FY 2019 state UI quality service plans

CLASSIFICATION
 EMPLOYMENT AND TRAINING ADMINISTRATION               Unemployment Insurance
             ADVISORY SYSTEM                          CORRESPONDENCE SYMBOL
        U.S. DEPARTMENT OF LABOR                      OUI/DPM
           Washington, D.C. 20210                     DATE
                                                      August 17, 2018


ADVISORY:         UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 12-18

TO:               STATE WORKFORCE AGENCIES

FROM:             ROSEMARY LAHASKY /s/
                  Deputy Assistant Secretary

SUBJECT:          Additional Planning Guidance for the Fiscal Year (FY) 2019
                  Unemployment Insurance (UI) State Quality Service Plan (SQSP)

1. Purpose. To initiate the SQSP process, provide supplemental instructions, and define
   additional requirements for the FY 2019 SQSP.

2. References.
    Sections 303(a)(1) and 306 of the Social Security Act (SSA);
    Government Performance and Results Act (GPRA) of 1993, Pub. L. 103-62, as
      amended by GPRA Modernization Act of 2010, Pub. L. 111-352;
    Improper Payments Elimination and Recovery Act of 2010 (IPERA), Pub. L. 111-204
      (31 U.S.C. 3301 note and 3321 note);
    Improper Payments Elimination and Recovery Improvement Act of 2012 (IPERIA),
      Pub. L. 112-248;
    Section 103 of the Workforce Innovation and Opportunity Act (WIOA), Pub. L. 113-
      128;
    20 CFR Parts 601, 640, 650, 652, and 660;
    Unemployment Insurance Program Letter (UIPL) No. 14-05, Changes to UI
      Performs, and its Changes 1, 2, and 3;
    UIPL No. 22-05, Unemployment Insurance Data Validation (UI DV) Program
      Software and Policy Guidance, and its Changes 1 and 2;
    UIPL No. 3-07, Use of National Directory of New Hires (NDNH) in Unemployment
      Insurance (UI) Benefit Accuracy Measurement (BAM) Audits, and its Change 1;
    UIPL No. 17-08, The Unemployment Insurance (UI) Reemployment Rate Core
      Measure;
    UIPL No. 22-10, Selecting and Monitoring At-Risk States for Continuous
      Improvement and Compliance with First Payment Timeliness and First Level Appeals
      Promptness;
    UIPL No. 03-11, Implementation of the Effective Audit Measure;
    UIPL No. 19-11, National Effort to Reduce Improper Payments in the Unemployment
      Insurance (UI) Program;

 RESCISSIONS                                            EXPIRATION DATE
 None                                                   December 31, 2019

      UIPL No. 34-11, Performance Measure for Unemployment Insurance (UI) Integrity,
       and its Change 1 and Change 2;
      UIPL No. 09-13, Integrity Performance Measures for Unemployment Insurance (UI),
       and its Change 1;
      UIPL No. 17-14, Revised Employment and Training (ET) Handbook No. 336, 18th
       Edition: “Unemployment Insurance (UI) State Quality Service Plan (SQSP) Planning
       and Reporting Guidelines”;
      UIPL No. 13-15, Fiscal Year (FY) 2015 Unemployment Insurance (UI)
       Reemployment Services and Eligibility Assessment (RESEA) Grants;
      UIPL No. 07-16, Fiscal Year (FY) 2016 Unemployment Insurance (UI)
       Reemployment Services and Eligibility Assessment (RESEA) Grants;
      UIPL No. 17-16, Reengineering Unemployment Insurance (UI) Benefits Program
       Accountability Process: High Priority Designation of States with Sustained Poor
       Performance;
      UIPL No. 03-17, Fiscal Year (FY)2017 Unemployment Insurance (UI) Reemployment
       Services and Eligibility Assessment (RESEA) Grant, and its Change 1;
      UIPL No. 18-17, Unemployment Insurance Benefits Operations Self-Assessment
       Tool;
      Workforce Innovation and Opportunity Act (WIOA); Notice of Proposed
       Rulemaking; Proposed Rules, 80 Fed. Reg. 20573-20687 (April 16, 2015);
      Training and Employment Notice (TEN) No. 08-14, Reengineering Unemployment
       Insurance (UI) Benefits Program Accountability Processes;
      TEN No. 03-15, Reengineering Unemployment Insurance (UI) Benefits Program
       Accountability Processes: Update on Implementation Progress and State Impacts;
      TEN No. 12-16, Unemployment Insurance (UI) State Information Data Exchange
       System (SIDES);
      ET Handbook No. 336, Unemployment Insurance (UI) State Quality Service Plan
       (SQSP) Planning and Reporting Guidelines, 18th Edition, Change 3 (April 2014);
      ET Handbook No. 395, Benefit Accuracy Measurement State Operations Handbook,
       5th Edition (November 2009); and
      ET Handbook No. 401, 5th Edition, UI Reports Handbook No. 401 (7/2017).

3. Background. The SQSP is the state’s UI performance management and service plan. It
   represents an approach to the UI performance management and planning process that
   allows for an exchange of information between federal and state partners to enhance the
   UI program’s ability to reflect their joint commitment to performance excellence and
   client-centered services. As part of UI Performs, the comprehensive performance
   management system for the UI program, the SQSP is the principal vehicle that state UI
   programs use to plan, record, and manage improvement efforts as they strive for
   excellence in service.

   The SSA authorizes the Secretary of Labor to provide funds to administer the UI program
   and governs the expenditure of those funds. The SQSP is part of the process by which
   states receive Federal UI administrative grants.


   ET Handbook No. 336 contains general instructions for the SQSP. This Handbook is
   designed as a permanent instruction for the planning and budget process and provides
   states with planning guidelines and instructions for reporting UI financial and staff year
   information.

   ET Handbook No. 336 is approved under OMB No. 1205-0132. The Handbook provides
   that the U.S. Department of Labor’s (Department) Employment and Training
   Administration (ETA) will issue a SQSP UIPL each year with additional planning
   guidance that supplements the Handbook and provides direction and instructions specific
   to the upcoming FY. This additional planning guidance is similar to the guidance issued
   in previous years, but is updated and must be read carefully by state personnel.

