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Unemployment insurance integrity performance measure
Summary ETA defined a state unemployment insurance integrity measure focused on benefit-year earnings overpayments, including fraud and nonfraud cases. It explained reduction targets and how state performance would be measured; two attachments provide analysis and state baseline figures. ETA now lists the letter as Canceled.
Document
Federal guidance
Agency
U.S. Department of Labor, Employment and Training Administration (ETA)
Document number
UIPL No. 34-11
Date issued
September 28, 2011
Status
Withdrawn
ETA lists this letter Canceled as of 2026-10-24, although the PDF prints “Continuing” in its expiration field.
Status last verified October 24, 2026
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UIPL34-11-ACC.pdf (https://www.dol.gov/sites/dolgov/files/ETA/advisories/UIPL/2011/UIPL34-11-ACC.pdf)
CLASSIFICATION
EMPLOYMENT AND TRAINING ADMINISTRATION UI
ADVISORY SYSTEM CORRESPONDENCE SYMBOL
OUI/DPM
U.S. DEPARTMENT OF LABOR
DATE
Washington, D.C. 20210 September 28, 2011
ADVISORY: UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 34-11
TO: STATE WORKFORCE AGENCIES
FROM: JANE OATES /s/
Assistant Secretary
SUBJECT: Performance Measure for Unemployment Insurance (UI) Integrity
1. Purpose. To provide information on the definition and implementation of the UI Performs
Core Measure for UI Integrity.
2. References. Improper Payments Information Act of 2002 (31 U.S.C. 3321 note); Improper
Payments Elimination and Recovery Act of 2010 (31 U.S.C. 3321 note); Executive Order (E.O.)
13520, 74 Fed. Reg. 62,201 (November 20, 2009); Unemployment Insurance Program Letter
(UIPL) No. 17-11; Employment and Training (ET) Handbook No. 395, 5th Edition, Benefit
Accuracy Measurement (BAM) State Operations Handbook; U.S. Department of Labor
(Department) Fiscal Year (FY) 2010 Agency Financial Report (AFR) (November 15, 2010),
http://www.dol.gov/_sec/media/reports/annual2010/2010annualreport.pdf,
3. Background. UIPL No. 17-11 described and solicited comments on a proposed UI Performs
Core Measure for UI Integrity. The performance measure is one of the strategies of the Integrity
Strategic Plan developed by the Department, which includes several other initiatives to address
the root causes of UI improper payments. The Department is required by the Improper Payments
Information Act of 2002 (IPIA) to estimate and report the annual rates and amounts of improper
payments in the UI program. The Improper Payments Elimination and Recovery Act of 2010
(IPERA), which amended the IPIA, established several criteria that Federal agencies must meet
in order to be in compliance with the law, including the requirement that the agency must have
an improper payment rate of less than 10 percent for each program for which an improper
payment estimate was obtained and published in the agency’s AFR. For the 2010 IPIA reporting
period (July 1, 2009 to June 30, 2010), the Department reported an improper payment rate of
11.2 percent (10.6 percent overpayment rate and 0.6 percent underpayment rate) in its FY 2010
AFR, page 179. In response, the Department developed an Integrity Strategic Plan to bring the
UI program into compliance with IPERA.
RESCISSIONS EXPIRATION DATE
None Continuing
The Integrity Strategic Plan also addresses the requirement of E.O. 13520, “Reducing Improper
Payments,” which directs Federal agencies “to reduce improper payments by intensifying efforts
to eliminate payment error, waste, fraud, and abuse in the major programs administered by the
Federal Government, while continuing to ensure that Federal programs serve and provide access
to their intended beneficiaries.”
The new performance measure addresses the leading cause of UI improper payments -- claimants
who return to work, fail to report earnings, and who continue to claim and collect UI benefits. In
calendar year (CY) 2010, these benefit year earnings (BYE) overpayments totaled nearly $2
billion, which represented 3.4 percent of total UI benefits paid and nearly 30 percent of all
overpayments.
