Unemployment Insurance: Legislative Issues
in the 112th Congress

Katelin P. Isaacs
Analyst in Income Security
Julie M. Whittaker
Specialist in Income Security
March 1, 2011
Congressional Research Service
7-5700
www.crs.gov
R41662
CRS Report for Congress
P
repared for Members and Committees of Congress

Unemployment Insurance: Legislative Issues in the 112th Congress

Summary
The 112th Congress may consider a number of issues related to currently available unemployment
insurance programs: Unemployment Compensation (UC), the temporary Emergency
Unemployment Compensation (EUC08), and Extended Benefits (EB). With the national
unemployment predicted to remain high into next year, the increased demand for regular and
extended unemployment benefits will continue. At the same time, the authorization for several
key unemployment insurance provisions is temporary and will end in the next year. For instance,
the EUC08 program, which currently provides the bulk of extended unemployment benefits, is
scheduled to expire the week ending on or before January 3, 2012. The 100% federal financing of
the EB program, will expire on January 4, 2012. In addition, a temporary 0.2% federal
unemployment tax (FUTA) surtax expires at the end of June 2011.
The 112th Congress faces these upcoming expirations as well as other likely unemployment
insurance policy issues, including unemployment insurance financing. Additionally, recent policy
discussions have focused on the appropriate length of unemployment benefits. This discussion
includes consideration of whether additional weeks of unemployment benefits—the creation of a
tier V of the EUC08 program, for instance—is warranted.
This report provides a brief overview of the three unemployment insurance programs—UC,
EUC08, and EB—that may currently pay benefits to eligible unemployed workers. It also
summarizes unemployment insurance legislation in the previous (111th) Congress and describes
relevant legislation introduced in the 112th Congress.

Congressional Research Service

Unemployment Insurance: Legislative Issues in the 112th Congress

Contents
Overview of Unemployment Insurance Programs........................................................................ 1
Unemployment Compensation Program ................................................................................ 1
Emergency Unemployment Compensation Program .............................................................. 2
Extended Benefit Program .................................................................................................... 3
Legislative Proposals .................................................................................................................. 4
112th Congress ...................................................................................................................... 4
Alleviating State Unemployment Compensation Stresses ................................................ 4
Additional Benefits for UI Exhaustees............................................................................. 5
Other Legislation ............................................................................................................ 6
Upcoming Expirations and Other Issues for the 112th Congress ............................................. 6
Expiration of the Temporary FUTA Surtax ...................................................................... 6
Expiration of the Emergency Unemployment Compensation (EUC08) Program .............. 7
Expiration of the 100% Federal Financing of Extended Benefit Program......................... 7
Federal and State Unemployment Benefits May Be Impacted if Debt Ceiling is
Reached ....................................................................................................................... 7
UI Laws Passed in the 111th Congress.................................................................................... 7
P.L. 111-5, The American Recovery and Reinvestment Act of 2009 ................................. 7
P.L. 111-92, The Worker, Homeownership and Business Assistance Act of 2009............ 10
P.L. 111-118, The Department of Defense Appropriations Act ....................................... 10
P.L. 111-144, The Temporary Extension Act of 2010 ..................................................... 10
P.L. 111-157, The Continuing Extension Act of 2010..................................................... 10
P.L. 111-205, The Unemployment Compensation Extension Act of 2010 ....................... 11
P.L. 111-291, The Claims Resolution Act of 2010.......................................................... 11
P.L. 111-312, The Tax Relief, Unemployment Insurance Reauthorization, and Job
Creation Act of 2010 .................................................................................................. 11

Contacts
Author Contact Information ...................................................................................................... 11