4. National Priorities. The SQSP process focuses on promoting state performance and
   integrity, aligning state UI administration and operations with national policies, paying
   benefits accurately and timely, and connecting UI claimants with needed reemployment
   services.

   Each year, after consulting with our stakeholders, ETA establishes national priorities for
   the UI program. For FY 2019, ETA’s top priorities include a continued focus on the
   prevention, detection, and recovery of improper payments; improved program
   performance; integrated service delivery under WIOA; implementation of the recently
   enacted amendments to the Social Security Act (P.L. 115-123) to make the RESEA
   program permanently authorized; and development of evidence-based, robust, and
   innovative reemployment interventions and service delivery strategies for UI claimants to
   speed their return to work. There is also a continued focus on data validation and
   improving the quality and accuracy of the ETA required UI reports.

   ETA provides the following national priorities for FY 2019 to help states develop their
   SQSP. States should also establish additional state-level priorities for their UI program.

   Improving State Capacity to Administer and Operate the UI Program Effectively

   The UI program acts as an important economic stabilizer when areas experience
   contractions in their labor markets. It is also a critical safety net for eligible American
   workers who are unemployed and are able to work, available to work, and actively
   seeking work. States continue to struggle with administrative and operational challenges,
   including changes in program leadership in many states; the need to make program
   improvements to aging technology systems and/or to implement new technology
   solutions; training state staff on newly-implemented state benefits and tax systems; the
   need to reduce staffing levels as workloads and funding decline; the loss of key subject
   matter expertise due to retirements; new staff who are still learning the program; and

    overall challenges to improving program performance. In developing their SQSPs, states
   are strongly encouraged to incorporate administrative capacity-building strategies such
   as:


      use the results from the state’s implementation of the UI State Self-Assessment
       Tool, as described below, to identify areas for needed changes to operational
       processes for administration of the program;

      conduct business process analysis in key areas to identify opportunities for
       improving program operations, and implementing recommendations from the
       analysis to improve performance;

      review staff training strategies to support succession planning and ongoing staff
       development for new staff; and

      use technical assistance opportunities offered by the Department, the UI
       Information Technology Support Center (ITSC), and the UI Integrity Center of
       Excellence, as well as the peer-to-peer communication platforms and other
       information sharing tools available through the UI Community of Practice (CoP).

In FY 2019, state UI agencies will have received the results of the inaugural state self-
assessment reviews of key operational elements in 15 functional areas within the UI
program. States should use these results compiled by their state reviewers to identify
areas in need of improvements and to formulate their own plans for operational
improvements. Additional information about the Self-Assessment Tool is discussed
below under “Improving Program Performance Nationally.”

ETA is eager to work with states to make the SQSP process a meaningful management
tool to be used by states as a strategic road map to improve program administration and
ensure quality service delivery.

Improving Prevention, Detection, and Recovery of UI Improper Payments

ETA recognizes that states have made improving program integrity a major priority in
recent years. Nevertheless, the UI program has not met the targets in the Improper
Payment Elimination and Recovery Act (IPERA) of 2010. The UI program has been out
of compliance since 2012. This is a critical issue given the adverse impact that improper
payments have on state UI trust funds. Integrity efforts not only help preserve these
unemployment funds and control UI tax rates, but they also maintain the public trust that
the program is protected and operated as intended. As such, there will be a continued
effort for ETA and the states to work collaboratively to aggressively reduce improper
payments.

ETA expects states to continue to implement national integrity strategies that focus on the
largest root causes where states have the greatest likelihood of being able to prevent
improper payments including:

       failure of claimants to comply with state work search requirements (Work
        Search);


      payments to individuals who continue to claim benefits after they have returned
       to work (Benefit Year Earnings); and

      failure of employers or their third-party administrators to provide timely and
       adequate information on the reason for an individual’s separation from
       employment (Separation).

ETA strongly encourages states to actively use the resources of the UI Integrity Center
operated by the National Association of State Workforce Agencies. The UI Integrity
Center continues to develop new products and should be considered a technical
assistance resource for states in addressing integrity-related matters. Among its
offerings to states, the Integrity Center compiles best-promising practices and business
process analysis services for states through its Integrity Knowledge Exchange, provides
training curriculum for state integrity staff through its National Integrity Academy, and
is developing a national repository of “suspicious actor” information to cross-match with
state UI claims as part of its Integrity Data Hub. The Integrity Center also offers on-site
assessment of UI integrity business processes to inform new strategies that support
improved integrity performance.

When identifying potential strategies to address improper payments, states are also
encouraged to use the Integrity tab on the UI Community of Practice (CoP) on the
WorkforceGPS website, which is populated with best-promising practices by the
Integrity Center (see https://ui.workforcegps.org).

States should view the State Information Data Exchange System (SIDES) as a part of its
integrity strategy. See TEN No. 12-16. Timely and accurate information from
employers and third-party administrators (TPAs) reduces improper payments. States
should consider efforts to encourage employers who do not use TPAs to use SIDES,
especially those who are frequent users of the UI program. Recently, a new SIDES
Marketing toolkit was developed and announced – see http://sidesitk.naswa.org/sides.

ETA notes that there has been an unfortunate increase in criminal syndicates and
organized fraud activities in the UI environment. These groups use stolen identities and
create fictitious employers to defraud the UI system. ETA encourages state UI agencies
to develop robust identity verification processes that detect fraudulent claims while
balancing and protecting the due process requirements of the UI program. ETA is
available to work with states to develop these types of processes.

States should continuously assess whether there are other state-specific strategies that
will improve their capacity to address the root causes of the state’s improper payments
and include those strategies in the Integrity Action Plan (IAP), which is a key component
of the SQSP submission. For example, states should review their current laws,

regulations, policies, procedures, and practices that may have the unintended
consequence of creating improper payments.


Improving Program Performance Nationally

ETA has embarked on a multi-pronged strategy designed to significantly bolster program
accountability and facilitate performance improvement nationally. For FY 2019, ETA
will continue the following strategies to meet this objective:

     Provide intensive technical assistance to support performance improvements for
      states with sustained poor performance;

     Use the UI performance management system, UI Performs, which includes core
      measures and Secretary’s Standards to monitor state performance; and

     Implement improvements to the SQSP process as part of a broader effort to
      reengineer UI benefit accountability processes for the program as a whole.

