Use of 2009 unemployment special distribution funds

Accessible letter PDF: https://www.dol.gov/sites/dolgov/files/ETA/advisories/TEGL/2012/tegl_12_11_acc.pdf

CLASSIFICATION
   EMPLOYMENT AND TRAINING ADMINISTRATION                 UI
               ADVISORY SYSTEM                            CORRESPONDENCE SYMBOL
                                                          OUI/DFAS
          U.S. DEPARTMENT OF LABOR
                                                          DATE
             Washington, D.C. 20210                       January 5, 2012



ADVISORY:       TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 12-11

TO:             STATE WORKFORCE ADMINISTRATORS
                UNEMPLOYMENT INSURANCE DIRECTORS

FROM:           JANE OATES /s/
                Assistant Secretary

SUBJECT:        $500 Million Special Distribution under the American Recovery and
                Reinvestment Act (Recovery Act)

1. Purpose. To strongly encourage states to expend their allotment from the $500 million
   special distribution under the Recovery Act as quickly as feasible and prudent in accordance
   with the intent of the Recovery Act to preserve and create jobs and promote economic
   recovery.

2. References.
   • The Assistance for Unemployed Workers and Struggling Families Act, Title II of
      Division B of Public Law No. 111-5, enacted February 17, 2009;
   • Unemployment Insurance Program Letter (UIPL) No. 14-09, Special Transfers for
      Unemployment Compensation Modernization and Administration and Relief from Interest
      on Advances; and
   • Office of Inspector General (OIG) report 18-10-012-03-315, Recovery Act: More Than
      $1.3 Billion in Unemployment Insurance Modernization Incentive Payments Are Unlikely
      to Be Claimed By States, issued September 30, 2010.

3. Background. Section 2003(g) under Subtitle A of the Assistance for Unemployed Workers
   and Struggling Families Act provided each state a share of $500 million based on each state’s
   proportionate share of Federal Unemployment Tax Act taxable wages paid in 2007. States
   were to use the funds for the following purposes:

   •   Implementing and administering the provisions of state law that qualify the state for the
       Unemployment Insurance (UI) Modernization money;
   •   Improved outreach to individuals who might be eligible by virtue of these provisions;
   •   The improvement of Unemployment Compensation (UC) benefit and tax operations,
       including responding to increased demand for UC; and
   •   Staff-assisted reemployment services for UC claimants.

4. Discussion. Critical objectives of the Recovery Act were to preserve and create jobs,
   promote economic recovery, and assist those most impacted by the recession. From the time

 RESCISSIONS                                              EXPIRATION DATE
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   of the passage, all recipients of Recovery Act funds have been either required or strongly
   encouraged to expend the funds quickly. To that end, all Recovery Act related expenditures
   have been tracked closely and reported to the Office of the Vice President to help assess their
   economic impact.

   Data as of November 26, 2011, show that only $170.6 million of the $500 million, or slightly
   over one-third of the funds, have been expended by states from their accounts in the
   Unemployment Trust Fund. The data also show that 16 states have not drawn down any of
   the funds. The significant amount of unexpended funds is of concern because they are not
   moving quickly enough into the economy to support the critical objectives of the Recovery
   Act.

   The uses of these funds are flexible and states should examine how they can be used most
   effectively to address important programmatic needs that should be addressed as quickly as
   possible, such as improving information technology infrastructure, addressing staff shortages
   in the UI program that are causing states to fail performance standards and creating backlogs,
   improving program integrity, and building capacity to deliver reemployment services to UC
   claimants. States choosing to use these funds for technology upgrades are encouraged to
   examine their contracts with technology vendors to determine if more frequent invoicing is
   feasible to speed expenditures of these funds.

   It is the intent of the Employment and Training Administration to seek approval from the
   Office of Management and Budget to require states to develop spending plans for these funds
   within the next few months. In the interim, states are strongly encouraged to expend these
   funds as quickly and prudently as feasible. The Employment and Training Administration
   will closely monitor progress in the use of the funds and will report periodically to interested
   stakeholders.

5. Action Requested. State administrators should distribute this advisory to appropriate staff
   and ensure proper and expeditious use of the funds.

6. Inquiries. Questions should be addressed to your Regional Office.




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