FY 2017 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 1, 2016


ADVISORY:         UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 18-16

TO:               STATE WORKFORCE AGENCIES

FROM:             PORTIA WU /s/
                  Assistant Secretary

SUBJECT:          Additional Planning Guidance for the Fiscal Year (FY) 2017 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 2017 SQSP.

2. References.
    Section 303(a)(1) of the Social Security Act (SSA);
    Government Performance and Results Act of 1993 (GPRA), Pub. L. 103-62, as amended
      by Pub. L. 111-352: GPRA Modernization Act of 2010;
    Improper Payments Elimination and Recovery Act of 2010 (IPERA), Pub. L. 111-204
      (31 U.S.C. 3301 note and 3321 note);
    Workforce Innovation and Opportunity Act (WIOA), Pub. L. 105-220, Title I;
    Section 103 of the Workforce Innovation and Opportunity Act (Pub. L. 113-128, July 22,
      2014);
    20 CFR Parts 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. 12-08, Establishing an Acceptable Level of Performance (ALP) for the
      Unemployment Insurance (UI) Reemployment Rate 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, 2017

      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;
      Workforce Innovation and Opportunity Act; Notice of Proposed Rulemaking; Proposed
       Rules, 80 Fed. Reg. 20687-21150 (April 16, 2015);
      Training and Employment Notice (TEN) No. 08-14, Reengineering Unemployment
       Insurance (UI) Benefits Program Accountability Processes;
      TEN No. 29-14, Announcing the release of the Workforce Innovation and Opportunity
       Act (WIOA) Notices of Proposed Rulemaking (NPRMs) on Federal Register Public
       Inspection;
      TEN No. 03-15, Reengineering Unemployment Insurance (UI) Benefits Program
       Accountability Processes: Update on Implementation Progress and State Impacts;
      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, State Operations Handbook for the Unemployment Insurance
       (UI) Benefit Accuracy Measurement (BAM) Program, 5th Edition (November 2009); and
      ET Handbook No. 401, 4th Edition, UI Reports Handbook No. 401.

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. Therefore, the SQSP is the part of the process
   by which states receive Federal UI administrative grants.

   ET Handbook No. 336 contains general instructions for the SQSP (See UIPL No. 3-10). 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. The Employment and Training Administration (ETA), in the U.S.
   Department of Labor (Department), issues this annual SQSP UIPL with additional planning

   guidance that supplements the Handbook and provides direction and instructions specific to
   the upcoming FY.

4. National Priorities. In addition to focusing on state performance and integrity, the SQSP
   process also focuses on aligning state UI administration and operations with national policies
   and priorities for paying benefits accurately and timely and providing reemployment
   services.

   Each year, after consulting with our stakeholders, ETA establishes national priorities for the
   UI program. For FY 2017, ETA’s top priorities include a continued focus on the prevention,
   detection, and recovery of improper payments; improved program performance; WIOA
   provisions that relate to the UI program; robust and innovative reemployment service
   delivery strategies for UI claimants to speed their return to work; and strategies to improve
   detection of misclassified workers.

   ETA provides the following national priorities for FY 2017 to help states develop their SQSP,
   including the establishment of state-level priorities for the UI program.

   Improving State Capacity to Administer and Operate the UI Program Effectively

   The UI program continues to be a critical safety net for eligible American workers who are
   unemployed and are able to work, available to work, and actively seeking work. States are
   continuing to struggle with administrative and operational challenges, including those that
   were a result of the Great Recession. An example of those challenges include: new program
   leadership in many states; a greater demand to make program improvements and/or to
   implement new technology solutions; the need to reduce staffing levels as workload
   diminishes; loss of key subject matter expertise due to retirements; many new staff who are
   still learning the program; and struggles to improve program performance. As states
   continue to develop and implement new strategies to improve program accountability and
   integrity, we strongly encourage states to develop their SQSPs to incorporate administrative
   capacity-building strategies such as:

      Conducting a business process analysis to identify opportunities for improving program
       operations, and implementing recommendations from the analysis to improve
       performance;

      Using Supplemental Budget Request opportunities to implement strategies most likely to
       enhance state capacity by using information technology to improve staff productivity,
       implement new tools and strategies to reduce improper payments, and improve program
       performance;

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

      Using 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).