4. Comments Submitted and Department Responses.
Fourteen states submitted comments in response to UIPL No. 17-11, which proposed reducing
the UI BYE fraud overpayment rate from the CY 2008 to CY 2010 baseline level by 35 percent
at the end of the first year of implementation and by 50 percent by the end of the second year of
implementation. Three states requested clarification of definitions or the methodology used to
compute the BYE fraud rates. Most states generally supported the concept of a UI integrity
performance measure. However, several states raised issues concerning the proposed definition
and implementation of the proposed measure. The Department has carefully considered these
comments and has revised the UI integrity performance measure as indicated below.
Performance Measure Defined in Terms of BYE Fraud or Five or More Weeks of Overpayments.
Five states expressed concern about how fraud would be defined or felt that the measure should
not be limited to BYE fraud or BYE overpayments of five weeks or more. These states
generally pointed out that the definition of fraud varies among states and, consequently, the
measure may reflect definitional differences rather than performance. Also, if a state changes its
fraud definition to meet the reduction target, the definition in the measurement period will differ
from the baseline period. In addition, some states emphasized the importance of reducing all
overpayments, not just fraud or overpayments of five weeks or more (see Attachment B of UIPL
No. 17-11 for a technical discussion of defining the proposed performance measure in terms of
fraud versus the number of weeks that were overpaid), and urged the definition of the measure be
broadened to include all BYE overpayments.
Department Response:
There is merit in many of the state comments with respect to interstate differences in the
definition of fraud and the need to ensure the Department is measuring state performance on a
level playing field. There is a legitimate concern that a measure limited to fraud overpayments
could have the unintended consequence of encouraging states to relax their definitions of fraud
in order to artificially reduce their fraud rates, while total BYE errors are not reduced.
In addition, the Department’s further analysis of BYE overpayments indicates a more complex
relationship between the number of overpaid weeks established and type of overpayment (fraud /
nonfraud), which is discussed in Attachment A.
The integrity performance measure will be defined to include both fraud and nonfraud
BYE overpayments, regardless of the number of weeks of benefits that were overpaid.
Reduction Targets
Eight states felt that the proposed reductions in the BYE fraud rates of 35 percent in the first year
of implementation and 50 percent in the second year were too ambitious. Four of these states
requested that implementation be stretched out to three years with alternative reduction targets.
Department Response:
The Department recognizes that the proposed reduction targets of 35 percent in the first year of
implementation and 50 percent by the end of the second year are very aggressive. However, the
magnitude of UI improper payments and the need to reduce these overpayments expeditiously
requires ambitious targets within the proposed two-year period. Extending the reduction period
to three years would adversely affect the ability of the Department to meet the 10 percent
improper payment rate criterion in IPERA. Nevertheless, the Department recognizes the many
demands on state agencies with respect to administering the UI program in a way that balances
integrity with performance. Consequently, the Department has relaxed the first year
reduction target to 30 percent.
Low Error Rate States
Six states felt that applying the same percentage reduction to all states unfairly penalizes states
with current low rates. These states pointed out that it would be very difficult for states with low
baseline rates to reduce their rates further. States that have already taken steps to reduce fraud
would be penalized, while states with high error rates that have taken few actions will be able to
achieve large initial reductions by adopting some basic measures, including redefining fraud to
include fewer overpayments.
Department Response:
The Department agrees that applying a single percentage reduction standard may penalize states
that have already implemented integrity measures to reduce their BYE error rates. Because
Benefit Accuracy Measurement (BAM) is a statistical survey, results are subject to both
sampling and nonsampling error (variation). As noted in UIPL No. 17-11, because this measure
initially would be based on sample data, the Department will follow appropriate statistical
procedures to take into account sampling error in determining whether a state meets its
Acceptable Level of Performance (ALP). Consequently, it may be difficult to detect statistically
significant changes in states with low baseline BYE rates.
To address the issue of low baseline error rates, a state will meet the ALP if: 1) its total
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.
