if the state’s TUR is at least 6.5%
and is at least 110% of the state’s average TUR for the same 13 weeks in either of
the previous two years; an additional 20 weeks of benefits if the TUR is at least
8% and is at least 110% of the state’s average TUR for the same 13 weeks in
either of the previous two years.
Each state’s IUR and TUR are determined by the state of residence (agent state) of the
unemployed worker rather than by the state of employment (liable state). EB benefits are not
“grandfathered” when a state triggers “off” the program; that is, EB benefit payments in the state
cease immediately.
EB Triggers May be Reviewed in 2010
The President’s 2010 budget outline suggested the EB program be modified to make the UC
system more responsive to changing economic conditions. The current EB triggers have been
criticized for deploying in many states long after a recession has started, for not deploying at all
in some states with high unemployment, and for triggering off too quickly in some states.
Analysts cite several reasons for this: (1) the general long-term decline in unemployment rates
has made the current triggers irrelevant; (2) the rate and lookback provisions work against each
other; and (3) amendments to the program in the early 1980s changed the IUR calculation in a
way that made EB activation less likely. 21
At the same time, analysts and legislators have also questioned the use of emergency extended
programs (such as EUC08) because these temporary programs can be subject to delays related to
the recognition of a recession and legislative activity. As a result, there is interest in modifying the
EB program, and especially the EB triggers, so that the EB program can deliver timely and welltargeted benefits.
Some of the issues concerning the EB trigger include national- versus state-level triggers, use of
the IUR versus the TUR, and the use of lookbacks that compare current unemployment with
conditions one and two years earlier.
(...continued)
unemployed workers whose last jobs were in the excluded employment, the insured unemployed rate excludes the
following: those who have exhausted their UC benefits (even if they receive EB or EUC08 benefits); new entrants or
reentrants to the labor force; disqualified workers whose unemployment is considered to have resulted from their own
actions rather than from economic conditions; and, eligible unemployed persons who do not file for benefits.
20
The TUR is the ratio of unemployed workers to all workers (employed and unemployed) in the labor market. The
TUR is essentially a weekly version of the unemployment rate published by the Bureau of Labor Statistics and based
on data from the BLS’ monthly Current Population Survey.
21
The Omnibus Budget Reconciliation Act of 1981 redefined the IUR to remove UC exhaustees and EB beneficiaries
from the numerator. The Act also eliminated the national IUR trigger, and raised the states’ trigger to 5%.
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The EB trigger is composed of two components, a level and a lookback. The EB is said to be
triggered “on” in a state when both components have met or exceeded the thresholds. The level
component of a trigger is a threshold rate, such as the IUR or the TUR. The lookback component
compares the current period’s level (rate) to the level in the same period in some reference time
such as the previous two years.
A national trigger may seem appropriate because the definition of a recession is that it is national
in scope, and the federal government’s interest in reversing an economic decline is national as
well. On the other hand, recessions have variations in its regional impact. A national trigger could
cause extended benefits to be paid to individuals in states that do not face unusually weak labor
markets. Regional or sub-regional triggers have also been suggested as a means to improve the
targeting of benefits, because labor markets can span state boundaries or be confined to rural or
urban areas within a state (especially where a single industry is involved). It would be very
difficult, however, to define appropriate regional or sub-state boundaries. There is also concern
about data accuracy and availability at regional or sub-state levels. With the EUC08 program,
Congress opted for a combination of national- and state-level triggers: EUC08 tiers I and II
provide benefits to all unemployed workers, and EUC08 tiers III and IV provide additional weeks
of benefits to unemployed workers in states that face high unemployment.
The IUR and the TUR have been used as triggers for the EB and EUC08 programs, and each has
merits as well as drawbacks. The calculation of the IUR is the ratio of the number of people
claiming regular UC benefits to the number of insured workers. The IUR is arguably the more
accurate indication of actual demand for EB. The IUR’s numerator can change with noneconomic factors such as state eligibility rules and administrative practices, however, and this in
turn can affect whether the EB is activated in a particular state. The TUR is defined as the number
of all unemployed individuals divided by the size of the civilian labor force (employed and
unemployed). The TUR represents a larger population because it includes uninsured workers
(such as the self-employed) and because it includes all unemployed workers, including those who
failed to qualify for regular UC benefits or who have exhausted regular UC. Recent studies have
suggested that whether an IUR or TUR trigger is used, the secular decline in unemployment over
the past several decades has resulted in the current trigger levels being relatively difficult to
attain.
Lookbacks (e.g., the base EB requirement that the IUR requirement be at least 120% of the
average of the rates for the same 13-week period in the each of the previous two years) are useful
for measuring changes in unemployment relative to a baseline, but have also been controversial.
The EB lookback has been criticized for forcing the trigger off too quickly, before the end of a
recession. This can occur, for example, when high unemployment rates reach a—still high—
plateau and the rate change from the reference period falls below 20% (in the case of a lookback
requirement of 120%). Some have proposed that the trigger not include a lookback; others have
suggested that the trigger refer to a fixed point in time at some date before the declaration of a
recession.
The Advisory Council on Unemployment Compensation recommended in 1994 that the EB
program use a state TUR of 6.5%, and that the EB program not use a lookback.