ETA is eager to work with states to make the SQSP process a meaningful management tool
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

Despite the aggressive efforts states have made to improve program integrity over the last six
years, the UI program remains out of compliance with the Improper Payment Elimination
and Recovery Act (IPERA) of 2010 as a result of having an improper payment rate that
exceeds 10 percent nationally. 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, intensified effort for ETA and the states to
work collaboratively to aggressively reduce improper payments.

ETA will continue to work with states to actively improve prevention, detection, and
recovery of improper payments. ETA is expecting states to continue to implement national
integrity strategies that focus on the largest national root causes including:

 Payments to individuals who continue to claim benefits after they have returned to work
  (Benefit Year Earnings);
 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);
  and
 Failure of claimants to comply with the state’s work search requirements (Work Search).

Additionally, 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.

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 2017, ETA will
continue the following strategies to meet this objective:

   Continue to provide intensive technical assistance to support performance improvements
    for states with sustained poor performance;
   Continue to 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.

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, of which UI is one; the type of UI career services that must be provided in one-stop
centers; and new language in amendments to the Wagner-Peyser Act that speak to the types
of employment services that should be available to UI claimants. WIOA seeks to modernize
the workforce system to provide comprehensive, integrated and streamlined services, which
requires linking and aligning the different one-stop partners.

As a mandatory one-stop partner, the UI program continues to be a vital program within the
workforce system and UI claimants continue to be critical customers for the system. As
such, UI state agencies play an important role in the implementation of WIOA and must
work collaboratively with workforce system programs to fully connect UI claimants to the
full range of reemployment services delivered through the American Job Centers (AJCs), on-
line systems, and through the states’ rapid response programs. States are strongly
encouraged as they develop their SQSPs to address implementation of the WIOA provisions
as it relates to the operations of the UI program.

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 with the enactment of WIOA. In FY 2015,
ETA made important changes to the Reemployment and Eligibility Assessment (REA)
program, now called the Reemployment Services and Eligibility Assessment (RESEA)
program. Funding for this program may now be used for the delivery of reemployment
services. In addition, there is a new focus on targeting those claimants that are most likely to
exhaust their benefits and recipients of Unemployment Compensation for Ex-
Servicemembers (UCX). The goal is to provide more intensive reemployment services to
these populations, given they are more likely to have more barriers to reemployment. For
more information on the RESEA program, please see UIPL No. 13-15
(http://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=4482) and UIPL No. 07-16
(http://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=6312).

As states develop their SQSPs, they should consider including innovative and robust
reemployment strategies that are jointly developed in collaboration with workforce system
partners, including, but not limited to, the WIOA Adult and Dislocated Worker programs, the


Wagner-Peyser funded Employment Service program, and the Trade Adjustment Assistance
program. These strategies may include:

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

   Connecting UI claimants as quickly as possible to the public labor exchange systems so
    that they may start receiving job referrals immediately;

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

   Using ongoing risk assessments to determine whether UI claimants are having a difficult
    time finding a job and need additional services.

ETA recommends that UI program staff collaborate with these partners to ensure the
strategies reflect the agreement(s) made and are documented in each partner’s strategic plan.

Addressing Worker Misclassification

States should monitor their performance under the Effective Audit Measure (See UIPL No.
03-11 (http://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 state-driven strategies to address the
misclassification of workers and to include those strategies in the state’s SQSP. ETA will
continue to identify state “best practices” in this area and share them broadly. The UI CoP
provides the states the ability to review and select best practices from other states that they
can implement to address the issue of worker misclassification.

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

The Government Performance and Results Act of 1993 (GPRA) 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 2017, 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 link below
for the GPRA goals for FY 2017:
http://www.oui.doleta.gov/unemploy/docs/GPRA_Summary_Report.asp.


