Additional guidance on unemployment modernization payments and state transfers

UIPL14-09c1acc.pdf (https://www.dol.gov/sites/dolgov/files/ETA/advisories/UIPL/2009/UIPL14-09c1acc.pdf)

                                                              CLASSIFICATION
       Employment and Training Administration                 UC Incentive Payments
                  Advisory System                             CORRESPONDENCE SYMBOL
             U.S. Department of Labor                         DL
              Washington, D.C. 20210                          DATE
                                                              March 19, 2009


ADVISORY:              UNEMPLOYMENT INSURANCE PROGRAM LETTER No. 14-09,
                       Change 1

TO:                    STATE WORKFORCE AGENCIES

FROM:                  DOUGLAS F. SMALL /s/
                       Deputy Assistant Secretary

SUBJECT:               Special Transfers for Unemployment Compensation Modernization and
                       Administration and Relief from Interest on Advances

1. Purpose. To provide additional guidance to states concerning unemployment compensation
(UC) modernization incentive payments, the recent special administrative transfers, and to
correct guidance related to relief from interest on advances to state unemployment funds.

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; the Social Security Act
(SSA); the Federal Unemployment Tax Act (FUTA); and Unemployment Insurance Program
Letter (UIPL) No. 14-09.

3. Background. UIPL No. 14-09 provided guidance to states on the UC provisions of Public
Law 111-5, including how to qualify for UC modernization payments. This UIPL, using a
Question and Answer (Q&A) format, provides, among other things:

   •   Additional guidance concerning applications for UC modernization incentive payments
       and on using a training benefit provision to qualify for such payments.
   •   Additional guidance related to the special administrative transfer.
   •   A correction to earlier guidance related to relief from interest on advances.

4. Action. State administrators should distribute this advisory to appropriate staff.

5. Inquiries. Questions should be addressed to your Regional Office.
 RESCISSIONS                                               EXPIRATION DATE
 None                                                      Continuing

6. Attachment. QUESTIONS AND ANSWERS

UIPL14-09c1a1.pdf (https://www.dol.gov/sites/dolgov/files/ETA/advisories/UIPL/2009/UIPL14-09c1a1.pdf)

                                                                                  Attachment

                                 QUESTIONS AND ANSWERS


UC MODERNIZATION - APPLICATIONS UNDER “PERMANENT” LAWS

CH 1-1. Question. UIPL No. 14-09 provides that applications for incentive payments should
only be made under provisions of state laws that are currently in effect as permanent law and not
subject to discontinuation. Does this mean that my state may never repeal any of the provisions
that qualified it for a UC Modernization payment?

Answer: No. If a state eventually decides to repeal or modify any of these provisions, it may do
so, and it will not be required to return any incentive payments. However, in providing the
incentive payments, Congress clearly intended to support states that had already adopted certain
eligibility provisions and to expand eligibility to additional beneficiaries by encouraging other
states to adopt these provisions. By specifying that the provisions must be in effect as permanent
law, Congress also made clear its intention that the benefit expansions not be transitory. While
states are free to change or repeal the provisions on which modernization payments were based
subsequent to receipt of incentive payments, Congress and the Department rely on states’ good
faith in adopting the eligibility criteria, and the application must attest to this good faith as
required by the following Q&A.

CH 1-2. Question: Are there any changes to the application procedure?

Answer: Yes. Each state’s application for incentive payments must contain a certification that
the application is submitted in good faith with the intention of providing benefits to unemployed
workers who meet the eligibility provisions on which the application is based.

UC MODERNIZATION - TRAINING BENEFITS

CH 1-3. Question. May my state establish a limitation on when the individual must enroll in
training to be eligible for the training benefit?

Answer: Yes. As a general matter, individuals who were separated from declining occupations
or businesses reducing operations, and who would benefit from job training, should be placed in
appropriate training as soon as possible. A state law would qualify for certification if it provided
that an individual must be enrolled in training no later than the end of the benefit year
established with respect to the separation that makes the individual eligible for the training
benefit. (That is, a separation from a declining occupation, or a separation due to a permanent
reduction of operations at the individual’s place of employment.) A state may provide for a
longer period of time, but its application would not be certified if it provided for a period of time
ending prior to the end of the individuals’ benefit year.

States adopting this limitation must notify individuals of the limitation at the time the state
approves their initial claims.

CH 1-4. Question. Q&A III-24 in UIPL No. 14-09 provides that eligibility for the training
benefit may not be terminated by the expiration of a benefit year. Does this mean that my state
may set no outside limits on payment of the training benefit?