Other potential EB triggers could include the increase in the number of unemployed over a period
such as the previous year; the increase in the number of long-term unemployed (unemployed for
over 26 weeks); or changes in the number of UC exhaustees. Although the UC exhaustion rate is
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intuitively appealing, a potential problem with this trigger includes a built-in delay of up to 26
weeks until benefit exhaustion that could prevent timely launch of the EB program.
It would be important in any reform to build in a mechanism for reviewing and updating EB
triggers.
EB Eligibility Requirements Beyond Requirements for Regular UC
The EB program imposes additional federal restrictions on individual eligibility for benefits
beyond the state requirements for regular UC. The EB program requires that a worker make a
“systematic and sustained” work search. Furthermore, the worker may not receive benefits if he
or she refused an offer of “suitable” work, which is defined as “any work within such individual’s
capabilities”. In addition, P.L. 97-35, among other items, amended the EUCA to require that
claimants work at least 20 weeks of full-time insured employment or equivalent in insured wages
during their base period.
The 2009 stimulus package affects a further requirement for EB eligibility. As the EB program
has operated in the past, a beneficiary had to be within their original “benefit year”22 when the
EB EB
program triggered “on” in their state in order to receive EB benefits. Thus, on the condition
that that
the state triggered “on” during an individual’s benefit year, he or she could receive EB
benefits benefits
during the benefit year, or even after the benefit year expired, that is, at the time he or she
exhausted regular unemployment compensation or EUC08 benefits even if this occurred after the
expiration of the benefit year. However, if the state’s most recent EB period triggered on after the
individual’s benefit year ended, the beneficiary would not receive EB. As a result, in states that
have recently triggered “on” to EB because of rising unemployment rates, many individuals may
be ineligible for EB benefits. For example, if an individual’s benefit year expired in July 2008,
this person would be ineligible for EB benefits if his or her state triggered “on” for EB in
November 2008.
Under the 2009 stimulus package (as amended), states have the option of ignoring the benefit
year requirement and instead using EUC08 exhaustion as an eligibility requirement, as long as the
state’s EB period falls between enactment of the stimulus package and June 2November 30, 2010. This
has the
effect of allowing more individuals to be eligible for the EB program. In addition, states can opt
to grandfather those who exhaust their EUC08 benefits after the EUC08 program expires.23
As described above, the EUC08 program contains a “reachback” clause under which EUC08
benefits were made available to individuals who had exhausted regular UC benefits with respect
to a benefit year that expired during or after the week of May 6, 2007. Before the stimulus
package, many individuals who had exhausted EUC08 benefits would have been ineligible for EB
benefits if the state triggered “on” for EB after their benefit year expired. Under the stimulus
package, however, all individuals who have exhausted EUC08 benefits would be eligible for EB
benefits, regardless of the timing of their benefit years.
22
The benefit year is a one-year period during which a worker may receive benefits based on a previous period of
unemployment. In all states, the beginning date of the benefit year depends on when a worker first files a valid claim,
meaning the worker meets minimal wage and employment requirements.
23
States would once again be responsible for 50% of the cost of new entrants to the EB benefit program after June 2,
November 30, 2010, however, as 100% federal financing of the EB plan ends. The federal government would continue
to pay 100% of
EB benefits for individuals who were receiving EB during the week ending before June 2November 30, 2010,
for the duration of
their EB receipt.
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package, however, all individuals who have exhausted EUC08 benefits would be eligible for EB
benefits, regardless of the timing of their benefit years.
Methods for Determining 20 Weeks of Full-Time Insured Employment
States use one, two, or three different methods for determining an “equivalent” to 20 weeks of
full-time insured employment. These methods are described in both law (Section 202(a)(5) of the
EUCA) and regulation (20 CFR 615.4(b)). In practice, states that require any of these three
methods for receipt of regular UC benefits and do not allow for exceptions to those requirements
do not need to establish that the worker meets the 20 weeks full-time insured employment. The
three methods are listed below:
•
earnings in the base period equal to at least 1.5 times the high-quarter wages; or
•
earnings in the base period of at least 40 times the most recent weekly benefit
amount, and if this alternative is adopted, it shall use the weekly benefit amount
(including dependents’ allowances) payable for a week of total unemployment
(before any reduction because of earnings, pensions or other requirements) that
applied to the most recent week of regular benefits; or
•
earnings in the base period equal to at least 20 weeks of full-time insured
employment, and if this alternative is adopted, the term “full-time” shall have the
meaning provided by the state law.
The base period may be the regular base period or, if applicable in the state, the period may be the
alternative base period or the extended base period if that determined the regular UC benefit.
The underlying reasoning behind the requirements seems to be the following:
•
Because there are 13 weeks in a quarter, 1.5 times the high-quarter wage is
roughly equivalent to 1.5 times 13 weeks of wages or about 20 weeks of wages.
(Many states require high quarterly earnings of under $2,000, which works out to
less than $4/hour under full-time assumptions. This is less than the federal
minimum wage of $5.85/hour.)
•
Similarly, because the weekly benefit amount is roughly equivalent to half the
average weekly wage, 40 times the weekly benefit amount is roughly equivalent
to 20 weeks of wages.