For example, for the CY 2008 through CY 2010 baseline period, the national BYE rate was 2.92
percent. A 30 percent reduction for the first performance year would reduce the national BYE
rate to 2.04 percent. The following table summarizes several scenarios using these performance
criteria.
Performance Criteria
State State State BYE State BYE State BYE State Met State BYE Status
BYE 30% Rate for Rate Reduction Rate <=
Baseline Reduction Performance Decreased? Target? U.S. BYE
Rate Target Period Reduction
Target
(2.04%)?
A 6.5% 4.55% 4.95% Y N N Fail
B 5.2% 3.64% 5.34% N N N Fail
C 3.5% 2.45% 2.12% Y Y N Pass
D 1.9% 1.33% 1.39% Y N Y Pass
E 1.3% 0.91% 1.48% N N Y Fail
Following each performance period, a new baseline BYE rate will be computed based on the
three most recent years, and a new national threshold will be announced in a UIPL based on the
target reduction for the subsequent performance period.
Other Comments
Several states commented on other aspects of the proposed performance measure, including:
A concern about the adequacy of the sample sizes in the BAM survey to provide accurate
statistics on state performance.
Department Response: BAM is a methodologically sound statistical survey. The
Department will compute the sampling error of each state’s BYE overpayment rate for
the reporting period and conduct the appropriate statistical tests to account for sampling
variance in evaluating state performance.
A recommendation to use Benefit Payment Control (BPC) data to define a measure in
terms of reducing overpayments established that are classified as BYE fraud or reducing
the duration of fraud overpayments.
Department Response: BPC data collection cannot currently support the evaluation of
performance for this measure. State agencies report BPC data to the Department on the
Employment and Training Administration 227 Overpayment Detection and Recovery
Activities Report. This report does not provide the level of detail required to classify
overpayments by cause (BYE) or by the number of weeks that were overpaid. The
Department will seek authority under the Paperwork Reduction Act to implement the
collection of more detailed population integrity data.
A recommendation to postpone implementation of the measure until a more accurate data
collection can be implemented.
Department Response: The current improper payment rate exceeds the statutory
requirement of IPERA. The Department is required to proceed expeditiously to
implement strategies to reduce improper payments.
A statement of the need for additional consultations with the state workforce agencies to
discuss the proposed definition of the performance measure and state best practices.
Department Response: The Department is committed to maintaining close
communication and consultation with the state workforce agencies to implement this
performance measure through webinars, workgroups, and other collaborative efforts.
The Department will provide states the opportunity to share best practices through the UI
Communities of Practice (CoP) Website: http://uiworks.workforce3one.org.
A request that the Department conduct a cost/benefit study of the state burden to meet the
proposed ALP and an analysis of the impact of the measure on claimants and the public.
Department Response: Such studies would require a significant commitment of time and
resources that cannot be supported given the need, as expressed by Congress and the
President as explained above, to move expeditiously to address integrity issues.
A request for the Department to work with state agencies and employers to improve the
reporting of wage record information.
Department Response: The Department will continue to work with state agencies and
employers to facilitate the timely and accurate reporting of all claimant information,
including wage record and new hire data.
A recommendation that the measure include additional causes of improper payments
other than BYE overpayments.
Department Response: While the Department supports state efforts to address all root
causes of improper payments, the Department believes there is a particular need to focus
state efforts on reducing BYE overpayments because it is the single leading cause of
improper payments.
A concern that states could confront potential resource and programming issues when a
data collection system for the number of weeks and amounts of overpayments established
is implemented.
Department Response: As part of the authorization process for new data collection, the
Department is required under the Paperwork Reduction Act to justify any additional cost
and reporting burden and will design data collection requirements that minimize
development costs.
A recommendation that state overpayment recovery efforts be taken into account in any
measure.
Department Response: The Department is required by IPERA to develop improper
payment recovery targets. As part of this development process, the Department will
evaluate the need for a measure of overpayment recovery performance.
