UIPL_12-16_Acc.pdf

ETA Advisory File Text

EMPLOYMENT AND TRAINING ADMINISTRATION ADVISORY SYSTEM U.S. DEPARTMENT OF LABOR Washington D.C. 20210 CLASSIFICATION UI CORRESPONDENCE SYMBOL OUI DFAS DATE March 29 2016 RESCISSIONS None EXPIRATION DATE Continuing ADVISORY UNEMPLOYMENT INSURANCE PROGRAM LE TT ER NO. 12-16 T O STATE WORKFORCE AGENCIES FR OM PORTIA WU s Assistant Secretary S UBJECT Implementation of Sequestration under the Budget Control Act of 2011 for Mandatory Unemployment Insurance Programs for Fiscal Year 2016 1.Purpose. To provide information to State Workforce Agencies SWAs about application of sequestration in Fiscal Year FY 2016 how the Department of Labor Department will apply sequestration to mandatory Unemployment Insurance UI programs and on delayed benefit payments from prior fiscal years and the 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 2 and Change 1 dated April 9 2013 Implementation of Sequestration under the Budget 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 and Change 1 dated January 22 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 OMB Report to the Congress on the Joint Committee Reductions for Fiscal Year 2015 dated March 10 2014 and OMB Report to the Congress on the Joint Committee Reductions for Fiscal Year 2016 dated February 2 2015. 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. As required by the sequestration order and set out in the February 2 2015 OMB Report to the Congress on the Joint Committee Reductions for Fiscal Year 2016 a 6.8 percent reduction in non-exempt mandatory programs went into effect on October 1 2015 for FY 2016. There are no sequestration reductions applicable to discretionary programs projects and activities PPAs for FY 2016. 4. Impact of Sequestration in FY 2016 on Benefit Payments Delayed from Prior Fiscal Years and Resulting Administrative Costs. Payments in FY 2016 of benefits and related administrative costs relating to the programs listed below in this section that are delayed from prior fiscal years for example because of appeals are subject to the FY 2016 6.8 percent sequestration reduction since FY 2016 funds have been apportioned for these purposes 1 Emergency Unemployment Compensation EUC benefits and administrative funding and 2 The Federal share of Extended Benefits EB . 3 5. Impact of Sequestration on the Mandatory UI Programs in FY 2016. Below is a list of PPAs related to the mandatory UI programs and the applicability of sequestration to each PPA. The following PPAs are exempted from sequestration 1 Unemployment compensation paid by a state from its account in the Unemployment Trust Fund 2 Title XII Social Security Act SSA advances to states and 3 Unemployment Compensation for Federal Employees UCFE and Unemployment Compensation for Ex-Servicemembers UCX . Note The Federal Emergency Management Agency advises that there is no impact on Disaster Unemployment Assistance DUA administrative funding or benefits. Sequestration applies to the following mandatory PPAs 1 The Federal share of Extended Benefits EB and 2 Trade Adjustment Assistance funds appropriated under the Federal Unemployment Benefits and Allowances Account FUBA . 6. Impact of Sequestration on EB. The applicable percentage reduction to the Federal share of EB benefit costs is 6.8 percent starting with weeks of unemployment ending on October 3 2015 and ending with weeks of unemployment ending on September 24 2016. Unless a state were to amend its law to reduce EB benefits as explained below reduction in Federal sharing of EB due to sequestration means the state becomes responsible for paying the remaining EB share from its own funds i.e. the amount represented by the 6.8 percent reduction. Authority for States to Reduce EB Weekly Benefit Amounts due to Sequestration Under the Federal-State EUCA the EB weekly benefit amount WBA is the amount of regular compensation including dependents allowances under the State law payable to such individual for such week for total unemployment. Section 202 b 2 Federal-State EUCA. However 2 U.S.C. 906 i 2 BBEDCA section 256 h 2 permits states to reduce EB WBAs if the Federal share of EB benefit costs is reduced under a sequestration order. That section provides A A State may reduce each weekly benefit payment made under the Federal-State Extended Unemployment Compensation Act of 1970 for any week of unemployment occurring during any period with respect to which payments are reduced under an order issued under section 904 of this title by a percentage not to exceed the percentage by which the Federal payment to the State under section 204 of such Act is to be reduced for such week as a result of such order. 4 B A reduction by a State in accordance with subparagraph A shall not be considered as a failure to fulfill the requirements of section 3304 a 11 of Title 26. State law must authorize the reduction in EB WBAs as specified in the BBEDCA. Note that actual reductions in Federal spending could not be achieved if WBAs are reduced without also reducing individuals remaining entitlement or maximum benefit amount MBA for EB. For this reason state law must also provide for reductions in EB remaining entitlement and MBA if it provides for reducing EB WBAs. Any state amending its law to provide for these EB reductions must provide notice to claimants and an opportunity to appeal the calculation of the amounts but not to appeal the reduction itself. 7. Impact of Sequestration on EUC. EUC funding for both benefits and administration is subject to a sequestration reduction of 6.8 percent in FY 2016. Although any residual EUC benefit payments made in FY 2016 would relate to benefit weeks that occurred in prior fiscal years the FY 2016 sequestration reduction of 6.8 percent should be applied to any EUC benefit payments made in FY 2016. EUC administration is funded quarterly in combination with above-base workload for regular UI. The sequestration reduction of 6.8 percent will be applied to above-base funds provided to the state for the administration of EUC. Although the EUC program expired on January 1 2014 the Department will continue to provide administrative funds to cover residual EUC administrative workloads. 8. Impact of Sequestration on TAA . The applicable percentage of reduction to Trade Adjustment Assistance is 6.8 percent in FY 2016. As in previous fiscal years using the flexibility under BBEDCA the Department will apply the full TAA Program sequestration to the funding for Training and Other Activities which are the funds available for training employment and case management services out-of-area job search relocation allowances and related administrative expenses. The reductions will not be applied to Trade Readjustment Allowances TRA Reemployment Trade Adjustment Assistance RTAA benefits or Alternative Trade Adjustment Assistance ATAA available under the TAA Program. 9. Action Requested. State Administrators are advised to provide this guidance to appropriate staff. 10. Inquiries. Questions should be directed to the appropriate Regional Office.