2009 Stimulus Provisions Affecting EB Level and Duration
The EB program provides for additional weeks of UC benefits. As described earlier, all states
must pay up to a maximum of 13 weeks during periods of high unemployment, and certain states
that have chosen additional, optional triggers may pay up to a maximum of 20 weeks during
periods of extremely high unemployment. The 2009 stimulus package (as amended) provided a
supplemental $25 weekly benefit through June 2, 2010, for recipients of unemployment
compensation, including EB recipientsfor those individuals receiving unemployment benefits prior to
May 29, 2010, including EB (see section on “Federal Additional Compensation” above for more
details on FAC expiration and “grandfathering”).
EB benefits on interstate claims are limited to two extra weeks unless both the agent state (e.g.,
Texas) and liable state (e.g., Louisiana) are both in an EB period.
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2009 Stimulus Provisions Affecting EB Financing
Under permanent law, EB benefits are funded half (50%) by the federal government through its
account for that purpose in the UTF. States fund the other half (50%) through their state accounts
in the UTF. The federal government pays 100% of EB administrative costs.
The 2009 stimulus package, as amended, temporarily changes the federal-state funding
arrangement. The federal government finances 100% of EB benefits through June 2November 30, 2010,
through the EUCA of the UTF, with the exception of former state and local employees’ EB
benefits. 100% federal financing of the EB program has “non-sharable” benefits (generally, these are
former state and local employees’ EB benefits). The EB program’s 100% federal financing has
prompted some states to adopt the
optional triggers to provide 20 weeks of extended benefits. The
exception for former state and
local employees’ EBnon-sharable benefits, however, has made some states reluctant to adopt the
optional 20week20-week EB triggers, or the stimulus provision that allows them to use EUC08
exhaustion rather
than benefit year as a requirement for EB eligibility.
For individuals who were receiving EB
payments during the week ending June 2 payments on November 30, 2010, the federal government
will continue to pay
100% of EB benefits for the duration of these individuals’ benefits (but not
for new entrants to the
EB program starting after that date). The stimulus package also continues
the temporary
suspension of the waiting week requirement for federal funding until the week ending before
November 6, 2010
ending on or before May 30, 2011.24
Short-time Compensation (Work Sharing)
Short-time compensation (STC) is a program within the federal-state unemployment
compensation system. Seventeen states operate STC programs.
STC is a regular unemployment benefit, pro-rated for a partial work reduction, that is offered
within the context of a temporary work sharing arrangement. Under a work sharing arrangement,
a firm that is faced with a need to downsize temporarily reduces work hours for many or all
workers instead of laying off a smaller number of workers. For example, an employer might
reduce the work hours of the entire workforce by 20%, from five to four days a week, in lieu of
laying off 20% of the workforce.
States with STC programs require employers who seek STC for their workers to submit a formal
work sharing plan for approval. Once the state has approved an employer’s plan, the worksharing employees receive pro-rated unemployment compensation, or STC. In the above
example, the amount of STC provided to each worker would be 20% of the unemployment
benefit that a worker would have received had he or she been laid off.
Employers have used STC combined with work sharing arrangements to reduce labor costs while
retaining highly skilled workers. Work sharing can also reduce employers’ recruitment and
training costs by making it unnecessary to recruit new employees when business improves. On
the employee’s side, work sharing arrangements combined with STC can spread more moderate
earnings reductions across more employees—as opposed to imposing significant hardship on a
24
States that do not require a one-week UC waiting period, or have an exception for any reason to the waiting period,
pay 100% of the first week of EB. Twenty-five states, including Rhode Island and North Carolina, do not require a oneweek UC waiting period in all cases. P.L. 110-449 (as amended by P.L. 111-5, P.L. 111-118, P.L. 111-144, and P.L.
111-157) suspendedsuspends this requirement until November 6, 2010.
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earnings reductions across more employees—as opposed to imposing significant hardship on a
few. Work sharing and STC cannot, however, avert layoffs or plant closings if a company’s
financial situation is dire. In addition, some employers may choose not to adopt work sharing
because laying off workers may be a less expensive alternative.
STC benefits are charged to employers according to the experience rating rules of a state’s regular
unemployment program. Therefore, a firm generally incurs no more in UI tax costs by using STC
than it would through layoffs. Seven states also impose additional tax provisions on work sharing
employers, in order to ensure that employers who already pay the maximum state unemployment
tax rate share in the burden.
Currently, only 1718 states operate STC programs to support work sharing arrangements. Through
the end of 2008, the STC program has never constituted more than about 1% of unemployment
benefits paid annually across the U.S, although very preliminary data for the first three quarters of
2009 indicate that this ratio may recently have risen to as high as 2%. The reasons for low state
and employer take-up of the STC program are not completely clear, but a key cause would appear
to be ambiguity in the 1992 federal law that authorizes STC. Because of this ambiguity, the U.S.