        Strategic Goal 4: Secure retirement, health, and other employee benefits and, for
        those working, provide income security.
        Strategic Objective 4.1: Provide income support when work is impossible or
        unavailable and facilitate return to work.

           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.

           Detect Benefit Overpayments
            o Target: Overpayments established will be at least 61.4 percent of the estimated
               detectable, recoverable overpayments.

           Establish Tax Accounts Promptly
            o Target: 88.0 percent of status determinations for new employers will be made
               within 90 days of the end of the first quarter in which liability occurred.

            Employment Rate at Second Quarter After Exit: The employment rate at the second
             quarter after exit for all UI claimants registered with the Wagner-Peyser system
             includes all participants, regardless of whether or not they came into the program
             employed. The data for the implementation of the WIOA measure will require new
             reporting by the states. The new reporting is expected to begin in July 2016, with
             first reports due in November 2016. A target will be implemented upon availability
             of adequate data to conduct analysis and to establish an annual national target for
             this measure. ETA expects to establish a national target for this measure in FY
             2019.

5.   Impact of WIOA on the SQSP Process.

     A key goal for the UI program is to help ensure that claimants are able to successfully return
     to work. As such, the SQSP must reflect coordination with other WIOA programs to ensure
     a coordinated effort and integrated service delivery. The coordination must be described in
     the State Plan Narrative portion of the SQSP.

     WIOA provides the option for states to include program plans for mandatory one-stop
     partner 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 beginning with the FY 2016 SQSP. However, it should be
     noted that 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.

     The WIOA state plans were due by April 1, 2016. States electing to include UI in a
     Combined Plan were to have incorporated the SQSP in its entirety into the Combined Plan
     through the Combined State Plan process. Subsequent SQSPs are to be incorporated into the
     Combined Plan upon approval of the SQSP. ETA has provided technical assistance on


   WIOA state planning processes and will continue to provide assistance and guidance as
   necessary.

   To include the SQSP, states must cut-and-paste the SQSP documents into the WIOA State
   Plan Portal. However, the Portal has limitations, and not all approved SQSP documents can
   be incorporated into the Portal. 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 must include the unsigned Microsoft Word version of the
      Transmittal letter into the Portal. States are to add a note at the end of this section in the
      Portal that the signed copy of the “Transmittal Letter” is maintained with the state agency
      and the RO.

    2. SQSP Narrative, CAPs, and 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 must use the Microsoft Word version of the
      CAP, IAP, and Narrative forms.

    3. Budget Worksheets/Forms: The Portal does not support Adobe PDF; therefore, states
      are to add a note at the end of the section that includes information from the SF 424: the
      title, description, funding total, project start and end date, and the name of the authorizing
      representative. The note also is to 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 are to 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 is to 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
      must include the unsigned version of the Signature Page. The approving official’s name
      is to be typed on the form that is submitted into the Portal. States are to 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.

6. 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 2017.

   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, Corrective Action Plans (CAPs) and/or Narratives are expected
whenever a state’s performance does not meet established criteria for the SQSP measurement
period (see Attachment A) and remains uncorrected before the preparation of the SQSP.
The measurement period for the FY 2017 SQSP is April 1, 2015 – March 31, 2016, unless
otherwise indicated. 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.

SQSP Preparation and 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 (formerly called SQSP Lite).

SQSP Biennial Submittal: The Biennial SQSP consists of a complete SQSP package. It
must contain a transmittal letter, the State Plan Narrative, CAPs, the IAP, budget
worksheets/forms, assurances, 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. A sample CAP format for the two-year
planning cycle is in ET Handbook No. 336, 18th Edition, Change 3.

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.

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, budget worksheets, organizational
chart, SQSP Signature Page, CAPs for new performance deficiencies, and required
modifications to existing CAPs. 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 regional office reviews of state performance
    data during the most recent performance year.

Additionally, 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 Biennial
SQSP and the alternate year submittal.

Additional descriptions of the formal SQSP submittal, SQSP Alternatate 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.