Congressional Research Service

Unemployment Insurance: Legislative Issues in the 112th Congress

he unemployment insurance (UI) system has two primary objectives: (1) to provide
temporary, partial wage replacement for involuntarily unemployed workers; and (2) to
T stabilize the economy during recessions. In support of these goals, several UI programs
may currently provide benefits for unemployed workers.
Overview of Unemployment Insurance Programs
In general, when eligible workers lose their jobs, the joint federal-state Unemployment
Compensation (UC) program may provide up to 26 weeks of income support through the
payment of regular UC benefits. UC benefits may be extended in two ways: (1) for up to 53
weeks by the temporarily authorized Emergency Unemployment Compensation (EUC08)
program; and (2) for up to 13 or 20 weeks by the Extended Benefit (EB) program if certain
economic situations exist within the state.1
Unemployment Compensation Program
The joint federal-state UC program, authorized by the Social Security Act of 1935 (P.L. 74-271),
provides unemployment benefits for up to a maximum of 26 weeks.2 Former U.S. military
servicemembers may be eligible for unemployment benefits through the unemployment
compensation for ex-servicemembers (UCX) program.3 The Emergency Unemployment
Compensation Act of 1991 (P.L. 102-164) provides that ex-servicemembers be treated the same
as other unemployed workers with respect to benefit levels, the waiting period for benefits, and
benefit duration.
Although federal laws and regulations provide broad guidelines on UC benefit coverage,
eligibility, and benefit determination, the specifics regarding UC benefits are determined by each
state. This results in essentially 53 different programs.4 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. 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 states use to determine monetary
eligibility vary greatly. Most state benefit formulas replace approximately half of a claimant’s
average weekly wage up to a weekly maximum.

1 For detailed information on each of these programs, see CRS Report RL33362, Unemployment Insurance: Available
Unemployment Benefits and Legislative Activity
, by Katelin P. Isaacs and Julie M. Whittaker. Certain groups of
workers may qualify for income support from additional UI programs, including Trade Adjustment Assistance (TAA),
Reemployment Trade Adjustment Assistance (RTAA), and Disaster Unemployment Assistance (DUA). Workers who
lose their jobs because of international competition may qualify for income support through the TAA program or the
RTAA (for certain workers aged 50 or older). Workers may be eligible to receive DUA benefits if they are not eligible
for regular UC and their unemployment may be directly attributed to a declared natural disaster. For more information
on the TAA, and RTAA programs, see CRS Report RS22718, Trade Adjustment Assistance for Workers (TAA) and
Reemployment Trade Adjustment Assistance (RTAA)
, by John J. Topoleski.
2 Montana provides 28 weeks and Massachusetts provides 30 weeks of regular unemployment benefits.
3 For more information on the UCX program, see CRS Report RS22440, Unemployment Compensation (Insurance)
and Military Service
, by Julie M. Whittaker.
4 The District of Columbia, Puerto Rico, and the Virgin Islands are considered to be states in UC law.
Congressional Research Service
1

Unemployment Insurance: Legislative Issues in the 112th Congress

The UC program is financed by federal taxes under the Federal Unemployment Tax Act (FUTA)
and by state payroll taxes under the State Unemployment Tax Acts (SUTA). The 0.8% effective
net FUTA tax paid by employers on the first $7,000 of each employee’s earnings ($56 per worker
per year) funds both federal and state administrative costs, loans to insolvent state UC accounts,
the federal share (50% permanent law, 100% temporarily) of EB payments, and state employment
services.5
SUTA taxes on employers are limited by federal law to funding regular UC benefits and the state
share (50% permanent law, 0% temporarily) of EB payments. Federal law requires that the state
tax be on at least the first $7,000 of each employee’s earnings (it may be more) and requires that
the maximum state tax rate be at least 5.4%. Federal law also requires the state tax rate to be
based on the amount of UC paid to former employees (known as “experience rating”). Within
these broad requirements, states have great flexibility in determining the SUTA structure of their
state. Generally, the more UC benefits paid out to its former employees, the higher the tax rate of
the employer, up to a maximum established by state law. Funds from FUTA and SUTA are
deposited in the appropriate accounts within the Unemployment Trust Fund (UTF).
Emergency Unemployment Compensation Program
On June 30, 2008, the President signed the Supplemental Appropriations Act of 2008 (P.L. 110-
252), which created a new temporary unemployment insurance program, the Emergency
Unemployment Compensation (EUC08) program. This was the eighth time Congress had created
a federal temporary program to extend unemployment compensation during an economic
slowdown.6 State UC agencies administer the EUC08 benefit along with regular UC benefits. The
authorization for this program continues until January 3, 2012.
The EUC08 program has been amended eight times.7 This temporary unemployment insurance
program provides up to 20 additional weeks of unemployment benefits to certain workers who
have exhausted their rights to regular UC benefits. A second tier of benefits provides up to an
additional 14 weeks of benefits (for a total of 34 weeks of EUC08 benefits for all unemployed
workers). A third tier is available in states with a total unemployment rate (TUR)8 of at least 6%
and provides up to an additional 13 weeks of EUC08 benefits (for a total of 47 weeks of EUC08
benefits in these states). A fourth tier is available in states with a TUR of at least 8.5% and
provides up to an additional six weeks of EUC08 benefits (for a total of 53 weeks of EUC08
benefits in theses states).9