States are also expected to implement and use the new UI Benefits Operations State Self-
Assessment Tool, which reviews benefit operations in the various key functional and
program areas. The states should use the tools and the results of its review to identify and
address areas that need improvement in their operations. The first self-assessment cycle
will be over eighteen months (six quarters) to enable states to become familiar with the tool
and the review process. States must complete the questions for all 15 functional and
program areas by March 31, 2019, and submit those results to ETA by April 15, 2019. In
subsequent years, the review will be conducted over a one-year (twelve months/four
quarters) period with each review being completed by March 31 and the results submitted
to ETA by April 15. For more information on the Self-Assessment Tool, please see UIPL
No. 18-17 (https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=9282) and the Self-
Assessment Tool “Featured Resource” page on the UI Community of Practice.

As states develop their SQSPs, they should consider including strategies that will
significantly enhance program accountability and performance improvement, and seek
technical assistance through ETA’s regional offices (ROs).

Workforce Innovation and Opportunity Act (WIOA)

The enactment of WIOA on July 22, 2014, has a number of impacts for the UI program
including, but not limited to: provisions related to the requirements for mandatory one-
stop partners, including UI; the type of career services that must be provided in one-stop
centers; and amendments to the Wagner-Peyser Act that speak to the types of
employment services that must be provided or made available to UI claimants. WIOA
seeks to modernize the workforce system to provide comprehensive, integrated, and
streamlined services, which require linking and aligning the different one-stop partners.
The UI program continues to be a vital program within the workforce system and UI
claimants are critical customers for the system. As such, UI state agencies play an
important role in implementing WIOA and must work collaboratively with other
workforce system partners to fully connect UI claimants to the full range of


reemployment services delivered through the American Job Centers (AJCs), online
systems, and through the states’ rapid response programs.

States are strongly encouraged, as they develop their SQSPs, to address the WIOA
provisions as they relate to the operations of the UI program, which include:

        Integrating the delivery of services to UI claimants, both online and through
         AJCs;

        Ensuring meaningful assistance to UI claimants is provided in the AJCs; and

        Partnering with the Wagner-Peyser Act-funded Employment Service (ES)
         program and other AJC partner programs to ensure employment services are
         available to UI claimants.

Reemployment of UI Claimants

Reemployment of UI claimants remains a top priority for the entire workforce system,
including UI, and, as stated above, is reinforced by WIOA. During FY 2018, new
legislation permanently authorized the RESEA program, codifying it in Section 306 of
the Social Security Act, but also delayed implementation of new program requirements
until FY 2019. Among other changes, the new RESEA requirements include increasing
the use of evidence-based interventions and service delivery strategies. Detailed
guidance about new RESEA requirements is forthcoming.

Beginning in FY 2019, the new RESEA provisions require states to use evidence-based
practices to deliver RESEAs. In light of the new focus on use of evidence-based
interventions and service delivery strategies, as states develop their SQSPs, they should
strongly consider implementing innovative and robust reemployment strategies that have
been proven to work. They should also consider implementing and evaluating new
strategies developed jointly in collaboration with workforce system partners, including,
but not limited to, the WIOA Adult and Dislocated Worker programs, the Wagner-Peyser
Act-funded ES program, and the Trade Adjustment Assistance program. ETA
recommends that UI program staff collaborate with these partners to ensure the strategies
reflect the agreement(s) made as part of the WIOA state planning process and as part of
the local WIOA Memorandum of Understanding process.

Strategies to consider include:

       Developing integrated registration processes that produce a more complete profile
        of UI claimants so that AJCs may better serve them by more efficiently targeting
        reemployment services and job referrals;

       Implementing strategies that have been shown to increase the “show rate” of
        RESEA participants;


      Connecting claimants as quickly as possible to the public labor exchange systems
       so that they may start receiving job referrals immediately, and consider
       periodically “pushing” jobs to claimants throughout the claim cycle;

      Integrating information technology systems to support improved reemployment
       service delivery; and

      Using ongoing assessments to determine whether UI claimants are having a
       difficult time finding a job and need additional services. This may include
       periodic reviews and adjustments to the state’s worker profiling model to ensure it
       is still properly identifying claimants most likely to exhaust and be in need of
       reemployment services.

Research and information about evidence-based strategies that can support reemployment
is available on the Department’s Clearinghouse for Labor Evaluation and Research
(CLEAR). CLEAR's mission is to make research on labor topics more accessible to
practitioners, policymakers, researchers, and the public more broadly so that it can inform
their decisions about labor policies and programs. CLEAR identifies and summarizes
many types of research, including descriptive statistical studies and outcome analyses,
implementation, and causal impact studies (https://clear.dol.gov/). Additional resources,
including an ETA research publication database, annotated bibliography of selected
research, and collection of workforce system strategies, are maintained and published by
ETA’s Office of Policy Development and Research (https://www.doleta.gov/research/).

Improving Data Validation and Federal Reporting

Data Validation (DV) is a systematic procedure for assessing the accuracy of UI reports
required by ETA and is a critical part of guaranteeing the integrity of the UI program as a
whole. DV impacts several essential government functions including performance
assessment, budget formulation, and economic management. By ensuring states are
reporting accurate counts and storing key data points correctly, the performance and
workload of a state UI program is more accurate. The Department uses UI DV results to
evaluate the accuracy of the data states report on selected UI required reports. Accurately
reported data are essential for properly assessing state performance, for ensuring that
states are treated equitably when administrative funds are distributed, and for providing a
basis for many statistical research analyses.

Because performance measures are intended to guide and assist states in improving their
performance and service to their ultimate customers (workers and employers), states also
have an interest in ensuring that the data from reports, upon which these measures are
based, are correct. The DV system includes detailed guidance to state programmers for
correctly constructing various report elements. This not only ensures they will construct

the DV extract files accurately, but also will simplify their tasks when new tax or benefit
system software is installed.