The "At-Risk" Process (Old Process)

ETA’s goal is to ensure that states are implementing “…methods of administration …
reasonably calculated to ensure full payment of unemployment compensation when due,” in
accordance with section 303(a)(1), SSA. To that end, ETA had previously identified
persistently low performing states as "At-Risk," requiring greater technical assistance and
monitoring from the regional and National offices. This collaborative process between ETA
and these states is expected to identify impediments to achieving performance standards;
action steps designed to improve performance; and technical assistance strategies. 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.”

States that have been identified as “At-Risk” in previous years because of consistently
significant low performance for the first payment and appeals timeliness measures will
continue to work collaboratively with ETA to achieve performance improvement. The “At-
Risk” designation will continue until the state meets the standard 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.

High Priority States (New Process)

As part of the reengineering of its program oversight and accountability processes, ETA has
developed a new process for identifying states that are considered to be “High Priority” and
in need of more intensive technical assistance. Please refer to TEN Nos. 8-14 and 3-15 for
details. The new High Priority Model is designed to take a variety of important program
performance measures relating to UI benefit payment performance, integrity, and operations
and to produce a score for each state. The methodology was developed to include integral
parts of UI Performs core measures, data validation results, and program integrity-related
data.

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 new 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 new High
   Priority designation framework and process are outlined in UIPL No. 17-16.

   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 Assurances H, Assurance of Contingency
   Planning and J, 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.

   States must:

      Review and/or update, and test the its IT Contingency Plan annually;

      Review and/or update its System Security Plan annually; and

      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.

7. UI Program Performance and Criteria for FY 2017.

   Core Measures

   Performance below the ALPs for Core Measures is expected to be addressed in a CAP unless
   otherwise indicated. Additional instructions for Core Measures are as follows:

      Employment Rate (OMB 1205-0521): ETA expects to establish an ALP for this measure
       in FY 2019. The data for the implementation of the WIOA measure will require new
       reporting by the states. The new reporting is due to start in July 2016, with first reports
       expected in November 2016. This measure will be implemented upon availability of
       adequate data in order to establish the ALP.


   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 states generally 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 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 should 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, 2016; the performance period for the BAM component is the
    three-year period ending September 30, 2015.

   UI Integrity Measure - Benefit Year Earnings (BYE)

    The UI Integrity Measure for BYE errors addresses a leading cause of UI improper
    payments – individuals who continue to claim benefits after returning to work.
    Performance will be measured by the state’s BYE overpayment rate, estimated by the
    BAM survey, rather than the amount overpaid to control for year-to-year changes in
    benefit outlays. Per UIPL No. 34-11, Change 2, the ALP for the calendar year (CY) 2015
    performance period is a 25 percent reduction in the state’s CY 2012 to CY 2014 baseline
    BYE rate. A state will meet the ALP if: 1) its BYE overpayment rate decreases during
    the performance period by the percentage decrease specified for the period; or 2) its BYE
    overpayment rate decreases during the performance period and the rate is below the
    national BYE overpayment rate by the target percentage decrease. States failing to meet
    the ALP for the UI Integrity Measure for BYE will be expected to develop a CAP as part
    of the FY 2017 SQSP. The CAP will address performance for CY 2015.

   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 CY 2015 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 Unemployment
       Compensation for Ex-Servicemembers (UCX) programs.

       During the past years, ETA used a methodology which subtracted UI overpayment
       recoveries for the computation of the estimated improper payment rate. The Improper
       Payments Elimination and Recovery Improvement Act of 2012 (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 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 new
       methodology. This new methodology for the computation of the improper payment rate
       will become effective for the states with the FY 2017 SQSP cycle.

       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 2015 IPIA performance period (July 1, 2014 to June 30, 2015).
       States failing to meet the ALP for the 2015 IPIA performance period will be expected to
       develop a CAP as part of the FY 2017 SQSP.

      UI Overpayment Recovery Measure

       Pursuant to Section 3(a)(3)(F) of IPERA and 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 65 percent for the
       2015 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
       to June 30 of the IPIA reporting year). Pursuant to the UI Reports Handbook (ET
       Handbook No. 401, 4th edition), the June quarter ETA 227 reports are due August 1st.
       States failing to meet the ALP for the 2015 IPIA performance period will be expected to
       develop a CAP as part of the FY 2017 SQSP.

