Fiscal year 2015 sequestration of delayed benefit payments

CLASSIFICATION
   EMPLOYMENT AND TRAINING ADMINISTRATION               UI
               ADVISORY SYSTEM                          CORRESPONDENCE SYMBOL
          U.S. DEPARTMENT OF LABOR                      OUI/DFAS
             Washington, D.C. 20210                     DATE
                                                        January 22, 2015

ADVISORY:       UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 2-15,
                Change 1

TO:             STATE WORKFORCE AGENCIES

FROM:           PORTIA WU /s/
                Assistant Secretary

SUBJECT:        Implementation of Sequestration under the Budget Control Act of 2011 for
                Mandatory Unemployment Insurance Programs for Fiscal Year 2015

1. Purpose. To clarify application of sequestration in Fiscal Year (FY) 2015 on delayed
   benefit payments from prior fiscal years and resulting administrative costs.

2. References.
   • Federal-State Extended Unemployment Compensation Act of 1970 (Federal-State
      EUCA) (Pub. L. 91-373);
   • Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA) (Pub. L. 99-
      177), as amended by the Budget Control Act;
   • Budget Control Act of 2011(BCA) (Pub. L. 112-25);
   • Consolidated Appropriations Act, 2012 (Pub. L. 112-74);
   • Continuing Appropriations Resolution, 2013 (Pub. L. 112-175);
   • Middle Class Tax Relief and Job Creation Act of 2012 (Pub. L. 112-96);
   • American Taxpayer Relief Act of 2012 (ATRA) (Pub. L. 112-240);
   • Unemployment Insurance Program Letter (UIPL) No. 23-08, dated July 7, 2008,
      Supplemental Appropriation Act, 2008, Title IV – Emergency Unemployment
      Compensation;
   • UIPL No. 04-10, Change 3, dated July 23, 2010, Emergency Unemployment
      Compensation Program Extension and Modification, Extended Benefits Temporary
      Provisions Extension, and Expiration of Federal Additional Compensation, and Change
      9, dated March 5, 2012, Extension and Modification of Emergency Unemployment
      Compensation, 2008 (EUC08) and Extension of Temporary Extended Benefits (EB)
      Provisions;
   • UIPL No. 22-12, dated June 18, 2012, Short-Time Compensation Provisions in the
      Middle Class Tax Relief and Job Creation Act of 2012;
   • UIPL No. 13-13, dated March 8, 2013, Implementation of Sequestration under the Budget
      Control Act of 2011 for the Unemployment Insurance Programs for Fiscal Year 2013,
      and Change 1, dated April 9, 2013, Implementation of Sequestration under the Budget


RESCISSIONS                                           EXPIRATION DATE
None                                                  Continuing

       Control Act of 2011 for the Unemployment Insurance Programs for Fiscal Year 2013 –
       Questions and Answers: Emergency Unemployment Compensation;
   •   UIPL No. 15-13, dated March 29, 2013, Unemployment Insurance (UI) Supplemental
       Funding Opportunity to Fund Costs Attributable to the Implementation of the
       Sequestration Impacts on the Emergency Unemployment Compensation (EUC) Program;
   •   UIPL No. 27-13, dated September 9, 2013, Unemployment Insurance (UI) Supplemental
       Funding Opportunity to Fund Costs Attributable to the Implementation of the
       Sequestration Impacts on the Emergency Unemployment Compensation (EUC) Program
       in Fiscal Year (FY) 2014;
   •   UIPL No. 30-13, dated September 27, 2013, Implementation of Sequestration under the
       Budget Control Act of 2011 for Mandatory Unemployment Insurance Programs for
       Fiscal Year 2014;
   •   UIPL No. 2-15, dated October 15, 2014, Implementation of Sequestration under the
       Budget Control Act of 2011 for Mandatory Unemployment Insurance Programs for
       Fiscal Year 2015;
   •   Office of Management and Budget (OMB) Sequestration Preview Report to the President
       and Congress for Fiscal Year 2014 and OMB Report to the Congress on the Joint
       Committee Reductions for Fiscal Year 2014 (April 10, 2013) (Corrected Version—May
       20, 2013);
   •   OMB Sequestration Update Report to the President and Congress for Fiscal Year 2014,
       dated August 20, 2013; and
   •   OMB Report to the Congress on the Joint Committee Reductions for Fiscal Year 2015,
       dated March 10, 2014.

3. Background. The BCA amended the BBEDCA to require reductions in budgetary
   authority, known as sequestration, beginning on January 2, 2013, unless Congress passed,
   and the President signed, a bill that reduced the deficit by at least $1.2 trillion over 10 years.
   No changes to the requirements of the BBEDCA for FY 2015 have been made and the
   sequestration order requires a 7.3 percent reduction in non-exempt mandatory programs that
   went into effect on October 1, 2014, for FY 2015 (as set out in the March 10, 2014, OMB
   Report to the Congress on the Joint Committee Reductions for Fiscal Year 2015). As stated
   in the OMB report, there are no sequestration reductions applicable to discretionary
   programs, projects, and activities (PPAs) for FY 2015.

4. Impact of Sequestration in FY 2015 on Benefit Payments Delayed from Prior Fiscal
   Years and Resulting Administrative Costs. Below is a list of PPAs related to the
   mandatory UI programs subject to sequestration:

       1) Emergency Unemployment Compensation (EUC) benefits and administrative
          funding;
       2) The Federal share of Extended Benefits (EB);
       3) Federal reimbursement of state Short Time Compensation benefit costs authorized in
          section 2162 of Pub. L. 112-96; and





       4) Trade Adjustment Assistance funds appropriated under the Federal Unemployment
          Benefits and Allowances Account. The entirety of the sequestration reduction will be
          taken from funds for Training and Other Activities and not to Trade Readjustment
          Assistance or Alternative Trade Readjustment Assistance.

   Payments in FY 2015 of such benefits and related administrative costs delayed from prior
   fiscal years, for example because of appeals, are subject to the FY 2015 7.3 percent
   sequestration reduction since FY 2015 funds have been apportioned for these purposes.

5. Action Requested. State Administrators are advised to provide this guidance to appropriate
   staff.

6. Inquiries. Questions should be directed to the appropriate Regional Office.