5 FUTA imposes a 6.2% gross tax rate on the first $7,000 paid annually by employers to each employee. Employers in
states with programs approved by the federal government and with no delinquent federal loans may credit 5.4
percentage points against the 6.2% tax rate, making the minimum net federal unemployment tax rate 0.8%. See CRS
Report RS22954, The Unemployment Trust Fund (UTF): State Insolvency and Federal Loans to States, by Julie M.
Whittaker, for details on how delinquent loans affect the net FUTA tax.
6 The other programs became effective in 1958, 1961, 1972, 1975, 1982, 1991, and 2002.
7 The eight amendments are P.L. 110-449, P.L. 111-5, P.L. 111-92, P.L. 111-118, P.L. 111-144, P.L. 111-157, P.L.
111-205, and P.L. 111-312.
8 The TUR (the total unemployment rate) is the ratio of unemployed workers to all workers (employed and
unemployed) in the labor market.
9 Each week the Department of Labor posts trigger notices for tiers III and IV of the EUC08 program, which are
available online, at http://www.workforcesecurity.doleta.gov/unemploy/claims_arch.asp.
Congressional Research Service
2

Unemployment Insurance: Legislative Issues in the 112th Congress

The EUC08 benefit amount equal to the eligible individual’s weekly regular UC benefits and
includes any applicable dependents’ allowances. All tiers of EUC08 benefits are temporary and
will expire the week ending on or before January 3, 2012. This has the implication that there will
be no new entrants into the EUC08 program after December 31, 2011.10 Those unemployed
individuals who had qualified for a tier I, II, III, or IV EUC08 benefit by December 31, 2011,
may be “grandfathered” for their remaining weeks of eligibility for only that specific tier, and
would continue to receive payments for the number of weeks they were deemed eligible within
that tier. No EUC08 benefits—regardless of tier—are payable for any week after June 9, 2012.
Until February 16, 2009, the EUC08 program was federally financed by federal unemployment
taxes deposited into a federal account within the UTF. With the passage of the American
Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5), however, EUC08 is now financed
from general funds of the U.S. Treasury. Neither the federal accounts within the UTF nor the
states need to repay these funds.
Extended Benefit Program
The Federal-State Extended Unemployment Compensation Act of 1970 (EUCA), P.L. 91-373,
established the Extended Benefit (EB) program. The EB program provides extended
unemployment benefits at the state level if certain economic situations exist within the state.11 In
all states, the EB program is available when a state’s insured unemployment rate (IUR)12 or
TUR13 reaches certain levels.14
All states must pay up to 13 weeks of EB if the state’s IUR for the previous 13 weeks is at least
5% and is 120% of the average of the rates for the same 13-week period in each of the two
previous years. Additionally, states may choose two optional thresholds for activating the EB
program. (States may choose one, two, or none). If the state has chosen a given option, they
would provide the following:
• Option 1: up to 13 weeks of EB if the state’s IUR is at least 6%, regardless of
previous years’ averages.
• Option 2: up to 13 weeks of EB 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; or up to 20 weeks of benefits if the TUR is at least 8% and is at least

