UIPL Modernization Attachment A

Attachment I
Modernization Incentive Payments – Overview

IN GENERAL
Section 2003(a) of Public Law 111-5 added new subsection (f) to Section 903, SSA, to provide
for incentive payments to states.
These incentive payments are calculated in the same manner as a “Reed Act” distribution. This
means each state’s share is based on its proportionate share of FUTA taxable wages multiplied
by the $7 billion authorized by the amendments. For purposes of computing each state’s
proportionate share, the Secretary of Labor will use the taxable wages that would have been used
for calculating any Reed Act distribution occurring on October 1, 2008. As provided by Section
903(f)(1)(B), SSA, tax year 2007 data is used for determining each state’s share.
A state’s share will be reserved in the Federal Unemployment Account (FUA) in the UTF for
purposes of making incentive payments. As of the close of Federal fiscal year 2011 (that is,
September 30, 2011), this limitation expires, and any unused amounts again become available for
any FUA use.
A state’s eligibility for its maximum incentive payment is conditioned on its law containing
specific provisions:
•

To obtain the first one-third of its share, the state law must provide for either a base
period that uses recent wages or an alternative base period (ABP) using recent wages.
This “base period provision” is discussed in Attachment II.

•

If a state qualifies under this base period provision, it may obtain the remaining twothirds if its state law contains two of four options related to benefit eligibility. These
options are discussed in Attachment III.

STATE APPLICATIONS
In General. The state must apply to the Department of Labor to receive any incentive payment.
A complete application must document which provisions of state law meet the requirements for
obtaining an incentive payment as interpreted by this UIPL. The application must also describe
how the state intends to use any incentive payment to improve or strengthen the state’s UC
program. Attachment II discusses what constitutes a complete application for purposes of the
base period provision and Attachment III discusses what constitutes a complete application for
purposes of the other benefit eligibility provisions.

Applications are to be signed by the state agency administrator and addressed to:
Cheryl Atkinson
Administrator
Office of Workforce Security
200 Constitution Avenue NW
Room S-4231
Washington, DC 20210
States may submit applications by mail, fax, or e-mail. States may fax applications to 202-6932874 to the attention of the Division of UC Legislation. E-mail submissions should be sent to
[email protected] with a cc to [email protected]. Copies should be provided
to the appropriate Regional Office. For purposes of determining the date of receipt (as described
immediately below), the date of receipt in the National Office will be used.
Review Process. Within 30 days of receipt by the Department of a state’s complete application,
the state will be notified whether it qualifies for an incentive payment. If it does, the Secretary of
Treasury will transfer the amount of the incentive payment within seven days of receipt of the
Department’s certification. Since all incentive payments must be made before October 1, 2011,
and since the Department must have adequate time to review any application, all applications
must be received by the Department no later than August 22, 2011.
To expedite processing of applications and distribution of incentive payments to the states, the
Department is providing for a two-tiered application process under which a state may make one
application regarding the base period provisions and a separate application regarding the other
benefit eligibility provisions. Nothing prohibits states from making a single application.
However, since the Department anticipates relatively swift action on base period applications, it
may be advantageous for states to make two applications.
State Law Status. Applications should only be made under provisions of state laws that are
currently in effect as permanent law and not subject to discontinuation. This means that the
provision is not subject to any condition – such as an expiration date, the balance in the state’s
unemployment fund, or a legislative appropriation – that might prevent the provision from
becoming effective, or that might suspend, discontinue, or nullify it.
There is one exception to this limitation. In some cases, a state might enact a new provision of
law to qualify for the incentive payment, but delay its effective date due to implementation
requirements. In these cases, if the state law provision takes effect within 12 months of the date
of the Secretary of Labor’s certification, then the provision will be considered to be in effect as of
the date of the Secretary’s certification to the Secretary of Treasury. In the case of a provision
that is not effective until more than 12 months (which may be the case with ABP provisions) the
state should time its application so that the Secretary’s certification will be made no more than 12
months prior to its law’s effective date. Thus, for example, since the Secretary must rule on any
application within 30 days, the application should be submitted no more than 13 months before
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the state law’s effective date. Note, however, as discussed above, the Department will not
consider applications received after August 22, 2011. As a result, the latest effective date of a
provision must be on or before September 21, 2012.
RECEIPT AND USE OF INCENTIVE PAYMENTS
Following the Secretary’s certification for an incentive payment, the entire amount certified will
be transferred to the state’s account in the UTF. A state may use its incentive payment: (1) to
pay UC (including dependents’ allowances); or (2) upon appropriation of its state legislature, to
pay UC and employment service administrative costs. The conditions for administrative use of
the incentive payment are the same as those applicable to the $8 billion Reed Act distribution
made in 2002. Refer to Q&As 9 through 19 and Q&A 21 in Attachment I to TEGL 18-01 for
guidance. Like the $8 billion Reed Act distribution, there is no time limit on the use of the
incentive payment for benefit or administrative purposes. Incentive payments available for the
payment of UC must, however, be expended before the state may obtain an advance to pay UC
under Title XII, SSA.
PAPERWORK REDUCTION ACT (PRA) STATEMENT
The public reporting burden for this collection of information is estimated to average
approximately eight hours per response including time for gathering and maintaining the data
needed to complete the required disclosure.
This UIPL contains a new collection of information in the form of an application for UC
Modernization Incentive Payments. According to the Paperwork Reduction Act of 1995 (Pub. L.
104-13), no persons are required to respond to a collection of information unless such collection
displays a valid Office of Management and Budget (OMB) control number. The Department is
planning to submit an Information Collection Request (ICR) to OMB requesting a new OMB
Control Number. The Department notes that a Federal agency cannot conduct or sponsor a
collection of information unless it is approved by OMB under the PRA, and displays a currently
valid OMB control number, and the public is not required to respond to a collection of
information unless it displays a currently valid OMB control number. See 44 U.S.C. § 3507.
Also, notwithstanding any other provisions of law, no person shall be subject to penalty for
failing to comply with a collection of information if the collection of information does not
display a currently valid OMB control number. See 44 U.S.C. § 3512. The Department will
notify states of OMB’s decision upon review of the Department’s ICR, including any changes
that may result from this review process.

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