5. Performance Standard.
After careful consideration of the comments received in response to UIPL No. 17-11, the
Department has established the following UI Performs Core Measure for UI Integrity.
Acceptable Level of Performance (ALP): Reduce the percentage of UI benefits overpaid due
to BYE from the baseline level by 30 percent at the end of the first year of implementation and
by 50 percent by the end of the second year of implementation. As described in section 4 of this
UIPL, 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.
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.
A table of ALP targets by state is provided in Attachment B.
Benchmark Period: The benchmark period for the state’s average BYE rate is the previous
three calendar years. This will result in more accurate estimates than using a single year due to
the larger samples and will smooth out year-to-year variances due to macroeconomic factors. A
table of BYE rates by state for the CY 2008 through CY 2010 baseline period is provided in
Attachment B.
Calculation: The measure will be calculated from BAM data using the following data elements:
Dollar Amount of Key Week Error: BAM data element ei1 - defines the overpayment
amount for the key (sampled) week of benefits.
Key Week Action: BAM data element ei2 - 10 (fraud), 11 (nonfraud recoverable), 12
(nonfraud nonrecoverable), 13 (overpayment – finality), 15 (overpayment – other than
finality).
Error Cause: BAM data element ei3 - 100-119 and 150-159 - defines BYE
overpayments.
Original Amount Paid: BAM data element f13 - defines amount paid to claimant in key
week.
The rate is the ratio (expressed as a percentage) of the estimated amount of UI benefits that were
overpaid due to BYE issues to the total amount of UI benefits paid. Both the numerator and the
denominator are weighted (by the number of paid UI weeks in the BAM survey population)
estimates.
Amount overpaid due to BYE
———————————————— X 100
Amount of UI benefits paid
Performance Period: In order to include the state results for this measure in the State Quality
Service Plan (SQSP), the performance period will be based on BAM data for the CY. As
explained in the BAM State Operations Handbook (ET Handbook 395, 5th edition), 98 percent
of BAM cases must be completed within 120 days after the end of the CY (April 30, or April 29
in leap years). The first measurement period will be CY 2012.
Sampling Error: Because this measure is based on sample data, the sampling error of the
state’s estimated BYE overpayment rate will be taken into account in determining whether a
state meets the ALP.
Failure to Meet the ALP: States failing to meet the ALP will develop a Corrective Action Plan
as part of the SQSP. Performance for CY 2012 will be addressed in the FY 2014 SQSP.
Future ALPs: As states reduce their BYE overpayment rates, percentage reductions for
performance periods after CY 2013 will be adjusted to reflect ALPs that are cost effective for
state agencies to achieve.
Initially, this measure will be defined in terms of the percentage of BYE overpayments estimated
by the BAM survey. However, the Department plans to request authorization from the Office of
Management and Budget under the Paperwork Reduction Act to collect enumerative data of UI
overpayments established by state BPC activities, which will support evaluating performance for
BYE overpayments by type (fraud/nonfraud) and/or the number of weeks that were overpaid.
Data Collection Costs: Because the performance measure will initially use data collected
through the BAM survey, there are no data collection start-up costs for this performance
measure.
6. Action Requested. State Administrators are requested to provide the information in this
advisory to the appropriate staff.
7. Inquiries. All inquiries should be directed to the appropriate Employment and Training
Administration Regional Office.
8. Attachments.
Attachment A –Additional Analysis of Benefit Year Earnings (BYE) Weeks Overpaid
Attachment B – State Benefit Year Earnings Rates and Acceptable Levels of Performance
Baseline Period CY 2008 to 2010
UIPL34-11-ATT-A.pdf (https://www.dol.gov/sites/dolgov/files/ETA/advisories/UIPL/2011/UIPL34-11-ATT-A.pdf)
Attachment A
Additional Analysis of Benefit Year Earnings (BYE) Weeks Overpaid
BYE overpayments are the leading cause of UI overpayments, accounting for nearly 30 percent
of all overpayments. In terms of the amount overpaid, for the period calendar year (CY) 2008
through CY 2010, nearly 52 percent of UI benefits overpaid due to BYE issues were for
overpayments of five weeks or more.