10 January 1, 2012, for New York state.
11 The EB program imposes additional federal restrictions on individual eligibility for benefits beyond the state
requirements for regular UC. In addition to all state requirements for regular UC eligibility, the EB program requires
claimants to have at least 20 weeks of full-time insured employment or the equivalent in their base period, and to
conduct a systematic and sustained work search. P.L. 110-252 allows states to determine which extended
unemployment benefit—EUC08 or EB—is paid first. States balance the decision of which benefit to pay first by
weighing the potential cost savings to the state against the potential loss of unemployment benefits for unemployed
individuals in the state. All states except Alaska pay EUC08 benefits before EB.
12 The IUR (the insured unemployment rate) is the ratio of UC claimants divided by individuals in UC-covered jobs.
13 The TUR (the total unemployment rate) is the ratio of unemployed workers to all workers (employed and
unemployed) in the labor market.
14 The Department of Labor’s weekly trigger notices for the EB program are available online at
http://www.workforcesecurity.doleta.gov/unemploy/claims_arch.asp.
Congressional Research Service
3

Unemployment Insurance: Legislative Issues in the 112th Congress

110% of the state’s average TUR for the same 13 weeks in either of the previous
two years.
P.L. 111-312 made some temporary technical changes to certain triggers in the EB program,
which allow states to temporarily use lookback calculations based on three years of
unemployment rate data (rather than the current lookback of two years of data) as part of their
mandatory IUR and optional TUR triggers if states would otherwise trigger off or not be on a
period of EB benefits. Using a two-year versus a three-year EB trigger lookback is an important
adjustment because some states are likely to trigger off of their EB periods in the near future
despite high, sustained—but not increasing—unemployment rates.
States may opt to implement the lookback changes; to do so, the states must individually amend
their state UC laws. These state law changes must be written in such a way that if the two-year
lookback is working and the state would have an active EB program, no action would be taken.
But if a two-year lookback is not working as part of an EB trigger and the state is not triggered on
to an EB period, then the state would be able to use a three-year lookback. This temporary option
to use three-year EB trigger lookbacks expires the week on or before December 31, 2011.
The EB benefit amount is equal to the eligible individual’s weekly regular UC benefits.
Under permanent law, FUTA finances half (50%) of the EB payments and 100% of EB
administrative costs. States fund the other half (50%) of EB benefit costs through their SUTA.
ARRA (P.L. 111-5) temporarily changed the federal-state funding arrangement for the EB
program. Currently, the FUTA finances 100% of EB benefits through January 4, 2012. The one
exception to the 100% federal financing is for those EB benefits based on work in state and local
government employment; those “non-sharable” benefits continue to be 100% financed by the
former employers.
Legislative Proposals
112th Congress
Alleviating State Unemployment Compensation Stresses
The broader state financial crisis facing the states is mirrored in the states’ accounts within the
UTF. On December 30, 2010, 31 states owed a cumulative $40.8 billion to the federal accounts
within UTF. The Recovery Act temporarily stopped the accrual of interest charges on loans
through December 31, 2010, but those charges are once again accruing. States currently are
prohibited to actively legislate a decrease in regular benefits (restricted for the duration of the
EUC08 program); as a result state unemployment taxes on employers are likely to increase. At the
same time, employers in up to 24 states are likely to face an increased net federal unemployment
tax (FUTA) because the states have borrowed funds from the federal UTF loan account for two
consecutive years.15

15 See CRS Report RS22954, The Unemployment Trust Fund (UTF): State Insolvency and Federal Loans to States, by
Julie M. Whittaker for more information on the interest calculation and the potential net FUTA increase.
Congressional Research Service
4