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.


UI Programs

     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. 3-07 and UIPL No. 3-07, Change 1, must be addressed
      in a CAP for FY 2017.

     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, 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, 2016. DV items that fail to pass
      validation or that are due but not submitted are expected to be addressed in the state’s
      FY 2017 SQSP. Non-submitted items include failures to certify that Module 3 of the
      DV Benefits and Tax Handbooks are up-to-date during the April 1 – June 10, 2016
      certification window.

      Any DV items due for Validation Year (VY) 2016 that do not pass or are not
      submitted by the June 10, 2016, deadline, must be addressed in a CAP for FY 2017.

      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 2017 SQSP CAP will include DV items failing after review in the VY 2016
        monitoring cycle (monitored between June 11, 2015 and June 10, 2016). All
        subsequent SQSP cycles will address items changed from pass to fail in the previous
        year’s monitoring review.

       UI Program Integrity

        IPERA requires agencies to ensure that their managers and accountable officers
        (including the agency head), programs, and, where applicable, states and localities,
        are held accountable for reducing improper payments. States are required to report
        their planned activities to prevent, detect, reduce, and recover improper UI payments
        in their Program Integrity Action Plan, which should be submitted as part of their
        annual SQSP submission.

        To update their Program Integrity Action Plan, 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 Web site at http://www.dol.gov/dol/maps/map-
        ipia.htm. 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 of Excellence. 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.

        The format and instructions for the UI Program Integrity Action Plan are in ET
        Handbook 336, 18th Edition, Appendix I.

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.

   The Attachment lists the performance criteria for the Core Measures, Secretary’s Standards
   and other program requirements where CAPs and/or Narratives may be required if annual
   performance is not acceptable.

8. Funding Period. The Department’s proposed FY 2017 appropriation language allows for
   obligation of UI allocations by states through December 31, 2017, 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 2017 UI funds through September 30, 2019, if
   such obligations are for automation acquisitions or competitive grants awarded to states for
   improved operations; reemployment and eligibility assessments and improper payments; or
   activities to address worker misclassification, and states would be able to obligate FY 2017
   UI funds through September 30, 2022, if such obligations are for automation acquisitions
   being carried out through a consortia of states. Therefore, if Congress adopts the proposed
   FY 2017 appropriations language, the end of the obligation period for regular state UI
   administrative funds will be December 31, 2017, for all funds except automation
   acquisitions, improved operations, reemployment and eligibility assessments, and improper
   payments or misclassification activities, which have an obligation deadline of September 30,
   2019. ETA will notify state agencies if Congress adopts this language.

9. Data Availability. 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 2017.

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: http://apply07.grants.gov/apply/FormLinks?family=15. States may
    submit the SQSP signature page electronically if the state law permits. States that do not
    submit the signature page electronically 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 2017 SQSP to the appropriate RO by the deadline set by that RO.

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

14. Attachment.
    Attachment A - Measures/Programs to be addressed in the Fiscal Year (FY) 2017 State
    Quality Service Plan (SQSP)

Attachment (official PDF: https://www.dol.gov/sites/dolgov/files/ETA/advisories/UIPL/2016/UIPL_18_16_Attachment_A_Acc.pdf)