Addressing Worker Misclassification

States should monitor their performance under the Effective Audit Measure (See UIPL
No. 03-11 (https://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=2971)) to determine
whether they are effectively detecting and preventing worker misclassification. States
may deploy a wide array of strategies to address worker misclassification. ETA
encourages states to develop and implement strategies to address the misclassification of
workers and to include those strategies in the state’s SQSP. ETA will continue to
identify state “best-promising practices” in this area and share them broadly. The UI CoP
provides states the ability to review and select best promising practices from other states
that they can implement to address the issue of worker misclassification.

Government Performance and Results Act (GPRA) UI Performance Measures
(Federal Emphasis)

The Government Performance and Results Act of 1993 requires a commitment from all
Department programs to attain expressed goals and objectives. Achieving these
objectives requires the combined efforts of the federal and state partners.

In recognition of the national priorities, attention continues to be focused on the
following GPRA goals for FY 2019, with targets that the system as a whole is expected
to meet. States should continue to strive to reach or exceed these GPRA goals and
targets. See https://oui.doleta.gov/unemploy/docs/GPRA_Summary_Report.asp for the
FY 2019 GPRA goals and targets.

      Percent of Intrastate Payments Made Timely (Make Timely Benefit Payments)
          o    Target: 87.0 percent of intrastate first payments for full weeks of
               unemployment compensation will be made within 14/21 days from the
               week ending date of the first compensable week.

      Detection of Recoverable Overpayments (Detect Benefit Overpayments)
          o    Target: Overpayments established will be at least 54.5 percent of the
               estimated detectable, recoverable overpayments.

      Percent of Employer Tax Liability Determinations Made Timely (Establish Tax
       Accounts Promptly)

          o    Target: 89.0 percent of status determinations for new employers will be
               made within 90 days of the end of the first quarter in which liability
               occurred.

      UI Re-employment Rate. This measure is currently in development and is a
       measure of the reemployment rate at the second quarter after exit for all UI
       claimants registered with the Wagner-Peyser Act-funded ES system. This
       includes all participants receiving UI benefits, regardless of whether or not they


          came into the program employed (for example, a claimant with part-time
          employment and earnings below the state’s earning allowance). The data for the
          implementation of this UI measure requires new reporting by the states. The new
          data collection process began in November 2016, and the first full performance
          year of data was received October 2017. States continue to submit quarterly
          updates and an annual national target will be established after statistical analysis
          of this data. ETA expects to establish the national target for this measure in
          FY 2020.

5. WIOA Combined State Plans.

   WIOA provides the option for states to include program plans for mandatory one-stop
   partners and other programs to submit a Combined Plan. Given that the UI program is a
   mandatory one-stop partner, states have the option of including the UI program as part of
   the WIOA Combined State Plan. However, each state must participate in the UI
   Performs SQSP process, whether or not the state decides to include UI as part of its
   WIOA Combined State Plan.

   States electing to include UI in a Combined Plan must incorporate the SQSP in its
   entirety into the Combined Plan through the Combined State Plan process. The FY 2019
   SQSP is to be incorporated into the Combined Plan upon approval of the SQSP, but no
   later than October 31, 2018. Attachment A has specific instructions for including SQSP
   documents into the WIOA State Plan Portal.

6. UI Program Performance and Criteria for FY 2019.

   Attachment B lists the performance criteria for the Core Measures, Secretary’s Standards,
   and other program requirements where Corrective Action Plans (CAPs) and/or Narratives
   may be expected if annual performance is not acceptable.

   A. Core Measures. Performance below the acceptable levels of performance (ALPs)
      for Core Measures is expected to be addressed in a CAP unless otherwise indicated.

      Additional instructions for Core Measures are as follows:

         UI Re-employment Rate. This measure is currently in development and is a
          measure of the reemployment rate at the second quarter after exit for all UI
          claimants registered with the Wagner-Peyser Act-funded ES system. This
          includes all participants receiving UI benefits, regardless of whether or not they
          came into the program employed (for example, a claimant with part-time
          employment and earnings below the state’s earning allowance). The data for the
          implementation of this UI measure requires new reporting by the states. The new
          data collection process began in November 2016, and the first full performance
          year of data was received October 2017. States continue to submit quarterly
          updates and an annual national target will be established after statistical analysis


    of this data. ETA expects to establish the national target for this measure in FY
    2020.

   The Detection of Overpayments Measure. This measure is the percentage of
    detectable/recoverable overpayments established for recovery. States reporting an
    overpayment detection rate below 50 percent are expected to address the
    deficiency in a CAP. Also, because most states cannot cost-effectively detect and
    establish more than 90 percent of estimated overpayments, an upper limit of 95
    percent has been established for monitoring purposes. States reporting ratios over
    95 percent are expected to explain in the Narrative section the reasons for the
    higher-than-expected ratios. If an overpayment rate above 95 percent is the result
    of improper administration of Benefit Accuracy Measurement (BAM) or Benefit
    Payment Control (BPC) activities or misreporting of data on the ETA 227
    (Overpayment Detection and Recovery Activities) report, the state is expected to
    submit a CAP (for BAM/Overpayment Detection or BPC/Overpayment
    Detection). The CAP is to be designed to produce valid data for the Overpayment
    Detection Measure. The performance period for the BPC component is the three-
    year period ending March 31, 2018; the performance period for the BAM
    component is the three-year period ending September 30, 2017.

   UI Integrity Measure - Benefit Year Earnings (BYE). This measure has been
    discontinued.

   Effective Audit Measure. The Effective Audit Measure, as noted in UIPL
    No. 03-11, is a blended measure of the following four factors: 1) Percent of
    Contributory Employers Audited Annually, 2) Percent of Total Wage Change
    From Audit, 3) Percent of Total Wages Audited, and 4) Average Number of
    Misclassifications Detected Per Audit. Each of the four factors has a minimum
    standard score that states must attain to pass the Effective Audit Measure, as well
    as an overall combined score that must be met. The measure also requires states
    to direct additional emphasis to the factor(s) that they deem important to their
    state. An additional two points must be earned among any of the four factors to
    attain the overall passing score of at least 7.0. States that do not meet this
    measure will be expected to develop a CAP based on Calendar Year (CY) 2017
    data.