Department of Labor (DOL) has not provided guidance or technical assistance on STC to the
states since 1992. A more active public policy would require either DOL reinterpretation of the
1992 law or congressional action to either clarify federal law or give the Secretary of Labor
authority to determine needed additional provisions.25
Policy Proposals that Target Unemployment Benefit
Exhaustees
Recent Congressional hearings have raised the issue of how to aid long-term unemployed
workers, especially those individuals who have exhausted all available unemployment benefits.26
As of June 2010, about 46% of unemployed individuals had been without a job for more than 26
weeks.27 These long-term unemployed workers are at risk of exhausting current benefits while
remaining unemployed.28 A number of ideas have been advanced to provide additional income or
employment support to these individuals. Five popular policy strategies include the following:
•
Work sharing: Described in more detail above, the Short-Time Compensation
(STC) program—also known as “work sharing”—provides pro-rated
unemployment benefits to workers whose hours have been reduced in lieu of a
25
For more information on short-time compensation, see CRS Report R40689, Compensated Work Sharing
Arrangements (Short-Time Compensation) as an Alternative to Layoffs, by Alison M. Shelton.
26
Senate Committee on Finance Hearing on “Using Unemployment Insurance to Help Americans Get Back to Work:
Creating Opportunities and Overcoming Challenges,” held on April 14, 2010 (Member statements and witness
testimony available: http://finance.senate.gov/hearings/hearing/?id=868a8e37-5056-a032-5297-a991437cea80); House
Subcommittee on Income Security and Family Support Hearing on “Responding to Long-Term Unemployment,” held
June 20, 2010 (Member statements and witness testimony available: http://waysandmeans.house.gov/Hearings/
hearingDetails.aspx?NewsID=11201).
27
U.S. Department of Labor, “Employment Situation Summary,” Table A-12, July 2, 2010.
28
For more information on long-term unemployment, see CRS Report R41179, Long-Term Unemployment and
Recessions, by Gerald Mayer and Linda Levine.
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layoff, thereby retaining workers and avoiding unemployment. 29 Although STC
does not address unemployment benefit exhaustees directly, it attempts to
mitigate unemployment by preventing additional layoffs. Currently, 18 states
have STC programs. But several pieces of proposed legislation seek to provide
support for states to enact or expand STC programs.30
•
Subsidized jobs: One way to deliver support for unemployment benefit
exhaustees is by creating jobs.31 As proposed, H.R. 4812, the Local Jobs for
America Act, would provide federal funding to save and create local jobs.
Additionally, an earlier version of P.L. 111-205 proposed aid for subsidized
employment through the TANF Emergency Contingency Fund (see below).
•
Self-Employment Assistance (SEA): The SEA program provides a weekly
allowance, which is similar to a regular UC benefit in amount and duration, to
individuals who are otherwise eligible for unemployment benefits and are
participating full-time in self-employment activities. SEA waives state job search
requirements so that unemployed workers can start their own business while
receiving income support. SEA is available only to UC beneficiaries who have
been identified as likely to exhaust their benefits.32 Currently, only eight states
have active SEA programs. Although there are no current legislative proposals
related to SEA a recent Senate Committee on Finance hearing highlighted the
program as a potential source of aid to keep workers from becoming
exhaustees. 33
•
Tier V (of EUC08): Despite discussion regarding the appropriate length of
unemployment benefits,34 there has been no legislation introduced to create a tier
V of the EUC08 program, or otherwise append weeks of unemployment benefits.
•
TANF Emergency Contingency Fund (ECF): The 2009 stimulus package
(ARRA, P.L. 111-5) created an Emergency Contingency Fund (ECF) within the
Temporary Assistance for Needy Families (TANF) block grant to states, Indian
tribes, and the territories. States, Indian tribes, and the territories are reimbursed
80% of the costs of increased expenditures on direct aid to families that fall into
three categories: (1) basic assistance, which resembles traditional cash welfare;
(2) non-recurrent short-term (e.g., emergency) aid; and (3) subsidized
29
For more information on STC, see CRS Report R40689, Compensated Work Sharing Arrangements (Short-Time
Compensation) as an Alternative to Layoffs, by Alison M. Shelton.
30
For instance, S. 1646, the Keep Americans Working Act (and its House companion bill, H.R. 4135); S. 2831, the
Helping Unemployed Workers Act (and its House companion bill H.R. 4183); H.R. 4179, the SHARE Credit Act of
2009.
31
For information on job creation strategies in prior recessions, see CRS Report RL31138, Countercyclical Job
Creation Programs of the Post-World War II Era, by Linda Levine.
32
For more information on SEA, see CRS Report R41253, The Self-Employment Assistance (SEA) Program, by
Katelin P. Isaacs
33
Senate Finance Committee Hearing on “Using Unemployment Insurance to Help Americans Get Back to Work:
Creating Opportunities and Overcoming Challenges, held April 14, 2010 (Member statements and witness testimony
available: http://finance.senate.gov/hearings/hearing/?id=868a8e37-5056-a032-5297-a991437cea80).
34
See witness testimony from the House Subcommittee on Income Security and Family Support Hearing on
“Responding to Long-Term Unemployment,” held June 20, 2010 (Member statements and witness testimony available:
http://waysandmeans.house.gov/Hearings/hearingDetails.aspx?NewsID=11201).
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employment. 35 Currently, the ECF is temporarily funded for two years, FY2009
and FY2010. An earlier version of P.L. 111-205 would have extended the fund
through FY2011.