However, the distribution of BYE overpayment cases established is quite different. Over 70
percent of BYE overpayment cases are for one week or less, and less than 12 percent of the BYE
cases are for five weeks or more.
A-1
Attachment A
This disparity is explained by the large differences in average overpayments, which range from
$59 for overpayments of less than a week to $2,245 for overpayments of five weeks or more.
Average Amount of BYE Overpayment
By Number of Weeks Overpaid - CY 2008 - CY 2010
5+ Weeks $2,245
4 Weeks $699
3 Weeks $620
2 Weeks $440
1 Week $240
< 1 Week $59
$0 $250 $500 $750 $1,000 $1,250 $1,500 $1,750 $2,000 $2,250 $2,500
Average Amount of Overpayment
The following two charts show the distribution of overpayment type (fraud/nonfraud) by the
number of weeks overpaid. Roughly half of the cases established with five or more weeks of
overpayments were classified as fraud.
Type of Error By Number of Weeks Overpaid
Percentage of Cases With BYE Overpayments -- CY 2008 - CY 2010
5+ Weeks
4 Weeks
3 Weeks
2 Weeks
1 Week
< 1 Week
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Percent of Cases with BYE Overpayments
Fraud Nonfraud
A-2
Attachment A
In terms of benefits, approximately 70 percent of the amounts overpaid for overpayments of five
weeks or more were fraud.
Type of Error By Number of Weeks Overpaid
Percentage of BYE Benefit Overpayments -- CY 2008 - CY 2010
5+ Weeks
4 Weeks
3 Weeks
2 Weeks
1 Week
< 1 Week
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Percent of Benefits Overpaid -- BYE Issues
Fraud Nonfraud
Looking at it another way, nearly one-third of fraud BYE overpayments are for fewer than five
weeks, and just over one-third of nonfraud BYE overpayments are for five weeks or more.
Distribution of BYE Amounts Overpaid
By Type of Error and Fraud Weeks Distribution
CY 2008 - CY 2010
< 1 Week - 2.3%
1 Week - 9.3%
2 Weeks - 7.2%
3 Weeks - 7.6%
4 Weeks - 6.3%
Nonfraud Fraud
46.3% 53.7%
5+ Weeks - 67.4%
A-3
Attachment A
Distribution of BYE Amounts Overpaid
By Type of Error and Nonfraud Weeks Distribution
CY 2008 - CY 2010
< 1 Week - 9.0%
1 Week - 31.3%
2 Weeks 12.6%
Fraud Nonfraud
53.7% 46.3% 3 Weeks 8.0%
4 Weeks 5.2%
5+ Weeks - 34.0%
Estimated Effect on Annual Report and Operational Rates
The following charts show the reduction in the Annual Report and Operational rates for various
levels of reduction in the BYE rate, using the CY 2010 Annual Report rate of 11.46 percent and
the CY 2010 Operational rate of 6.15 percent as the baselines. BYE overpayments represent
29.5 percent of the overpayments included in the Annual Report rate and nearly 55 percent of the
overpayments included in the Operational rate. If all states meet their reduction targets, the U.S.
BYE rate would decrease by 30 percent in the first year, and both the Annual Report and
Operational rates would decrease by approximately 1.0 percentage point. After two years of
implementation, the U.S. BYE rate would decrease by 50 percent, and both the Annual Report
and Operational rates would decrease by approximately 1.69 percentage points.
A-4
Attachment A
Estimated Reduction In Annual Report Rate
CY 2010 Baseline
Overpayment
Rate 12.0%
11.0%
10.0%
9.0%
8.0%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Percent Reduction In BYE Overpayments
Estimated Ann. Rpt. Current Ann. Rpt.