   Improper Payments Measure. The Improper Payments Measure is defined as UI
    benefits overpaid and underpaid, estimated from the results of the BAM survey of
    paid UI claims in the State UI, Unemployment Compensation for Federal
    Employees (UCFE), and UCX programs.

    Before the enactment of IPERIA, ETA used a methodology which subtracted UI
    overpayment recoveries for the computation of the estimated improper payment
    rate. However, IPERIA requires agencies to include all identified improper
    payments in the reported estimate, regardless of whether the improper payment in
    question has been or is being recovered. ETA’s revised methodology, consistent


       with IPERIA, no longer nets out recoveries for the computation of the improper
       payment rate. Please refer to UIPL No. 09-13, Change 1, for a detailed discussion
       on the changed methodology.

       In accordance with requirements in section 3(a)(3)(F), IPERA, an ALP of less
       than 10 percent has been established for the improper payment measure. That is,
       states must maintain an improper payment rate of less than 10 percent for covered
       programs. This ALP is applicable to the 2017 (Improper Payments Information
       Act) IPIA performance period (July 1, 2016 to June 30, 2017). States failing to
       meet the ALP for the 2017 IPIA performance period will be expected to develop a
       CAP as part of the FY 2019 SQSP.

      UI Overpayment Recovery Measure. As explained in UIPL No. 09-13, the
       recovery rate is “the amount of improper overpayments recovered divided by the
       amount of improper overpayments identified.” The ALP for the recovery rate
       measure is 68 percent for the 2017 IPIA performance period. The Department
       will compute future recovery targets based on the most recent recovery and other
       performance data available.

       The performance period will be based on data from the ETA 227, Overpayment
       Detection and Recovery Activity (Regular), and ETA 227, Overpayment
       Detection and Recovery Activity (Emergency Unemployment Compensation)
       (EUC), for the IPIA period (July 1, 2016 to June 30, 2017 of the IPIA reporting
       year). Pursuant to the UI Reports Handbook (ET Handbook No. 401, 5th edition),
       the June quarter ETA 227 reports are due August 1st. States failing to meet the
       ALP for the 2017 IPIA performance period will be expected to develop a CAP as
       part of the FY 2019 SQSP.

B. Secretary’s Standards

   Performance below the criteria for the Secretary’s Standards established in regulation
   at 20 CFR Parts 640 and 650 is expected to be addressed in a CAP. The Secretary’s
   Standards are listed in Attachment B.

C. UI Programs

   The following UI Programs must be addressed as described below:

          National Directory of New Hires (NDNH)

       State BAM operations that, based on the BAM Administrative Determination, are
       not compliant with the NDNH matching requirements in ET Handbook No. 395,
       5th Edition, chapter VI, UIPL No. 03-07, and UIPL No. 03-07, Change 1, must be
       addressed in a CAP for FY 2019.


   Benefit Accuracy Measurement (BAM)

State BAM operations or operational components that, based on the BAM
Administrative Determination, are not compliant with investigative and/or method
and procedure requirements established in ET Handbook No. 395, 5th Edition,
and through findings established through ET Handbook No. 396, 4th Edition
monitoring reviews (based on the annual determination letter issued on or before
May 1, 2018), must be addressed in a CAP. This includes paid and denied claim
population variances outside established control limits.

   Tax Performance System (TPS)

To ensure that UI tax operations are in compliance with Federal reporting and
oversight requirements, failure to conduct one or more TPS sample reviews will
be subject to a CAP. Additionally, a tax function that is not sampled will be
included in the number of total failing functions as measured by Tax Quality Part
A (no more than three tax functions may fail TPS review), and Part B (a tax
function cannot fail for three consecutive years). Exceptions include universes
that are too small to support a sample (“S”), an Experience Rate sample that was
not scheduled for review during the performance year (“E”), or the granting of a
temporary waiver by the RO (“W”). Program Review Findings Charts should be
noted accordingly.

   Data Validation (DV)

The deadline for submitting DV results was June 10, 2018. DV items that fail to
pass validation or that are due but not submitted are expected to be addressed in
the state’s FY 2019 SQSP. Non-submitted items include failure to certify that
Module 3 of the DV Benefits and Tax Handbooks are up-to-date during the
April 1 – June 10, 2018, certification window.

Any DV items due for Validation Year (VY) 2018 that did not pass or were not
submitted by the June 10, 2018, deadline, must be addressed in a CAP for FY
2019.

ROs will monitor states every three years on cycles coinciding with the DV
validation year. They will assess the accuracy of the state’s DV results
considered passing or not due as of the time of the monitoring review to verify
that the states are properly implementing the DV program. DV items submitted
as passing but which a monitoring review determined to have failed must also be
addressed in the SQSP. The FY 2019 SQSP CAP will include DV items failing
after review in the VY 2018 monitoring cycle (monitored between June 11, 2017
and June 10, 2018). All subsequent SQSP cycles will address items changed from
pass to fail in the previous year’s monitoring review.


          UI Program Integrity

       States are required to report their planned activities to prevent, detect, reduce, and
       recover improper UI payments in their IAP, which should be submitted as part of
       their SQSP submission. States should convene their previously established cross-
       functional integrity task force to update their IAP. States must analyze their BAM
       data to identify the top root causes for improper payments and develop strategies
       that will be effective in reducing or recovering improper payments. The most
       recent state data are available at the Department’s website at
       https://www.dol.gov/general/maps/data.

       ETA will continue to provide technical assistance to states to support their
       integrity activities through webinars, individual state technical assistance, and in
       partnership with the UI Integrity Center. States are strongly encouraged to review
       and consider the use of the Integrity Center’s products and tools as part of their
       own state-specific work search strategies. These products and tools are posted on
       the “Integrity” tab at https://ui.workforcegps.org/. In addition, ETA will work
       with states to expand participation in the Treasury Offset Program for the
       recovery of overpayments, to implement and use the State Information Data
       Exchange System for obtaining timely and complete separation information, and
       to more effectively use the NDNH and other overpayment prevention tools for
       BPC.

