Senate Majority Leader Harry Reid (D-NV) may seek a vote next week on legislation to extend unemployment insurance benefits (H.R. 3548). The legislation has faced several obstacles, including objections from a number of Senators to provide additional UI benefits to all states, not just those states with an unemployment rate of 8.5 percent of higher. In addition, the cost of the legislation, to be offset by an extension of the Federal Unemployment Tax Act (FUTA) surtax through June 30, 2011, has drawn concern from the Senate Minority. The compromise legislation (click here) was released late last week by the Senate Finance Committee and would expand the Emergency Unemployment Compensation (EUC) program to include four tiers of benefits (click here for a one-page NASWA analysis).
The bill was designed to allow eligible claimants in all states to receive an additional 14 weeks of EUC benefits, including those states currently activated on only the first tier of EUC. Under the original EUC law, the only way for claimants to move from one tier to the next (in a state that has triggered onto more than one tier of EUC) is by exhausting the weeks of benefits offered under the previous tier.
Lawmakers chose to modify the second tier of EUC because claimants in all states could potentially exhaust EUC tier I benefits and subsequently be eligible for the EUC tier II entitlement. If the 14 additional weeks were instead added as third tier, the only claimants eligible for the additional weeks would be those who had exhausted their tier II benefits, which would not include claimants in states activated on the first tier of EUC only (Nebraska, North Dakota, South Dakota and Utah).
The bill's modification of the second tier of EUC is similar to the expansion of EUC08 that occurred under the Unemployment Compensation Extension Act of 2008 that passed last November. Under this bill, the previously enacted EUC program (then made up of only 13 weeks of benefits available to all states) was augmented to allow 7 additional weeks of benefits for all states. When this legislation was implemented, states were required to recalculate claimants' first tier EUC entitlement to account for the additional 7 weeks; a similar action would be required by states under the proposed legislation.
Tier One: The new first tier would remain the same as current law -- providing 20 weeks of benefits to all states.
Tier Two: The new second tier would allow for an additional 14 weeks of benefits to claimants in all states. This modification of the second tier of EUC would require states to recalculate second tier EUC entitlement for claimants that have either exhausted their original EUC tier two entitlement or those in a continued claim filing status of the EUC tier two entitlement.
Tier Three: The new third tier would provide up to 13 additional weeks of benefits to states with a Total Unemployment Rate (TUR) of at least 6.0% or an Insured Unemployment Rate (IUR) of at least 4.0%.
Tier Four: The new fourth tier would provide up to 6 additional weeks of benefits to states with a TUR of at least 8.5% or an IUR of at least 6.0%.
To help explain the proposed changes to the EUC program consider four possible scenarios:
Scenario #1: A claimant exhausts his first tier of EUC benefits in a state that is not triggered onto the second tier of EUC.
Result: The claimant (if eligible) would transfer onto the new EUC tier two and begin receiving up to 14 additional weeks of benefits
Scenario #2: A claimant in a state that is currently receiving EUC tier two benefits.
Result: The state would need to recalculate the claimant's entitlement for the augmentation of one additional week of benefits.
Scenario #3: A claimant in a state who has exhausted his EUC tier two entitlement but is not receiving EB payments.
Result: In order to receive the 14 additional weeks of EUC provided under the proposed legislation, the state would need to provide the claimant with his augmented 14th weekly benefit by recalculating the maximum benefit amount from his original EUC tier two claim. Once the claimant received the recalculated final week of EUC tier two benefits, he would have exhausted the tier of benefits and be eligible to receive the 13 additional weeks of EUC under the new tier III.
Scenario #4: A claimant in a state currently receiving EB benefits (13 total weeks or 20 total weeks).
Result: The claimant could continue to receive his EB benefits until they are exhausted (under the legislation states can elect whether they want to pay EB benefits first or the additional weeks of EUC first) at which point the state would need to provide the claimant with his augmented 14th weekly benefit by recalculating the maximum benefit amount from his original EUC tier two claim. Once the claimant received the recalculated final week of EUC tier two benefits, he would have exhausted the tier of benefits and be eligible to receive the 13 additional weeks of EUC under the new tier III.
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