Legislative Issues
111th Congress
2010 Budget
The President’s 2010 budget highlighted the need for legislation to make the UC system more
responsive to changing economic conditions, both as an automatic stabilizer and as an effective
social safety net. In a letter transmitting the Views and Estimates of the House Committee on
Ways and Means concerning 2010 budget issues within its purview, the Committee states that it
will continue to monitor the effectiveness of the 2009 stimulus package (ARRA), including
unemployment provisions in the package.
An ongoing question concerns whether the EB program can be altered so that it makes benefits
available more quickly to long-term unemployed workers, thereby avoiding the delays associated
with legislation to create special, temporary extended unemployment programs. Although
specifics are not yet available, reforms may center around the EB program and its trigger
mechanism. Potential issues may include the appropriateness of national versus state or regional
triggers, the use of the IUR versus the TUR, the trigger level, and the use of “lookbacks” to
unemployment in a reference period. (These issues are discussed in more detail in the “Extended
Benefit Program” section of this report.)
25
For more information on short-time compensation, see CRS Report R40689, Compensated Work Sharing
Arrangements (Short-Time Compensation) as an Alternative to Layoffs, by Alison M. Shelton.
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Extended Benefit Program” section of this report.)
P.L. 111-5, The American Recovery and Reinvestment Act of 2009
ARRA (P.L. 111-5, the 2009 stimulus package) contained a number of important provisions that
affect unemployment benefits. These provisions included extension of the EUC08 program
through December 2009; temporary 100% federal financing of the EB program; up to $7 billion
for modernization of state unemployment programs; a temporary $25 per week supplemental
benefit for regular UC, EB, EUC08, TAA and DUA benefits; temporary tax relief for
unemployment benefits; and a temporary suspension of interest accrual on loans to insolvent state
UTF funds.2636
35
For more information in the TANF ECF, see CRS Report R41078, The TANF Emergency Contingency Fund, by
Gene Falk.
36
For additional information on unemployment provisions in the 2009 stimulus package, please see CRS Report
R40368, Unemployment Insurance Provisions in the American Recovery and Reinvestment Act of 2009, by Alison M.
Shelton and Julie M. Whittaker.
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Unemployment Compensation Modernization
The 2009 stimulus package provided for a special transfer of up to $7 billion in federal monies to
state unemployment programs as “incentive payments” for changing certain state UC laws. The
funds are transferred from the federal unemployment account (FUA) in the UTF to qualifying
states’ UTF accounts. The maximum incentive payment allowable for a state is calculated using
the methods used in Reed Act distributions.
For a state to receive one-third of its potential distribution it must enact an alternative base period,
which ensures the last completed quarter of a worker’s employment is counted when determining
eligibility for unemployment benefits.
The remaining two-thirds of the $7 billion are distributed
to states contingent on their qualifying
for the first one-third, plus state law containing at least
two of the following four provisions:
(1) permit former part-time workers to seek part-time work;
(2) permit voluntary separations from
employment for compelling family reasons; (3) provide
extended compensation to UC recipients
in training programs for high-demand occupations; or
(4) provide dependents allowances to UC
recipients with dependents.
In addition to the $7 billion in conditional transfers, the package immediately transferred a total
of $500 million to the states for the administration of UC programs, without conditions. These
funds could be used to pay for (1) administration of the new provisions, if any, enacted in order to
receive shares of the $7 billion in special incentive payments; (2) improvement of outreach to
individuals who might be eligible for regular unemployment compensation by virtue of the
expansion provisions; (3) improvement of unemployment benefit and tax operations, including
responding to increased demand for unemployment compensation; and (4) staff-assisted
reemployment services for unemployment compensation claimants.
Federal Additional Compensation(FAC)
The 2009 stimulus package, as amended, temporarily increasesincreased benefits by $25 per week. This
supplemental benefit is available to all FAC benefit expired on May 29, 2010. Prior to May 29, 2010, it was available to all
individuals receiving regular UC, EB, EUC08, DUA, and
TAA benefits. This supplemental
benefit will beis grandfathered for individuals who have not
exhausted the right to unemployment compensation as of June 2had been receiving the FAC and have not exhausted
the right to all unemployment benefits as of May 29, 2010; however, no federal
additional compensation is payable for any week beginning after October 5, 2010. The
26
For additional information on unemployment provisions in the 2009 stimulus package, please see CRS Report
R40368, Unemployment Insurance Provisions in the American Recovery and Reinvestment Act of 2009, by Alison M.
Shelton and Julie M. Whittaker.
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additional
compensation is payable after December 11, 2010. The supplemental benefit is financed by the
federal government from general revenues and woulddoes not
need to be repaid.
ARRA Provisions Affecting the EUC08 Program
The 2009 stimulus package, as amended, also extended the temporary EUC08 program through
April 5, 2010May 29, 2010 (May 30, 2010 for New York state). Following enactment of the stimulus package,
the extension of EUC08 benefits
began to be paid from the general funds of the U.S. Treasury and do
does not need to be repaid.
