Could the DC Mayor obligate the District to pay interest on federal advances to its unemployment account in 1982?

Plain-English summary

In 1982, the District's Department of Employment Services asked Corporation Counsel Judith W. Rogers whether the Mayor could commit DC to pay interest on federal advances to its account in the Unemployment Trust Fund. Congress had recently changed the rules: advances made after April 1, 1982 required interest, and the interest could not be paid, directly or indirectly, from a state's unemployment fund.

Rogers concluded the Mayor could obligate the District to pay the federally required interest, provided the money did not come from the District Unemployment Fund. She noted that the District's unemployment law contemplated advances to its account and put the Mayor in charge of managing the fund. She also examined the Self-Government Act's indebtedness provisions and a statute authorizing Treasury advances for general District expenses. She found no conflict that barred the District from paying the interest under the stated restriction.

The opinion did not decide whether Council approval was required for a particular transaction or identify a specific appropriation to pay interest. Its conclusion was about the Mayor's authority to obligate the District and the federal restriction on which fund could pay.

What this means for you

For District finance and unemployment officials

The opinion distinguishes the principal advanced to the District's unemployment account from interest owed on that advance. Under the 1981 federal amendment as described in the opinion, the interest must be paid from outside the District Unemployment Fund. The opinion does not select a replacement funding source or describe an approval process for a specific borrowing agreement.

For researchers

This is a 1982 interpretation of the statutes cited then. Its reasoning relies on the District’s unemployment law, the Self-Government Act, and the new federal interest requirement. Check current code sections and federal rules before applying it to a present advance.

Currency note

The opinion was issued on August 30, 1982. It makes no finding about later DC borrowing, current interest rates, or the current text of these laws.

Common questions

What federal change prompted the request?

The Omnibus Budget Reconciliation Act of 1981 amended the federal advance provision to require interest on advances made after April 1, 1982. It also said interest "shall not be paid (directly or indirectly) by a State from amounts in its unemployment fund."

Could the Mayor commit the District to pay that interest?

Yes. The Corporation Counsel found no District or federal law preventing the obligation, provided the interest was not paid from the District Unemployment Fund.

Did the opinion waive a Council-approval requirement?

It did not address Council approval. It discussed the Mayor's authority under the cited unemployment and indebtedness statutes and reached the narrower interest-payment conclusion.

Does the opinion say which other fund must pay?

No. It says only that payment cannot come from the District Unemployment Fund.

Background and statutory framework

Sections 1201 and 1202 of the Social Security Act, cited in the opinion as 42 U.S.C. §§ 1321 and 1322, provided for federal advances to state unemployment accounts. The District's unemployment law treated DC as a state for this purpose and contemplated such advances. The 1981 federal amendment added interest and restricted its source. The Corporation Counsel read those provisions alongside the Mayor's authority to manage the District fund and the Self-Government Act's treatment of indebtedness.

Citations

• 42 U.S.C. §§ 1321 and 1322
• Pub. L. 97-35, § 2407(b)(5)
• D.C. Code §§ 46-102, 46-107, and 46-126 (1981)
• D.C. Code §§ 47-321 to 47-334 and § 1-1132

License

DC.gov publishes this source under Creative Commons Attribution 3.0. Attribution: Office of the Corporation Counsel, District of Columbia.

Source

• Original PDF: https://oag.dc.gov/sites/default/files/2018-02/Opinion-July-2014-Unemployment-Fund.pdf

The source PDF places this opinion on pages 1–2 and an unrelated convention-center memorandum on pages 3–8. That later memorandum has its own record.

Original opinion text

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~nurrutitrrtt nf tqr mistrirt of O!nlumhiu
OFFICE OF THE CORPORATION COUNSEL
DISTRICT BUILDING
WASHINGTON. D. C. 20004

IN REPLY REFER TO:

LCD:L&O:'m:ps:pn
(82-530)

August 30, 1982

OPINIOO OF THE RPORATIOO CDUNSEL

: Unenploynen~ Fund: Interest on Advances fran the Federal Account

• MEMJRANOOM
TO
·· Acting
Matthew F. Shannon
Director
Department of Emp10yqent Services

· COrporation
Judith W. Rogers J~
Counsel, D. C.

This is in reply to your request dated June 1, 1982, for an opinion on whether the Mayor may obligate the District of Columbia to pay interest on advances to it, made fran the Federal unemp10ynent account in the Unenp10ynent Trust Fund.

Sections 1201 an:] 1202 of the Social Security Act, 42 U.S.C. sees. 1321 an:] 1322, provide that the Secretat:y of the Treasut:y shall make such advances fran the Federal unenploynent account to State accounts in the Unenp10yment Trust Fund as are necessat:y to pay cxxnpensation in Mr1 given nonth. A State may later repay such advances by requesting that the SecretaJ:y of the Treasury transfer the apprcpriate anount fran its account in the Fund~ The District of Columbia is authorized to maintain an account in the UnE!!1Ploy- ment Trust Fund as a State. D.C. Code sees. 46-101(17) am 46-102 (1981). 'me

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District of Columbia Unenp10yment Compensation Act contemplates that the Distrl£t account in the Unenp10ynent Trust Fund will receive advances under Federal law. D.C. Code sec. 46-107(b)(S) and (c)(3).

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Until last year, advances from the Federal account in the Unemployment Trust Fund were repayable without interest~ 42 U.S.C. sec. l32l(a).
However, the Omnibus Budget Reconciliation Act of 1981, Pub. L. 97-35, 95 Stat. 357, amerrled Section 1202 of the Social Security Act, 42 U.S.C. sec. 1322, to provide that States must pay the Secretary of the Treasury interest on any such advance made after April 1, 1982, arrl that such interest "shall not be paid (directly or irrlirectly) by a State fran arrounts in its unemploynent furrl." Sec. 2407(b){5).

The District of Columbia Unemployment Compensation Act ~ides that the Mayor shall manage am control the. District 'Unemployment Furrl, D.C.
Code sees. 46-102 am 46-126, which includes the District account in the Unenployment Trust Furrl. D.C. Code sec. 46-l07(b) (5). As noted supra, the District account may include advances made pursuant to Federal law. 'llle law nOtl requires the payment of interest to the Secretary of the Treasury.
Consistent with his authority with respect to the District Qnemployment Furrl the Mayor may obligate the District to pay the Secretary of the Treasury interest on advances made to the District account in the Unemployment Trust Fum, as required by the Omnibus Budget Reconciliation Act of 1981.

The restrictions which the D. C. Self-Government Act places

• on the Mayor's authority to contract for irrlebtedness relate chiefly to the issuance of borrls am notes. See D.C. Code sees. 47-321 to 47-334.
Elsewhere, Congress has sPecifically authorized the: Mayor to requisition advances from the Secretary of the Treasury to Ireet general expenses of the District, arrl repay those advances out of taxes arrl reverue collected.
D.C. Code sec. 47-3401. 'llle D.C. Self-Goverrnnent Act itself contemplates that the Mayor will enter into contracts for indebtedness with the United States, apart fran the issuance of borrls am notes. See D.C. Code sec. 1-1132.

Accordingly, it is nr:t opinion that there is no conflict wi th the Self-Government Act or artj other District or Federal law which would prevent the District fran paying interest on advances to it, made fran the Federal unemployment account in the Unemployment Trust Furrl, provided that such interest is not paid fran arrounts in the District Unemployment ~.

JWR

cc: Gladys Mack
Assistant City Administrator
Office of Budget am Resources
Development

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