Unemployment Insurance: Legislative Issues in the 112th Congress

President’s Budget Proposal FY2012
The President’s Budget Proposal for FY2012 attempts to address some of these concerns. The
proposal included extending the suspension of interest accrual through 2012 and temporarily
suspending net FUTA tax increases through 2012. Currently, the U.S. Department of Labor
(DOL) projects that states will accrue $1.22 billion in interest charges in FY2011 and $1.79
billion in FY2012 without these suspensions.
The proposal would increase the FUTA taxable wage base from $7,000 to $15,000 in 2014 while
decreasing the FUTA tax rate from 0.6% to 0.38%. Beginning in 2015, the FUTA tax base would
be indexed to wage growth. Under federal law, the taxable wage base for SUTA taxes in states
must be at least the taxable wage base for FUTA. Therefore, the proposed increase in the FUTA
taxable wage based in the President’s Budget Proposal would have the effect of requiring states to
have a SUTA taxable wage base of at least $15,000 beginning in 2014 and indexed to wage
growth beginning in 2015.
Other Proposals to Alleviate State Unemployment Compensation Stress
Senator Durbin introduced S. 386, the Unemployment Insurance Solvency Act of 2011, on
February 17, 2011. Similar to the President’s proposal, S. 386 would extend the suspension of
interest accrual on federal loans to states through 2012; temporarily suspend net FUTA tax
increases through 2012; increase the FUTA taxable wage base from $7,000 to $15,000 in 2014
while lowering the net FUTA tax to 0.38%; and index the FUTA taxable wage base to wage
growth after 2014. Unlike the President’s proposal, S. 386 would forgive a certain percentage
(20%, 40%, or 60%) of the outstanding federal loan to the state based upon a state-level need-
based measure as of December 31, 2010. (This measure was originally constructed for
temporarily increasing the Medicaid Federal Medical Assistance Percentages (FMAP) in P.L.
111-5.) States without an outstanding federal loan would receive an additional 0.5% in interest
compared with what they would otherwise receive on their state UTF account balances.
Employers in states that maintain a programmatic measure of sufficient reserves would face a net
FUTA tax that was 0.1% less than it would otherwise have been. In addition, S. 386 would
require that any state taking advantage of the provisions in S. 386 submit a “reasonable” plan to
the DOL explaining how the state would repay any outstanding federal loans and how the state
would attain a programmatic measure of sufficient reserves within a “reasonable” time.
Additional Benefits for UI 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.16
As of January 2011, about 44% of unemployed individuals had been without a job for more than

16 House Subcommittee on Human Resources Hearing on “Improving Efforts to Help Unemployed Americans Find
Jobs,” held on February 10, 2011 (Hearing advisory and witness testimony available at
http://waysandmeans.house.gov/Calendar/EventSingle.aspx?EventID=223512); 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 at 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 at http://waysandmeans.house.gov/Hearings/hearingDetails.aspx?NewsID=11201).
Congressional Research Service
5

Unemployment Insurance: Legislative Issues in the 112th Congress

26 weeks.17 These long-term unemployed workers are at risk of exhausting current benefits while
remaining unemployed.18
One policy strategy to address the needs of unemployment insurance benefit exhaustees is to
create additional federal benefits. For instance, on February 9, 2011, Representative Barbara Lee
introduced H.R. 589, the Emergency Unemployment Compensation Expansion Act. This bill is
similar to H.R. 6556 of the 111th Congress in that it would add up to 14 additional weeks of
unemployment benefits to the existing tier I of the EUC08 program, amending tier I of EUC08 to
provide up to 34 weeks of unemployment benefits to eligible individuals. These new benefits
would not be retroactive (i.e., no lump sum payments) but, if this bill were passed, an individual
could begin to receive the additional benefits up to 14 weeks if he or she continued to meet the
eligibility criteria for EUC08. In addition, H.R. 589 would extend the date of the last payable
benefit for grandfathered individuals receiving EUC08 benefits from June 9, 2012, to September
22, 2012.19
Other Legislation
Representative Kevin Brady introduced H.R. 235, the Cut Unsustainable and Top-Heavy
Spending Act of 2011 (or CUTS Act) on February 7, 2011. Among other provisions, this bill
would prohibit the use of federal funds—from the EB and EUC08 programs—to pay
unemployment benefits to anyone with resources of at least $1 million in the preceding year. An
individual’s resources would be determined in the same way as the resource test for the Medicare
Part D drug benefit subsidy. This provision would be effective for any weeks of unemployment
beginning on or after January 1, 2011.
On February 9, 2011, Representative Lankford introduced H.R. 569, the Ending Unemployment
Payments to Jobless Millionaires Act of 2011. Like H.R. 235, H.R. 569 would prohibit any
EUC08 or EB benefit payments to individuals with resources in the preceding year of at least $1
million, as determined through the resource test for the Medicare Part D drug benefit subsidy.
This prohibition would be effective on or after enactment of this legislation.
Upcoming Expirations and Other Issues for the 112th Congress
Expiration of the Temporary FUTA Surtax
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.