Temporary Waiver of Interest Payments and the Accrual of Interest on Advances
to State Unemployment Funds
The stimulus package provides temporary relief to states that borrow from the Federal
Unemployment Account of the Unemployment Trust Fund. The interest payments due between
enactment of the stimulus package (February 17, 2009) through December 31, 2010, would be
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Unemployment Insurance: Available Unemployment Benefits and Legislative Activity
deemed to have been made by the state. In addition, no interest on advances accrue during the
period.
Temporary 100% EB Financing and Changes to EB Eligibility
The 2009 stimulus package (as amended) temporarily changes the federal-state funding
arrangement for the EB program. The federal government will finance 100% of EB benefits
through April 5November 30, 2010, with the exception of “non-sharable” (state and local government
employees’) EB benefits.
, as those benefits are also not subject to the permanent law 50% federal
financing provisions. The 100% federal financing of EB benefits takes place through the EUCA
in the UTF. After the
100% federal financing authorization ends, EB financing would revert to
50% state financing and
50% federal financing, although 100% financing would be grandfathered
for individuals who
were receiving EB during the week that the authorization of 100% federal
financing was
terminated. Consistent with this change in financing requirements, the stimulus
package also
continues the temporary suspension of the waiting week requirement for federal
funding until the
week ending before September 4, 2010May 30, 2011. Under the waiting week requirement, now temporarily
temporarily suspended, states that do not require a one-week UC waiting period, or have an
exception for any
reason to the waiting period, paid 100% of the first week of EB.
The 2009 stimulus package also temporarily allows states the option of expanding EB eligibility,
by ignoring the benefit year requirement and instead using EUC08 exhaustion as an eligibility
requirement for EB (as long as the state is triggered “on” for EB) until the expiration of the
EUC08 program. As the EB program has operated in the past, a beneficiary had to be within his
or her original “benefit year” when the EB program triggered “on” in the state in order to receive
EB benefits. Even though a number of states triggered “on” for EB in the second half of 2008, the
benefit year requirement cause numerous individuals to be ineligible for EB because their benefit
years had expired before the state triggered “on.” Allowing states to use EUC08 exhaustion as an
eligibility requirement instead will cause more individuals to be eligible for the EB program.
Temporary Suspension of Federal Income Tax on Unemployment Benefits.
ARRA (P.L. 111-5) provided tax relief to the unemployed through the exemption of the first
$2,400 of benefits from income taxation in tax year 2009. S. 155 and H.R. 155 proposed all
unemployment benefits be exempt.
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P.L. 111-92, The Worker, Homeownership and Business Assistance Act of 2009
The President signed P.L. 111-92, the Worker, Homeownership and Business Assistance Act of
2009, into law on November 6, 2009. The law created an additional (new second) tier of up to 14
weeks of benefits, without regard to state unemployment rates. The law also created a fourth tier
of up to an additional six weeks of EUC08 benefits in states with unemployment rates of at least
8.5%. Other measures included in the proposal concerned eligibility for food stamp payments
(benefit eligibility and determination would not consider the $25 additional federal
unemployment benefit established in ARRA legislation); railroad workers (who have their own
unemployment insurance system) would receive approximately the same increase in potential
benefits; and the authorization of the 0.2% FUTA surtax is extended through 2010 and the first
six months of calendar year 2011.
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Unemployment Insurance: Available Unemployment Benefits and Legislative Activity
P.L. 111-118, The Department of Defense Appropriations Act
On December 19, 2009, the President signed P.L. 111-118, the Department of Defense
Appropriations Act of 2010, into law. P.L. 111-118 extended the EUC08 program through the end
of February 2010. The law also extended the 100% federal financing of the EB program and the
$25 supplemental weekly benefit through end-February 2010.
P.L. 111-144, The Temporary Extension Act of 2010
On March 2, 2010, the President signed P.L. 111-144, the Temporary Extension Act of 2010. P.L.
111-144 extended three temporary provisions through April 5, 2010: EUC08, the $25
supplemental weekly benefit, and 100% federal EB financing. The Senate passed H.R. 4691
without amendment on March 2, 2010, and the President signed the bill that day.
P.L. 111-157, The Continuing Extension Act of 2010
On April 15, 2010, the President signed P.L. 111-157, the Continuing Extension Act of 2010 into
law. P.L. 111-157 extends the availability of EUC08, 100% federal financing of EB, and the $25
FAC benefitsbenefit, until the week ending on or before June 2, 2010.
Current Legislation
On March 10, 2010, the Senate passed H.R. 4213, the Tax Extenders Act of 2010. H.R. 4213
would extend the availability of EUC08, 100% federal financing of EB, and the $25 FAC
benefits, through the end of December 2010. Because the original bill was amended by the Senate
in the nature of a substitute (S.Amdt. 3336), the Senate-passed version must now go back to the
House for consideration.
H.R. 4183 would have extended the authorization of the EUC08 program through March 2011. It
also would have extended the FAC benefit as well as the 100% federal financing for EB through
March 2011. Additionally, it would have provided 100% federal financing for short-time
compensation benefits through March 2011.27
27
For information on short-time compensation programs see CRS Report R40689, Compensated Work Sharing
(continued...)
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Unemployment Insurance: Available Unemployment Benefits and Legislative Activity
S. 2831 would extend the authorization of the EUC08 program through December 2010. It would
extend the FAC benefit as well as the 100% federal financing for EB through December 2010.