Attachment A

                       Measures/Programs to be Addressed in the Fiscal Year (FY) 2017
                                     State Quality Service Plan (SQSP)
Core Measures                      Measurement Period               Criteria          CAP    Narrative
First Payment Promptness         Apr 1, 2015 – Mar 31, 2016          87%               √
Nonmonetary Determination                                            80%
                                 Apr 1, 2015 – Mar 31, 2016                            √
Time Lapse                                                      (combined score)
Nonmonetary Determination
                                 Apr 1, 2015 – Mar 31, 2016           75%              √
Quality – Nonseparations
Nonmonetary Determination
                                 Apr 1, 2015 – Mar 31, 2016           75%              √
Quality – Separations
                                 BPC: Apr 1, 2013 – Mar               >50%             √
                                 31, 2015;                            <95%                      √
                                 BAM: Oct. 1, 2012 –
                                 Sept. 30, 2015
Detection of Overpayments
                                 If the rate is a result of
                                 improper administration of
                                                                      >95%             √
                                 BAM and/or BPC
Average Age of Pending
                                 Apr 1, 2015 – Mar 31, 2016          30 days           √
Lower Authority Appeals
Average Age of Pending
                                 Apr 1, 2015 – Mar 31, 2016          40 days           √
Higher Authority Appeals
Lower Authority Appeals
                                 Apr 1, 2015 – Mar 31, 2016           80%              √
Quality
New Employer Status
                                 Jan 1, 2015 – Dec 31, 2015           70%              √
Determinations Time Lapse

Tax Quality (Part A: No more
than 3 tax functions failing
                                 Jan 1, 2015 – Dec 31, 2015                           √
Tax Performance System
(TPS) in a year)
Tax Quality (Part B: The
same tax function cannot fail    Jan 1, 2015 – Dec 31, 2015                           √
for 3 consecutive years)
Facilitate Reemployment Rate     1st Payments: October 1,
                                 2014 to September 30,
                                                                 Varies by State

                                 Reemployment: January 1,                              √
                                 2015 to December 31, 2015
UI Integrity Measure – Benefit   BAM batches 201501 to          25% reduction from
Year Earnings (BYE)              201552 (Dec. 28, 2014 – Dec   State’s CY 2012 - CY
                                 26, 2015)                      2014 baseline BYE
                                                                                       √
                                                                        rate
Effective Audit Measure          Jan 1, 2015 – Dec 31, 2015    Score >7;and exceed
                                                                                       √
                                                                   all 4 factors
Improper Payments Measure        BAM batches 201427 to
                                 201526 (June 29, 2014 to                              √
                                                                     < 10%
                                 June 27, 2015)
UI Overpayment Recovery          July 1, 2014 – June 30,
                                                                      65%              √
Measure                          2015

                        Measures/Programs to be Addressed in the Fiscal Year (FY) 2017
                                  State Quality Service Plan (SQSP) (cont’d)

Secretary’s Standards in
                                     Measurement Period         Criteria      CAP        Narrative
Regulation
First Payment Promptness           Apr 1, 2015 – Mar 31,
                                                                 87%            √
(IntraState 14/21 Days)            2016
First Payment Promptness           Apr 1, 2015 – Mar 31,
                                                                 93%            √
(IntraState 35 Days)               2016
First Payment Promptness           Apr 1, 2015 – Mar 31,
                                                                 70%            √
(InterState 14/21 Days)            2016
First Payment Promptness           Apr 1, 2015 – Mar 31,
                                                                 78%            √
(InterState 35 Days)               2016
Lower Authority Appeals (30        Apr 1, 2015 – Mar 31,
                                                                 60%            √
Days)                              2016
Lower Authority Appeals (45        Apr 1, 2015 – Mar 31,
                                                                 80%            √
Days)                              2016

UI Programs, etc.                  Measurement Period                      CAP           Narrative
Data Validation
    Results not submitted by      Apr 1, 2015 – Mar 31,
                                                                                √
     June 10, 2016                 2016
_________________________
 Failing/incomplete
   submission by June 10,          Apr 1, 2015 – Mar 31,
                                                                                √
   2016                            2016

Compliance with NDNH
                                   Status as of March 31,
matching requirements for                                                       √

BAM
BAM operations not compliant
with investigative and /or
                                   Jan 1, 2015 – Dec 31, 2015                   √
method and procedure
requirements
Incorrect recording of the Issue                                                         √
                                   Apr 1, 2015 – Mar 31,
Detection Date and/or

Determination Date
TPS Sample Reviews                 Jan 1, 2015 – Dec 31, 2015                   √
UI Program Integrity
                                                                               To be
                                                                            addressed
                                                                             in the UI
                                                                            Integrity
                                                                              Action
                                                                               Plan