17 U.S. Department of Labor, “Employment Situation Summary,” Table A-12, February 4, 2011.
18 For more information on long-term unemployment, see CRS Report R41179, Long-Term Unemployment and
Recessions
, by Gerald Mayer and Linda Levine.
19 This legislative proposal was also offered by Rep. Barbara Lee as H.Amdt. 67 to H.R. 1, the Full-Year Continuing
Appropriations Act of 2011, on February 17, 2011; however, a point of order was sustained against it.
Congressional Research Service
6

Unemployment Insurance: Legislative Issues in the 112th Congress

Expiration of the Emergency Unemployment Compensation (EUC08) Program
P.L. 111-312, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of
2010, extends the authorization of the EUC08 program until the week ending on or before
January 3, 2012. Thus, on December 31, 2011 (January 1, 2012 for New York), the EUC08
program will cease to enroll new beneficiaries and current beneficiaries will complete their
current tier of benefits but not advance to the next tier.
Expiration of the 100% Federal Financing of Extended Benefit Program
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 until January 4, 2012, with the exception of “non-
sharable” benefits (generally, these are former state and local employees’ EB benefits). The EB
program’s 100% federal financing has prompted 26 states to adopt the optional triggers to provide
20 weeks of extended benefits.
For individuals who were receiving EB payments on January 4, 2012, 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).
Federal and State Unemployment Benefits May Be Impacted if Debt Ceiling is
Reached

Federal unemployment benefit payments (EUC08, EB, unemployment benefits for former
military servicemembers, and unemployment benefits for former federal employees) may be
subject to Treasury priority for payment if the debt ceiling is reached.20 The federal loan account
within the UTF may be unable to loan states funds; states may not be able to pay regular state UC
benefits if they are unable to borrow funds from UTF.
UI Laws Passed in the 111th Congress
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

20 For further understanding of how the UTF interacts with the federal debt, see “The Unemployment Trust Fund and
the Federal Budget” within CRS Report RS22077, Unemployment Compensation (UC) and the Unemployment Trust
Fund (UTF): Funding UC Benefits
, by Julie M. Whittaker.
Congressional Research Service
7

Unemployment Insurance: Legislative Issues in the 112th Congress

unemployment benefits; and a temporary suspension of interest accrual on loans to insolvent state
UTF funds.21
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
The 2009 stimulus package, as amended, temporarily increased benefits by $25 per week. The
authorization for Federal Additional Compensation (FAC) was extended by P.L. 111-118, P.L.
111-144, and P.L. 111-157. This supplemental FAC benefit expired on May 29, 2010, as it was
not included in P.L. 111-205 or P.L. 111-312. Prior to May 29, 2010, it was available to all
individuals receiving regular UC, EB, EUC08, DUA, and TAA benefits. This supplemental
benefit was grandfathered for individuals who had been receiving the FAC and had not exhausted
the right to all unemployment benefits as of May 29, 2010. However, this grandfathering
terminated on December 11, 2010 (December 12, 2010 for New York). The supplemental benefit
was financed by the federal government from general revenues and did not need to be repaid. All
FAC payments ceased December 11, 2010 (December 12, 2010 for New York).

21 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.
Congressional Research Service
8

Unemployment Insurance: Legislative Issues in the 112th Congress

ARRA Provisions Affecting the EUC08 Program
The 2009 stimulus package, as amended, also extends the temporary EUC08 program through
December 31, 2011 (January 1, 2012, 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 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
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 finances 100% of EB benefits through
January 4, 2012, 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 took place through the Extended
Unemployment Compensation Account (EUCA) in the UTF. After the 100% federal financing
authorization ends, EB financing reverts to 50% state financing and 50% federal financing,
although 100% financing is grandfathered for individuals who were receiving EB during the
week that the authorization of 100% federal financing is terminated. The stimulus package also
continues the temporary suspension of the waiting week requirement for federal funding until the
week ending before May 30, 2011. Under the waiting week requirement, now 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 to receive EB
benefits.22 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.