P.L. 111-205, the American Jobs and Closing Tax Loopholes Act of 2010
On July 22, 2010, the President signed P.L. 111-205, the American Jobs and Closing Tax
Loopholes Act of 2010, into law. P.L. 111-205 extends the availability of EUC08 and 100%
federal financing of EB through November 30, 2010. It does not extend the $25 FAC benefit,
which expired May 29, 2010.
Current Legislation
The House passed H.R. 5618, the Restoration of Emergency Unemployment Compensation Act
of 2010, on July 1, 2010. H.R. 5618 would extend the availability of EUC08 and 100% federal
financing of EB through the end of November 2010. There is, however, no extension of the
weekly $25 FAC benefit in this bill. H.R. 5618 does contain a provision that requires states not to
reduce weekly unemployment benefits in order to be eligible for EUC08 funds. No spending
offsets are included in H.R. 5618.
S. 3520, the Unemployment Insurance Extension Act of 2010, was introduced on June 22, 2010.
S. 3520 would extend EUC08, 100% federal financing of EB, and the weekly $25 FAC benefit
through December 2010. It does not contain any spending offsets or provisions related to
restrictions on unemployment benefit reductions by states.
On June 30, 2010, H.R. 5647, the Responsible COBRA, Unemployment, and Poverty Extension
Act, was introduced. H.R. 5647 would extend the availability of EUC08 and 100% federal
financing of EB through the end of September 2010. It would not extend the weekly $25 FAC
benefit or require states not to reduce weekly unemployment benefits in order to receive EUC08
funds. In addition, H.R. 5647 includes a provision that fully offsets spending proposed in the bill
with unobligated balances from P.L. 111-5, the American Recovery and Reinvestment Act of
2009.
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Unemployment Insurance: Available Unemployment Benefits and Legislative Activity
S. 3551, the Fiscally Responsible Relief for Our States Act of 2010, also introduced on June 30,
2010, would extend the availability of EUC08 and 100% federal financing of EB through the end
of November 2010. This bill does not contain an extension of FAC or a requirement that states
not reduce weekly unemployment benefits in order to be eligible for EUC08 funds. S. 3551 does
propose spending offsets, including the use of unobligated balances from P.L. 111-5.
H.R. 4183 would extend the authorization of the EUC08 program through March 2011. It also
would extend the FAC benefit as well as the 100% federal financing for EB through March 2011.
Additionally, it would provide 100% federal financing for short-time compensation benefits
through March 2011.37
S. 2831 would extend the authorization of the EUC08 program through December 2010. It would
also extend the FAC benefit as well as the 100% federal financing for EB through December
2010. The bill would allow the unemployed to opt to continue to receive their remaining EUC08
entitlements rather than reapply for UC at the end of their benefit year. It would suspend the
federal taxation of the first $2400 of unemployment benefits through 2010. The bill would also
require the U.S. Department of Labor to conduct a study on the implementation of the EUC08
program. Additionally, S. 2831 provides 100% federal financing for short-time compensation
benefits through 2011.
Senator Reed introduced S. 1646, the Keep Americans Working Act, towould provide federal financing
to states for 100% of
benefits paid to workers who participate in an STC program, contingent on
employer certification
that health and retirement benefits are not affected by participation in the
STC program. The bill
would also provide start-up grants to states and would allow the DOL to
reimburse states for
administrative expenses. Representative DeLauro has introduced a
companion bill, H.R. 4135, in
the House of Representatives. Senator Reed included substantially
the same STC provisions from
S. 1646 in S. 2831, the Helping Unemployed Workers Act.
Representative McDermott introduced
H.R. 4183, the Helping Unemployment Workers Act,
which would require the Secretary of Labor
to pay 100% of STC benefits to the unemployment
trust fund accounts of states whose STC
programs have been certified by the Secretary of Labor.
(...continued)37
For information on short-time compensation programs see CRS Report R40689, Compensated Work Sharing
Arrangements (Short-Time Compensation) as an Alternative to Layoffs, by Alison M. Shelton.
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Appendix A. Unemployment Insurance
Benefits
Figure A-1. Unemployment Insurance: Available Unemployment Benefits
Source: CRS.
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Appendix B. Summary of EUC08 Program
Table B-1. Emergency Unemployment Compensation Program:
Public Law, Benefits, Effective Dates, and Financing
Public Law
Benefit Tiers and Availability
Supplemental Appropriations Act of
2008, Title IV Emergency
Unemployment Compensation
(P.L. 110-252), signed June 30, 2008
13 weeks (all states)
Unemployment Compensation
Extension Act of 2008 (P.L. 110-449),
signed November 21, 2008.
Tier I: 20 weeks (all states)
American Recovery and
Reinvestment Act of 2009
(P.L. 111-5), signed February 17,
2009.
Same as above.
Worker, Homeowner, and Business
Assistance Act of 2009 (P.L. 111-92),
signed November 6, 2009.
Tier I: 20 weeks (all states)
Dates in Effect and Financing
7/6/2008-3/29/2009
(No benefits past 7/4/2009)
Funded by federal EUCA funds
within UTF.