D. Other UI Performance

   States are expected to address the following performance deficiencies in the SQSP
   Narrative, unless otherwise indicated:

      Failure to conduct required program reviews;

      Deficiencies identified during required program reviews;

      Failure to meet reporting requirements; and

      Invalid recording of the Issue Detection Date (IDD) and Determination Date
       (DD). The validity of the UI Performs nonmonetary determination timeliness
       measure depends on the accuracy of the state’s IDD and DD data. IDD and DD
       data are considered accurate if dates were correct in at least 95 percent of the
       nonmonetary determinations evaluated in the quarterly quality samples (obtained
       from the ETA 9056 report). Since the accuracy of IDD and DD data is based on
       sample results, sampling variation will be taken into account in setting the
       percentage below which a state’s data will be considered inaccurate. States with
       invalid IDD or DD data are expected to address the steps they will take to record
       the IDD and DD correctly in the SQSP Narrative.


7. SQSP Planning Guidance and Requirements. ET Handbook No. 336, 18th Edition,
   Change 3, and this UIPL, provide guidelines for the completion and submission of the
   SQSP for FY 2019.

   The Department’s strategic approach to UI Performs is to focus efforts on improving the
   performance of states where performance is below minimum criteria while promoting
   overall excellence. To that end, CAPs and/or Narratives are expected whenever a state’s
   performance does not meet established criteria for the SQSP measurement period and
   remains uncorrected before the preparation of the SQSP.

   The measurement period for the FY 2019 SQSP is April 1, 2017 – March 31, 2018,
   unless otherwise indicated (see Attachment B). CAPs and Narratives addressing
   performance deficiencies are components of the state’s formal plan and schedule for
   improving performance; therefore, the causes of performance shortfalls should be
   thoroughly analyzed before the development of the state’s SQSP.

   A. SQSP Submittal

   The SQSP process provides a 24-month window for states to adequately plan and
   implement performance improvement efforts. The process provides for two types of
   submittals: a Formal two-year (biennial) plan and an Alternate year plan.

       1) SQSP Formal Submittal: The Formal submittal consists of a complete SQSP
          package. It must contain: a transmittal letter; the State Plan Narrative, including
          Assurances; CAPs; the IAP; budget worksheets/forms; organizational charts; a
          Signature Page; and other required administrative documents as requested. For
          the two-year planning cycle, states must submit quarterly targets and milestones
          for both years.

          States may also develop extended multi-year CAPs so that efforts that must
          extend beyond the two-year planning cycle due to their size, scope, or complexity
          can be realistically portrayed. Out-year portions of such multi-year plans do not
          need to provide quarterly targets or milestones (as required for the two-year SQSP
          planning cycle) but should provide enough information to explain anticipated
          progress and results.

       2) SQSP Alternate Year Submittal: The SQSP Alternate year submittal consists of
          items included in the state’s request for Federal UI administrative funding, as well
          as modifications to SQSPs. It must contain at the least: a transmittal letter;
          modifications to the State Plan Narrative, including Assurances; CAPs for new
          performance deficiencies; required modifications to existing CAPs; modifications
          /updates to the IAP; budget worksheets/forms, organizational chart (if changed),
          and SQSP Signature Page.
          Since states and ROs will continue to review reported performance data, monitor
          program performance, and initiate corrective actions when warranted, the SQSP


        Alternate year submittal will require states to submit new CAPs to describe, for
       example:

                  Corrective actions the state will take based on findings made in RO
                   performance reviews; and

                  New performance deficiencies identified in RO reviews of state
                   performance data during the most recent performance year.

       States will be informed by their RO if modifications are required to the State Plan
       Narrative, existing CAPs, and IAPs to include, for example:

                  Missed milestones; and
                  New strategies for performance improvement.

Budget worksheets and various assurances will continue to be submitted annually since
funds for UI operations are appropriated each FY. These and other required documents
related to the federal UI administrative funding process are to be submitted with both the
Formal (biennial) SQSP and the Alternate year submittals.

Additional descriptions of the Formal and Alternate year submittal, SQSP cycle schedule,
significant activities, and dates relating to the submittal and approval of the SQSP are
outlined in ET Handbook No. 336, 18th Edition, Change 3.

B. SQSP Preparation

States must use the Excel CAP Workbook to develop their CAPs and IAPs for the SQSP
submissions. States must use the Workbook also for reporting updates to the specific
milestones and performance each quarter. The RO will provide states with the Workbook
and specific instructions at the beginning of the SQSP planning cycle.

C. The “At-Risk” Process

ETA had previously identified persistently low performing states as "At-Risk" since
FY 2011, because of consistently significant low performance for the first payment and
appeals timeliness measures. States that have been identified as “At-Risk” in previous
years will continue to work collaboratively with ETA to achieve performance
improvement. The action strategies and technical assistance activities are to be included
in the state’s SQSP CAP for those measures that have caused the state to be designated
“At-Risk.”

The “At-Risk” designation will continue until each of the remaining states designated as
“At-Risk” meets the ALP for the identified performance measure for six consecutive
months, and is likely to continue to sustain this performance improvement. These states
will also continue to receive enhanced technical assistance as needed.


The ROs must schedule and conduct quarterly status calls with each “At-Risk” state to
discuss the state’s progress in implementing the activities and strategies identified in the
SQSP, and the state’s progress towards achieving the performance standards.

D. The “High Priority” States Process

As part of the reengineering of its program oversight and accountability processes, ETA
identifies states that are considered to be “High Priority” and in need of more intensive
technical assistance. The High Priority model is designed to use a variety of important
program performance measures relating to UI benefit payment performance, integrity,
and operations, to produce a score for each state. The methodology was developed to
include integral parts of UI Performs core measures, DV results, and program integrity-
related data. Please refer to TEN Nos. 08-14 and 3-15 for details.

The selected “High Priority” state(s) will be formally notified by ETA with information
on the specific focus areas that caused their selection under this initiative. One of the key
aspects of this process is an on-site review with each “High Priority” state by a select
expert team of program specialists. The expert team will include National, Regional, and
state subject matter experts on the issue areas identified as needing improvement. ETA
will work collaboratively with each state to identify strategies and action steps to enable
the state to improve its performance in the areas identified by the on-site review. The
High Priority designation framework and process are outlined in UIPL No. 17-16.