Answer: No. Q&A III-24 was intended to assure that an individual enrolled and making
satisfactory progress in training did not have eligibility for the training benefit terminated
because the benefit year ended. A state may, however, terminate an individual’s training benefit
after the individual has been provided a reasonable period to collect the entire training benefit.
A state law would qualify for certification if it provided that no training benefits are payable one
year following the end of the benefit year. If a state adopts a shorter termination date, its
application must justify why the date is reasonable.

CH 1–5. Question. An individual voluntarily quit a job. May my law deny this individual the
training benefit?

Answer. The answer depends upon the facts. Section 903(f)(3)(C)(ii), SSA, as amended,
provides that the training benefit is payable to an individual who was either “separated from a
declining occupation, or [was] involuntarily and indefinitely separated from employment as a
result of a permanent reduction of operations at the individual’s place of employment . . . .”
Since these two conditions are in the disjunctive, a state must pay the training benefit if a
claimant meets either one. Accordingly, the state must pay the training benefit to an individual
who voluntarily quit a job in a “declining occupation,” because Federal law does not condition
eligibility on the cause of the separation where the separation is from a declining occupation.
Further, the state must pay the benefit where the individual was “involuntarily and indefinitely
separated from employment as a result of a permanent reduction of operations at the individual’s
place of employment . . . .” However, the state may deny the benefit where neither condition is
met: an individual voluntarily quit a job and the job was not in a declining occupation.


SPECIAL ADMINISTRATIVE TRANSFERS

CH 1-6. Question: Section 903(g)(3)(C) of the SSA provides that my state’s share of the $500
million special administrative transfer is available for, among other things, “improvement of
unemployment benefit and tax operations, including responding to increased demand for
unemployment compensation.” Does this mean that my state may use this money to fund the
hiring of additional staff due to increased workload?

Answer: Yes. Adding staff to respond to workload is “responding to increased demand for
unemployment compensation.”

CH 1-7. Question: May my state use its share of the $500 million special administrative


transfer to pay costs individuals might otherwise incur in using their UC debit cards?

Answer: Yes. Reducing costs to individuals in accessing their UC payments is an
“improvement” in UC benefit operations because it facilitates the payment of benefits.

CH 1-8. Question: When was the $500 million special administrative distribution transferred
to states?

Answer: March 2, 2009.

REPORTING

CH 1-9. Question: Where should transactions involving UC modernization incentive payments
and the $500 million special administrative distribution be reported?

 Answer: The transfer of any incentive payments and the $500 million special administrative
funds was authorized by Title IX of the SSA, as amended. As such, transactions involving these
funds should be reported on the ETA 8403 Summary of Financial Transaction – Title IX Funds
as well as on lines 15 and 44 of the ETA 2112, UI Financial Transaction Summary report.
(OMB Numbers 1205-0154 and 1205-0154.)

INTEREST ON TITLE XII ADVANCES

CH 1-10. Question: How did the amendments made by Section 2004 of Public Law 111-5
affect interest due on Title XII advances?

Answer: Section 2004 added new paragraph (10) to Section 1202(b), SSA:

       (10)(A) With respect to the period beginning on the date of enactment of this
       paragraph and ending on December 31, 2010—
       (i) any interest payment otherwise due from a State under this subsection during
       such period shall be deemed to have been made by the State; and
       (ii) no interest shall accrue during such period on any advance or advances made
       under section 1201 to a State.
       (B) The provisions of subparagraph (A) shall have no effect on the requirement
       for interest payments under this subsection after the period described in such
       subparagraph or on the accrual of interest under this subsection after such period.
        [Emphasis added.]

Under this new paragraph, any interest payment due during the period beginning on the date of
enactment (that is, beginning February 17, 2009) and ending on December 31, 2010, shall be
“deemed to have been” paid by the state. This effectively waives all interest due during this
period. Further, no interest accrues on any advance or advances during this period.



This Q&A supersedes Q&A V-1 of UIPL 14-09 and corrects the text of the amendment found on
page 4 of Attachment VI to UIPL 14-09.

CH 1-11. Question: Will interest accrue on advances made prior to the date of enactment
during the period February 17, 2009 through December 31, 2010?

Answer: No. As discussed in the previous Q&A, no interest will accrue on advances during the
period. This Q&A supersedes Q&A V-2 of UIPL No. 14-09.

CH 1-12. Question: How is interest after December 31, 2010, determined?

Answer: The normal rules for determining the amounts of interest accrued and the dates interest
is due will again apply. This response is the same as Q&A V-3 of UIPL No. 14-09.