UIPL_9-13_Change_1_Acc.pdf

ETA Advisory File Text

RESCISSIONS None EXPIRATION DATE Continuing EMPLOYMENT AND TRAINING ADMINISTRATION ADVISORY SYSTEM U.S. DEPARTMENT OF LABOR Washington D.C. 20210 CLASSIFICATION Unemployment Insurance CORRESPONDENCE SYMBOL OUI DPM DATE ADVISORY UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 9-13 Change 1 TO STATE WORKFORCE AGENCIES FROM PORTIA WU Assistant Secretary SUBJECT Integrity Performance Measure for Unemployment Insurance 1. Purpose. To inform State Workforce Agencies SWAs about a revision of the improper payment rate methodology for Unemployment Insurance Performs Core Measures. 2. References. Improper Payments Information Act of 2002 IPIA Public Law Pub. L. 107-300 31 U.S.C. 3321 note Improper Payments Elimination and Recovery Act of 2010 IPERA Pub. L. 111-204 31 U.S.C. 3301 note and 3321 note Improper Payments Elimination and Recovery Improvement Act of 2012 IPERIA Pub. L. 112-248 31 U.S.C. 3321 note U.S. Department of the Treasury Interim Rule with Requests for Comments Offset of Tax Refunds Payments To Collect Delinquent State Unemployment Compensation Debts 76 F.R. 5070 Notice Requesting Public Comment on Two Proposed Unemployment Insurance UI Program Performance Measures to Meet Reporting Requirements in the Improper Payments Elimination and Recovery Act of 2010 IPERA 77 F.R. 7602 Executive Order E.O. 13520 Reducing Improper Payments November 20 2009 Office of Management and Budget OMB Circular No. A-123 Appendix C Parts I II and III Revised Requirements for Effective Measurement and Remediation of Improper Payments and OMB Memorandum M-15-02 Appendix C to Circular No. A-123 Requirements for Effective Estimation and Remediation of Improper Payments Oct. 20 2014 Unemployment Insurance Program Letter UIPL No. 02-09 Recovery of Unemployment Compensation Debts Due to Fraud or to Working while Claiming Benefits from Federal Income Tax Refunds 2 UIPL No. 9-13 Integrity Performance Measures for Unemployment Insurance Benefits Accuracy Measurement BAM State Operations Handbook ET Handbook No. 395 5 th edition and Unemployment Insurance Reports Handbook ET Handbook No. 401 4 th edition . 3. Background. The Improper Payment Information Act IPIA as amended requires agencies of the executive branch including the Department of Labor in accordance with guidance from the OMB to review their respective programs and activities to identify those that may be susceptible to significant improper payments estimate the amount of those improper payments overpayments and underpayments using a standardized method determined by OMB and report to Congress on those estimates and corrective actions the agency is taking to reduce future improper payments. In 2010 the Improper Payments Elimination and Recovery Act IPERA amended IPIA to clarify and enhance the responsibilities of federal agencies. Under the combined requirements of IPIA IPERA and the governing OMB guidance each covered agency must comply with a number of obligations among them Conducting periodic reviews at least once every three fiscal years FY of programs and activities susceptible to significant improper payments. Significant improper payments are defined as gross annual improper payments by a program in the preceding FY that exceed either 1 10 million and 1.5 percent of program outlays as of FY 2013 or 2 100 million in improper payments regardless of the improper payment percentage of total program outlays Include a statistically valid estimate of the improper payments made by each program or activity it identifies as susceptible to significant improper payments in its annual financial statement and Included with its estimate 1 a report on actions it is taking to reduce improper payments and 2 for programs or activities expending 1 million or more annually a report on actions to recover improper payments that have been identified in recovery audits that agencies are now required to conduct when such audits are determined to be cost-effective. In addition when compiling its plan to reduce improper payments an agency must set OMB-approved reduction targets and a timeline for future levels of improper payments. The IPERA also requires that the Inspector General IG of each agency report annually on whether the agency is in compliance with the requirements and amendments put in place by the statute. To be in compliance with the law all programs and activities above 1.5 percent and 10 million or 100 million must keep improper payments below 10 percent. Each year the Employment and Training Administration ETA reports integrity rates for the UI program in the Department s Agency Financial Report AFR as required by the IPIA and the IPERA. Prior to 2013 the improper payment rate included all overpayments and underpayments estimated from the BAM survey. For the 2013 IPIA IPERA reporting period ETA and OMB developed a new