As states develop their SQSPs, they should consider including strategies that will
significantly enhance program accountability and performance improvement, and seek
technical assistance through ETA’s ROs. Also, those states that have been designated as
High Priority must address review findings as part of the SQSP process.

ROs must schedule and conduct quarterly status calls with each High Priority state to
discuss the state’s progress in implementing the activities and strategies identified during
the on-site review and address those items in the state’s SQSP. The quarterly calls will
include the High Priority state, the RO, and the National Office.

The High Priority designation will continue until the state completes corrective actions
resulting from the state’s on-site review; meets the standards for the core measures
related to the areas of concern during the initial designation process for six consecutive
months, and is likely to continue to sustain this performance improvement; and maintains
performance in other program areas without any diminution of performance.

E. SQSP Assurances

By signing the SQSP Signature Page, a state certifies that it will comply with the
assurances listed in ET Handbook No. 336, 18th Edition, and institute plans or measures
to comply with the requirements for each of the assurances.


   States will continue to provide information for the Assurance of Contingency Planning
   and the Assurance of Automated Information Systems Security. In the State Plan
   Narrative, Section H, states are expected to provide the dates that their Information
   Technology (IT) Contingency Plan, System Security Plan, and Risk Assessment were
   implemented, tested, and reviewed/updated.

   Each state must:

       1) Review and, if necessary, update, and test its IT Contingency Plan annually;

       2) Review and/or update its System Security Plan annually; and

       3) Conduct a Risk Assessment once every three years.

   If a state does not have an IT Contingency Plan, System Security Plan, and Risk
   Assessment procedures in place or if these documents are incomplete, then the state is
   expected to address the actions it plans to take to meet these requirements in a CAP.
   These plans and procedures must meet the minimum controls listed in the Chapter I,
   Section VII-H and Section VII-J of the ET Handbook No. 336, 18th Edition, Change 3.

8. Funding Period. The Department’s proposed FY 2019 appropriation language for State
   UI and Employment Service Operations allows for obligation of UI allocations by states
   through December 31, 2019, with 90 additional days to liquidate the obligations and
   complete the expenditure of funds. Under this proposed language, states would be able to
   obligate FY 2019 UI funds through September 30, 2021, if such obligations are for
   automation, competitive grants awarded to states for improved operations, or for
   conducting reemployment and eligibility assessments and improper payment reviews, and
   providing reemployment services and referrals to training, as appropriate. Under this
   proposed language, states would have through September 30, 2027, to obligate and expend
   FY 2019 funds, if such funds were obligated to states for automation being carried out
   through a consortium of states. ETA will notify state agencies on what language Congress
   adopts.

9. Data Availability. The ROs will provide states with data showing their performance
   measured against the Core Measures, Secretary’s Standards, and other information relevant
   to the SQSP (e.g., reporting deficiencies).

10. Deadline for State SQSP Submittal. Each RO will set a deadline for states to submit
    their SQSPs for FY 2019. States electing to include UI in a Combined Plan must
    incorporate the SQSP into the Combined Plan upon approval of the SQSP, but no later
    than October 31, 2018.

11. Electronic Submission of the SQSP. States must submit the SQSP electronically and
    should contact their RO SQSP Coordinator before submittal to coordinate specific details.
    Standard forms required as part of the budget reporting process (Chapter II of ET
    Handbook No. 336, 18th Edition, Change 3) are available in PDF and may be


   downloaded from the OMB Web site at: https://www.grants.gov/web/grants/forms/sf-
   424-family.html#sortby=1.

   States may submit the SQSP signature page electronically if the state law permits. States
   that do not submit the signature page electronically (which includes by fax or scan) must
   submit the signature page by mail by the deadline set by the RO.

12. Action Requested. State Administrators are requested to:

      Make this information available to appropriate staff;
      Prepare their SQSPs in accordance with instructions in this UIPL and the planning
       and reporting instructions contained in ET Handbook No. 336, 18th Edition, Change
       3;
      Coordinate specifics, as appropriate, with the RO for electronic submission of the
       plan; and
      Submit the FY 2019 SQSP to the appropriate RO by the deadline set by that RO.

13. Inquiries. Questions should be directed to the appropriate RO.

14. Attachments.

       A. Instructions for State Quality Service Plan (SQSP) Submittal to the WIOA State
          Plan Portal

       B. Measures/Programs to be addressed in the Fiscal Year (FY) 2019 State Quality
          Service Plan (SQSP)

Attachment (official PDF: https://www.dol.gov/sites/dolgov/files/ETA/advisories/UIPL/2018/UIPL_12-18_Attachment_A_Acc.pdf)

Attachment A

               Instructions for State Quality Service Plan (SQSP) Submittal
                              to the WIOA State Plan Portal


States that choose to include the UI program in their Combined Plan must submit their State
Plans via the online WIOA State Plan Portal at
https://rsa.ed.gov/login.cfm?mod=fom&usp=Y#skipnav. SQSP documents must be cut-and-
pasted into the Portal. However, the Portal has limitations, and not all approved SQSP
documents can be incorporated. Below are specific instructions for including SQSP
documents into the Portal:

1. Transmittal Letter: The Portal does not support Adobe Portable Document Format
   (PDF); therefore, states including UI in a Combined Plan must include the unsigned
   Microsoft Word version of the transmittal letter into the Portal. States must add a note at
   the end of the section in the Portal indicating that the signed copy of the transmittal letter
   is maintained with the state agency and the regional office (RO).

2. SQSP Narrative, Corrective Action Plans (CAPs), and Integrity Action Plan (IAP):
   The CAP and Quarterly Reporting Workbook documents are Excel documents with
   multiple rows in a single column, which is not supported by the Portal. Therefore, states
   including UI in a Combined Plan must use the Microsoft Word version of the CAP, IAP,
   and Narrative forms. States are to cut and paste the Microsoft Word version of the CAP,
   IAP, and Narrative into the Portal.

