UIPL_05-22.pdf

ETA Advisory File Text

EMPLOYMENT AND TRAINING ADMINISTRATION ADVISORY SYSTEM U.S. DEPARTMENT OF LABOR Washington D.C. 20210 CLASSIFICATION Unemployment Insurance CORRESPONDENCE SYMBOL OUI DFAS DATE December 20 2021 RESCISSIONS None EXPIRATION DATE September 30 2022 ADVISORY TO UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 5-22 STATE WORKFORCE AGENCIES FROM ANGELA HANKS Acting Assistant Secretary SUBJECT Implementation of Sequestration under the Budget Control Act of 2011 BCA for Mandatory Unemployment Insurance Programs for Fiscal Year FY 2022 1.Purpose. To ensure State Workforce Agencies SWAs apply the sequestration rules for FY 2022 to mandatory Unemployment Insurance UI programs. These rules include the application of sequestration on delayed benefit payments for prior FYs and the resulting administrative costs. 2.Action Requested. The Employment and Training Administration ETA advises State Administrators to provide this guidance to appropriate staff. 3.Summary and Background. a.Summary As required by the sequestration order and set out in the May 28 2021 Office of Management and Budget OMB Report to the Congress on the Balanced Budget and Emergency Deficit Control Act BBEDCA 251A Sequestration for FY 2022 a 5.7 percent reduction in non-exempt mandatory programs is effective as of October 1 2021 for FY 2022. Benefits attributable to Coronavirus Aid Relief and Economic Security CARES programs remain exempted from sequestration however the Department of Labor Department must apply sequestration to the administrative costs associated with these programs. b.Background The BCA amended the BBEDCA of 1985 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. Such action did not occur and sequestration rules have been in effect since FY 2013. 4.Sequestration in FY 2022. a.Impact on the Mandatory UI Programs. Below is a list of programs projects and activities PPAs related to the mandatory UI programs and the applicability of sequestration to each PPA. 2 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 3 Unemployment Compensation for Federal Employees UCFE and Unemployment Compensation for Ex-Servicemembers UCX 4 Benefit expenses attributable to PPAs enacted through Pub. L. 116-136 the Coronavirus Aid Relief and Economic Security CARES Act. see explanation in paragraph b. below 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 PPAs 1 The permanent Federal share of Extended Benefits EB 2 Trade Adjustment Assistance TAA funds appropriated under the Federal Unemployment Benefits and Allowances Account FUBA 3 Administrative expenses attributable to PPAs enacted through Pub. L. 116-136 the Coronavirus Aid Relief and Economic Security CARES Act. b. Impact of Sequestration on Benefit Costs for CARES Act PPAs. As stated above the sequestration order set out in OMB s Report to Congress requires a 5.7 percent reduction to budget authority approved for FY 2022. The PPAs established through enactment of the CARES Act as amended expired September 6 2021. Although residual benefit payments will continue to be issued to claimants beyond the expiration of these programs the Department in consultation with OMB has determined these residual benefit payments to be obligations incurred when the week of unemployment was experienced. Therefore residual benefit payments will continue to be charged to the FY 2021 budget authority and will not be subject to the 5.7 percent sequestration reduction. c. Impact of Sequestration on Administrative Costs for CARES Act PPAs. The administrative expenses to be paid in FY 2022 for CARES Act programs are treated differently than CARES Act benefit costs paid in FY 2022. Administrative costs for CARES Act programs will require new budget authority for FY 2022 and will be subject to a 5.7 percent reduction. The National Office will apply the sequestration reduction to amounts prior to issuing the administrative funding to state grants. d. Impact of Sequestration on EB. The permanent 50 percent Federal share of EB benefits authorized in the Federal-State Extended Unemployment Compensation Act EUCA of 1970 remains subject to sequestration. The applicable percentage of sequestration reduction to the permanent 50 percent Federal share of EB costs for FY 2022 is 5.7 percent starting with weeks of unemployment ending on October 2 2021 and concluding with weeks of unemployment ending on September 24 2022. Unless a state 3 amends its law to reduce EB as explained below a reduction in the Federal share 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 5.7 percent reduction to the 50 percent Federal share provided under EUCA. For any EB payments related to the permanent EB program as authorized by EUCA made in FY 2022 the FY 2022 sequestration reduction of 5.7 percent must be applied. Authority for States to Reduce EB Weekly Benefit Amounts due to Sequestration Under 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 EUCA. However section 256 h 2 of BBEDCA 2 U.S.C. 906 i 2 permits states to reduce EB WBAs if the Federal share of EB 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. 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. As a condition of reducing EB WBAs 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 EB reductions due to sequestration must provide notice to claimants and an opportunity to appeal the calculation of the amounts. The notice should also inform claimants that appeal of the sequestration reduction itself will not succeed as sequestration is mandated by Federal law. Any state considering a change in state law to reduce the WBA is encouraged to work closely with ETA to ensure conformity with Federal UC law. e. Impact of Sequestration on TAA. The applicable percentage of reduction to TAA is 5.7 percent in FY 2022. 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 4 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. 5. Inquiries. Please direct inquiries to the appropriate ETA Regional Office. 6. 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 of 2011 Budget Control Act of 2011 BCA Pub. L. 112-25 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 Families First Coronavirus Response Act of 2020 Pub. L. 116-127 Coronavirus Aid Relief and Economic Security CARES Act of 2020 Pub. L. 116-136 Unemployment Insurance Program Letter UIPL No. 23-08 issued July 7 2008 Supplemental Appropriation Act 2008 Title IV Emergency Unemployment Compensation and its changes 1 through 6 UIPL No. 04-10 Change 3 Emergency Unemployment Compensation Program Extension and Modification Extended Benefits Temporary Provisions Extension and Expiration of Federal Additional Compensation issued July 23 2010 UIPL No. 04-10 Change 9 Extension and Modification of Emergency Unemployment Compensation 2008 EUC08 and Extension of Temporary Extended Benefits EB Provisions issued March 5 2012 UIPL No. 22-12 Short-Time Compensation Provisions in the Middle Class Tax Relief and Job Creation Act of 2012 issued June 18 2012 UIPL 18-19 Implementation of Sequestration under the Budget Control Act of 2011 BCA for Mandatory Unemployment Insurance Programs for Fiscal Year FY 2020 issued September 16 2019 UIPL 12-21 Implementation of Sequestration under the Budget Control Act of 2011 BCA for Mandatory Unemployment Insurance Programs for Fiscal Year FY 2021 issued January 19 2021 Office of Management and Budget OMB Report to the Congress on the Joint Committee Reductions for Fiscal Year 2020 dated March 18 2019 Office of Management and Budget OMB Report to the Congress on the Joint Committee Reductions for Fiscal Year 2021 dated February 10 2020 and Office of Management and Budget OMB Report to the Congress on the BBEDCA 251A Sequestration for Fiscal Year 2022 dated May 28 2021. 7. Attachments. Not applicable.