methodology for calculating the UI improper payment rate which subtracted UI overpayment recoveries reported on the ETA 227 report from total overpayments. However on January 10 2013 the IPERIA of 2012 was enacted requiring agencies to include all identified improper payments in the reported estimate and explicitly 3 preclud ing netting out recoveries. As a result ETA worked with OMB to identify a new methodology for estimating the UI improper payment rate for FY 2014. This new methodology no longer nets out recoveries but excludes improper payments that are determined to be technically proper under state UI law. The payments that are deemed to be technically proper by BAM audit investigators are those which meet applicable state statutory requirements. Reasons that certain payments are determined to be technically proper under state UI law include Finality Reasons This includes payments with an eligibility issue s but the state cannot take official action to establish an overpayment for recovery because the time elapsed between the decision to pay the claimant and the detection of the eligibility issue exceeds the period established in state law for establishing an improper payment. In other words such payments are considered final under the state UI law and cannot be legally established for recovery. Other Reasons This category includes payments with an eligibility issue s but the state does not take official action to recover the overpayment because the claimant is without fault for the error creating the improper payment and recovery would be against the state s standard of equity and good conscience. In July 2014 OMB approved the use of ETA s proposed improper payment rate estimation methodology for the FY 2014 IPIA reporting period. 4. Improper Payment Rate Measure. This section provides the new definition and calculation of the new measure which becomes effective for states in IPIA 2015 July 2014 to June 2015 and reiterates the Acceptable Levels of Performance ALP performance period and requirements for failure to meet the performance standard. Definition UI benefits overpaid plus UI benefits underpaid divided by the total amount of UI benefits paid. Overpayments underpayments and total UI benefits paid are 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. Overpayments and underpayments that are determined to be technically proper under state UI law for finality and other reasons are excluded from the measure. Calculation The improper payment rate is estimated according to the following formula The overpayment underpayment and total amount of UI benefits paid components of the measure are calculated from BAM using data elements provided in Attachment. The new methodology will be effective for the 2015 IPIA reporting period. 4 ALP IPERA requires an improper payment rate of less than 10 percent for each program and activity for which an estimate was published under the IPIA. An improper payment is defined as any payment that should not have been made or that was made in an incorrect amount including both overpayments and underpayments. In accordance with IPIA and IPERA requirements the Department maintains an ALP of less than 10 percent in the IPIA 2014 reporting period. Performance Period The performance period will be based on BAM data for the IPIA reporting period July to June BAM sampling weeks referred to as batches YYYY27 to YYYY 1 26. The IPIA 2015 performance period will include BAM batches 201427 to 201526. Per the BAM State Operations Handbook ET Handbook No. 395 5 th edition 98 percent of BAM cases must be completed within 120 days after the week ending date of the BAM sampling batch. Therefore state performance will be based on BAM sample cases completed closed by the BAM supervisor by close of business October 28 2015 120 days after the ending date for batch 201426 . Sampling Error Because the BAM component of this measure continues to be based on sample data the sampling error of the estimated BAM improper payment rate will continue to be taken into account when determining whether or not a state meets the ALP. As such the Department will continue to compute the sampling errors of the estimated overpayments and underpayments using a probability threshold of 5 percent or less in the confidence interval used to determine whether or not a state s improper payment rate exceeds the 10 percent ALP with statistical significance. Failure to meet the ALP States failing to meet the ALP for the 2015 IPIA reporting period will be expected to develop a corrective action plan CAP as part of the FY 2017 State Quality Service Plan SQSP . 5. Action Requested. Copies of this directive should be provided to all pertinent units within the SWAs. 6. Inquiries. Questions should be addressed to the appropriate Regional Office. 7. Attachment. Attachment BAM Data Elements Used to Compute the Improper Payment Rate