Estimated Reduction In Operational Rate
CY 2010 Baseline
Overpaym ent
Rate 7.0%
6.0%
5.0%
4.0%
3.0%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Percent Reduction In BYE Overpayments
Estimated Operational Current Operational
A-5
UIPL34-11-ATT-B.pdf (https://www.dol.gov/sites/dolgov/files/ETA/advisories/UIPL/2011/UIPL34-11-ATT-B.pdf)
Attachment B
State Benefit Year Earnings Rates and Acceptable Levels of Performance
Baseline Period CY 2008 to 2010
ST BYE Rate Amount OP 30% Reduction 50% Reduction
AK 2.89% $14,560,615 2.02% 1.45%
AL 3.41% $50,471,092 2.39% 1.71%
AR 6.63% $96,466,657 4.64% 3.32%
AZ 3.72% $77,653,369 2.60% 1.86%
CA 2.40% $642,197,838 1.68% 1.20%
CO 2.53% $40,835,305 1.77% 1.27%
CT 2.24% $68,341,772 1.57% 1.12%
DC 5.80% $29,623,978 4.06% 2.90%
DE 3.79% $18,136,378 2.65% 1.90%
FL 2.49% $178,709,153 1.74% 1.25%
GA 1.85% $44,877,741 1.30% 0.93%
HI 1.07% $10,338,979 0.75% 0.54%
IA 2.37% $42,632,597 1.66% 1.19%
ID 3.59% $32,261,408 2.51% 1.80%
IL 3.23% $325,448,799 2.26% 1.62%
IN 3.07% $121,901,218 2.15% 1.54%
KS 3.35% $53,777,732 2.35% 1.68%
KY 1.48% $32,751,057 1.04% 0.74%
LA 9.50% $104,672,070 6.65% 4.75%
MA 1.81% $116,577,547 1.27% 0.91%
MD 3.42% $91,194,789 2.39% 1.71%
ME 1.36% $8,424,729 0.95% 0.68%
MI 2.74% $214,892,752 1.92% 1.37%
MN 3.09% $105,443,697 2.16% 1.55%
MO 2.59% $62,698,280 1.81% 1.30%
MS 3.69% $27,770,864 2.58% 1.85%
MT 3.38% $9,949,616 2.37% 1.69%
NC 3.59% $217,902,731 2.51% 1.80%
ND 2.07% $4,299,636 1.45% 1.04%
NE 2.73% $12,819,192 1.91% 1.37%
NH 1.96% $10,727,978 1.37% 0.98%
NJ 4.42% $389,858,962 3.09% 2.21%
NM 3.75% $30,380,832 2.63% 1.88%
NV 5.49% $133,465,318 3.84% 2.75%
NY 2.36% $275,813,151 1.65% 1.18%
OH 2.70% $152,476,434 1.89% 1.35%
OK 2.51% $28,758,390 1.76% 1.26%
OR 3.05% $103,390,978 2.14% 1.53%
PA 3.91% $442,626,347 2.74% 1.96%
PR 4.15% $33,979,236 2.91% 2.08%
B-1
Attachment B
RI 2.58% $25,259,159 1.81% 1.29%
SC 5.18% $103,275,387 3.63% 2.59%
SD 1.22% $1,685,253 0.85% 0.61%
TN 3.60% $75,691,824 2.52% 1.80%
TX 1.88% $152,403,147 1.32% 0.94%
UT 1.94% $21,248,022 1.36% 0.97%
VA 2.36% $58,326,909 1.65% 1.18%
VT 2.05% $9,016,328 1.44% 1.03%
WA 1.37% $71,476,936 0.96% 0.69%
WI 3.38% $138,114,296 2.37% 1.69%
WV 1.51% $11,208,796 1.06% 0.76%
WY 3.99% $12,397,151 2.79% 2.00%
US 2.92% $5,139,212,425 2.04% 1.46%
Source: Benefit Accuracy Measurement CY 2008 – CY 2010 results.
B-2
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