Tier II: 13 additional weeks (33
weeks total) if state TUR is 6% or
higher or IUR is 4% or higher
[Note this included several other
interventions that augmented UC
benefits. The Federal Additional
Compensation (FAC) benefit of
$25/week for those receiving UC,
EUC08, EB, DUA, or TAA. At state
option, EB benefit year could be
calculated based upon exhausting
EUC08 benefits. 100% federal
financing of EB program. First $2400
of unemployment benefits were
excluded from income tax in 2009.]
Tier II: 14 additional weeks (34
weeks total, all states)
Tier III: 13 additional weeks if state
TUR is 6% or higher or IUR is 4% or
higher (47 weeks total)
11/23/2008-3/29/2009
(No benefits past 8/29/2009)
Funded by federal EUCA funds
within UTF.
2/22/2009-12/26/2009
(No benefits past 6/6/2010)
Funded by general fund of the
Treasury. (Additionally, the FAC
program is funded by the general
fund of the Treasury. The 100%
financing of the EB program is
funded by the EUCA funds within
the UTF.)
11/8/2009-12/26/2009
(No benefits past 6/6/2010)
Funded by general fund of the
Treasury.
Tier IV: 6 additional weeks if state
TUR is 8.5% or higher or IUR is 6%
or higher (53 weeks total)
Department of Defense
Appropriations Act, 2010
(P.L. 111-118), signed December 19,
2009.
Same as above.
Temporary Extension Act of 2010
(P.L. 111-144), signed March 2, 2010.
Same as above.
12/27/2009-2/27/2010
(No benefits past 7/31/2010)
Funded by general fund of the
Treasury.
2/28/2010-4/3/2010
(No benefits past 9/4/2010)
Funded by general fund of the
Treasury.
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Public Law
The Continuing Extension Act of
2010 (P.L. 111-157), signed April 15,
2010
Benefit Tiers and Availability
Same as above.
Dates in Effect and Financing
4/3/2010-5/29/2010
(No benefits past 11/ 6/ 2010)
Funded by general fund of the
Treasury.
Source: CRS.
Author Contact Information
Julie M. Whittaker
Specialist in Income Security
jwhittaker@crs.loc.gov, 7-2587
Katelin P. Isaacs
Analyst in Income Security
kisaacs@crs.loc.gov, 7-7355
Alison M. Shelton
Analyst in Income Security
ashelton@crs.loc.gov, 7-9558
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Tier IV: 6 additional weeks if state
TUR is 8.5% or higher or IUR is 6%
or higher (53 weeks total)
[Note this included a 1.5 year
extension of the Federal
Unemployment Tax Act (FUTA)
surtax.]
Congressional Research Service
7/6/2008-3/29/2009
(No benefits past 7/4/2009)
Funded by federal EUCA funds
within UTF.
Tier III: 13 additional weeks if state
TUR is 6% or higher or IUR is 4% or
higher (47 weeks total)
Department of Defense
Appropriations Act, 2010
(P.L. 111-118), signed December 19,
2009.
Dates in Effect and Financing
Same as above.
11/23/2008-3/29/2009
(No benefits past 8/29/2009)
Funded by federal EUCA funds
within UTF.
2/22/2009-12/26/2009
(No benefits past 6/6/2010)
Funded by general fund of the
Treasury. (Additionally, the FAC
program is funded by the general
fund of the Treasury. The 100%
financing of the EB program is
funded by the EUCA funds within
the UTF.)
11/8/2009-12/26/2009
(No benefits past 6/6/2010)
Funded by general fund of the
Treasury.
Extended FUTA surtax through June
2011. Estimated revenues collected
from FUTA surtax provision were
$2.578 billion and offset the
estimated direct spending costs for
unemployment insurance provisions
of $2.42 billion.
12/27/2009-2/27/2010
(No benefits past 7/31/2010)
Funded by general fund of the
Treasury.
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Unemployment Insurance: Available Unemployment Benefits and Legislative Activity
Public Law
Temporary Extension Act of 2010
(P.L. 111-144), signed March 2, 2010.
Benefit Tiers and Availability
Same as above.
Dates in Effect and Financing
2/28/2010-4/3/2010
(No benefits past 9/4/2010)
Funded by general fund of the
Treasury.
The Continuing Extension Act of
2010 (P.L. 111-157), signed April 15,
2010
Same as above.
The American Jobs and Closing
Loopholes Act of 2010. (P.L. 111205), signed July 22, 2010.
Same as above.
4/3/2010-6/2/2010
(No benefits past 11/6/ 2010)
Funded by general fund of the
Treasury.
[Note this did not include an
extension of the Federal Additional
Compensation (FAC) benefit of
$25/week for those receiving UC,
EUC08, EB, DUA, or TAA. The FAC
expired on May 29, 2010.]
6/2/2010-11/30/2010
(No benefits past 4/30/ 2011)
Funded by general fund of the
Treasury.
Source: CRS.
Author Contact Information
Katelin P. Isaacs
Analyst in Income Security
kisaacs@crs.loc.gov, 7-7355
Alison M. Shelton
Analyst in Income Security
ashelton@crs.loc.gov, 7-9558
Julie M. Whittaker
Specialist in Income Security
jwhittaker@crs.loc.gov, 7-2587
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