22 A “benefit year” is the 52-week period during which an individual may receive unemployment benefits based on a
period of prior, qualifying employment. The benefit year starts after an unemployed worker files a “valid claim” (i.e., a
claim that meets minimal wage and employment requirements).
Congressional Research Service
9

Unemployment Insurance: Legislative Issues in the 112th Congress

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.
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.
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 the end of 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 the week ending on or before 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 retroactively extended the availability of EUC08, 100% federal financing of
EB, and the $25 FAC benefit, until the week ending on or before June 2, 2010.23

23 Over the history of the temporary EUC08 program, there have been four lapses in program authorization: February
27, 2010, to March 2, 2010; April 3, 2010, to April 15, 2010; June 2, 2010, to July 22, 2010; and November 30, 2010,
to December 17, 2010. Each of these lapses was addressed either in law, via retroactive effective dates of program
extension legislation for longer lapses, or through the administration of the program, in the case of the shortest lapse
(February 27, 2010-March 2, 2010). The longest of these authorization lapses was 49 days (or 7 weeks), occurring
between June 2, 2010, and July 22, 2010, and ending when P.L. 111-205 was signed. The passage of P.L. 111-312
addresses the most recent lapse (November 30, 2010-December 17, 2010) and retroactively restores EUC08 program
authorization. For more information on these lapses and the EUC08 program, see CRS Report RS22915, Temporary
Extension of Unemployment Benefits: Emergency Unemployment Compensation (EUC08)
, by Katelin P. Isaacs and
Julie M. Whittaker.
Congressional Research Service
10

Unemployment Insurance: Legislative Issues in the 112th Congress

P.L. 111-205, The Unemployment Compensation Extension Act of 2010
On July 22, 2010, the President signed P.L. 111-205, the Unemployment Compensation Extension
Act of 2010, into law. P.L. 111-205 retroactively extended the availability of EUC08 and 100%
federal financing of EB until the week ending on or before November 30, 2010. It did not extend
the $25 FAC benefit, which expired May 29, 2010. In addition, P.L. 111-205 addressed the
“second year benefit” issue for the EUC08 program.24
P.L. 111-291, The Claims Resolution Act of 2010
On December 8, 2010, the President signed into law P.L. 111-291, which contains provisions
related to unemployment insurance overpayment reform. P.L. 111-291 expands penalties related
to UI fraud to those who had failed to report earnings and improves UI data collection efforts.
P.L. 111-312, The Tax Relief, Unemployment Insurance Reauthorization, and
Job Creation Act of 2010

On December, 17, 2010, the President signed P.L. 111-312, the Tax Relief, Unemployment
Insurance Reauthorization, and Job Creation Act of 2010. P.L. 111-312 retroactively extends the
authorization of the EUC08 program until January 3, 2012, and the 100% federal financing of the
EB program until the week ending on or before January 4, 2012. In addition, P.L. 111-312 allows
states to use three-year lookback calculations in their mandatory IUR and optional TUR triggers
(rather than the two-year lookback calculations under current law) to trigger on or keep on a
period of EB benefits if they would otherwise trigger off or not be on a period of EB benefits (see
“Extended Benefit Program” section above for more details).

Author Contact Information

Katelin P. Isaacs
Julie M. Whittaker
Analyst in Income Security
Specialist in Income Security
kisaacs@crs.loc.gov, 7-7355
jwhittaker@crs.loc.gov, 7-2587



24 For full details on the “second benefit year” issue, see CRS Report RL33362, Unemployment Insurance: Available
Unemployment Benefits and Legislative Activity
, by Katelin P. Isaacs and Julie M. Whittaker.
Congressional Research Service
11