3. Budget Worksheets/Forms: The Portal does not support Adobe PDF; therefore, states
   including UI in a Combined Plan must add a note at the end of the section that includes
   information from the SF 424, including: a) the title, b) description, c) funding total, d)
   project start and end date, and e) the name of the authorizing representative. The note
   must also include a statement that the signed copy of the SF 424 and other appropriate
   budget-related forms are maintained with the state agency and the RO.

4. Organization Chart: These charts must be converted to Microsoft Word and cut-and-
   pasted into the Portal. If the state cannot convert the chart into Microsoft Word format,
   the state must add a note at the end of this section in the Portal that the Organization
   Chart is maintained with the state agency and the RO.

5. SQSP Signature Page: The Portal does not support Adobe PDF format; therefore, states
   including UI in a Combined Plan must include the unsigned version of the Signature
   Page. The approving official’s name must be typed on the form that is submitted into the
   Portal. States must include a note at the end of this section in the portal that the signed
   copy of the “SQSP Signature Page” is maintained with the state agency and the RO.

   Note: All approved/signed SQSP documents must also reside in the RO.
                                               A-1

Attachment (official PDF: https://www.dol.gov/sites/dolgov/files/ETA/advisories/UIPL/2018/UIPL_12-18_Attachment_B_Acc.pdf)

Attachment B

                Measures/Programs to be Addressed in the Fiscal Year (FY) 2019
                              State Quality Service Plan (SQSP)

Core Measures                    Measurement Period               Criteria          CAP   Narrativ
                                                                                             e
First Payment Promptness        Apr 1, 2017 – Mar 31,
                                                                    87%              √

Nonmonetary                     Apr 1, 2017 – Mar 31,             80%
                                                                                     √
Determination Time Lapse        2018                         (combined score)
Nonmonetary
                                Apr 1, 2017 – Mar 31,
Determination Quality –                                             75%              √

Nonseparations
Nonmonetary
                                Apr 1, 2017 – Mar 31,
Determination Quality –                                             75%              √

Separations
                                BPC: Apr 1, 2015 – Mar             >50%              √
                                31, 2018;                          <95%                       √
                                BAM: Oct. 1, 2014 –
Detection of Overpayments       Sept. 30, 2017
                                If the rate is a result of
                                improper administration
                                of BAM and/or BPC                  >95%              √
Average Age of Pending          Apr 1, 2017 – Mar 31,
                                                                   30 days           √
Lower Authority Appeals         2018
Average Age of Pending          Apr 1, 2017 – Mar 31,
                                                                   40 days           √
Higher Authority Appeals        2018
Lower Authority Appeals         Apr 1, 2017 – Mar 31,
                                                                    80%              √
Quality                         2018
New Employer Status             Jan 1, 2017 – Dec 31,
                                                                    70%              √
Determinations Time Lapse       2017
Tax Quality (Part A: No
more than 3 tax functions       Jan 1, 2017 – Dec 31,
                                                                                    √
failing Tax Performance         2017
System (TPS) in a year)
Tax Quality (Part B: The
                                Jan 1, 2017 – Dec 31,
same tax function cannot                                                            √

fail for 3 consecutive years)
                                1st Payments: October          Varies by State
                                1, 2016 to September 30,     (The ALP is based
                                2017                         on the state’s Total
Facilitate Reemployment         Reemployment: January        Unemployment
Rate                            1, 2017 to December 31,      Rate for the
                                                                                     √
                                2017                         previous CY and
                                                             the percent of state
                                                             claimants who are
                                                   B-1

                                                         not on temporary
                                                         layoff.)
UI Integrity Measure –
Benefit Year Earnings                       This Measure has been discontinued.
(BYE)
                              Jan 1, 2017 – Dec 31,      Score >7;and pass
Effective Audit Measure                                                        √
                              2017                          all 4 factors
                              BAM batches 201627 to
Improper Payments
                              201726 (June 26, 2016 to                         √
Measure                                                       < 10%
                              July 1, 2017)
UI Overpayment Recovery       July 1, 2016 – June 30,
                                                               68%             √
Measure                       2017

                    Measures/Programs to be Addressed in the UI (FY) 2019
                         State Quality Service Plan (SQSP) (cont’d)

Secretary’s Standards in                                                            Narrativ
                                Measurement Period            Criteria        CAP
Regulation                                                                             e
First Payment Promptness       Apr 1, 2017 – Mar 31,
                                                               87%             √
(IntraState 14/21 Days)        2018
First Payment Promptness       Apr 1, 2017 – Mar 31,
                                                               93%             √
(IntraState 35 Days)           2018
First Payment Promptness       Apr 1, 2017 – Mar 31,
                                                               70%             √
(InterState 14/21 Days)        2018
First Payment Promptness       Apr 1, 2017 – Mar 31,
                                                               78%             √
(InterState 35 Days)           2018
Lower Authority Appeals (30    Apr 1, 2017 – Mar 31,
                                                               60%             √
Days)                          2018
Lower Authority Appeals (45    Apr 1, 2017 – Mar 31,
                                                               80%             √
Days)                          2018

UI Programs, etc.             Measurement Period                             CAP    Narrativ
                                                                                    e
Data Validation
 Results not submitted by    Apr 1, 2017 – Mar 31,
                                                                               √
   June 10, 2018              2018
_______________________
__
 Failing/incomplete          Apr 1, 2017 – Mar 31,
                                                                               √
   submission by June 10,     2018
   2018
Compliance with NDNH
                              Status as of March 31,
matching requirements for                                                      √

BAM


                                               B-2

BAM operations not
compliant with investigative
and /or method and             Based on the annual
procedure requirements         determination letter       √
including construction of      issued May 1, 2018
valid samples and sample
populations
Incorrect recording of the
                               Apr 1, 2017 – Mar 31,
Issue Detection Date and/or                                       √

Determination Date
TPS Sample Reviews             Jan 1, 2017 – Dec 31,
                                                          √

                                                        To be
                                                       address
                                                         ed in
UI Program Integrity                                    the UI
                                                       Integrit
                                                       y Action
                                                         Plan


                                                B-3