North Carolina Department of Commerce Division of Employment Security FISCAL NOTE

Similar documents
GENERAL ASSEMBLY OF NORTH CAROLINA SECOND EXTRA SESSION 1996 CHAPTER 13 HOUSE BILL 18

RECITALS. NOW, THEREFORE, in consideration for the mutual promises herein, the parties agree as follows: I. DEFINITIONS

GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 2013 H 3 HOUSE BILL 680 Committee Substitute Favorable 5/9/13 Committee Substitute #2 Favorable 6/19/13

Attachment A Page 1 of 15 Below is the text of the rule change. New language is underlined; deletions are in brackets. * * * * * * * * * *

Short-Term Disability Administrative Services Only. sample. agreement

Federal Reserve Bank of San Francisco. Information Availability Policy

Title 24-A: MAINE INSURANCE CODE

Senate Bill No. 1 Committee of the Whole

Economic Development Corporation Rhode Island Enterprise Zone Program 315 Iron Horse Way, Suite 101 Providence, Rhode Island (401)

CHAPTER Senate Bill No. 1792

Producer Agreement DDWA Product means an Individual or Group dental benefits product offered by Delta Dental of Washington.

PROPOSED AMENDMENTS TO HOUSE BILL 2391

WAGE WITHHOLDING FOR DEFAULTED STUDENT LOANS A HANDBOOK FOR EMPLOYERS. Revised June 30, 2008

Title 24-A: MAINE INSURANCE CODE

79th OREGON LEGISLATIVE ASSEMBLY Regular Session. Enrolled. House Bill 2391

* Corporation General Partnership Limited Partnership LLC Sole Proprietorship Non Profit Other Accounts Payable: Name

ELECTRONIC TRADING PARTNER AGREEMENT

SUBCHAPTER 01H - PRIVATE ACTIVITY BOND VOLUME CAPACITY PROGRAM SECTION GENERAL DESCRIPTION

Hull & Company, LLC Tampa Bay Branch PRODUCER AGREEMENT

SUBCHAPTER 6C - WITHHOLDING SECTION WITHHOLDING INCOME TAXES

HIPAA PRIVACY POLICY AND PROCEDURES FOR PROTECTED HEALTH INFORMATION THE APPLICABLE WELFARE BENEFITS PLANS OF MICHIGAN CATHOLIC CONFERENCE

NC General Statutes - Chapter 55A Article 16 1

TITLE 18 DEPARTMENT OF THE SECRETARY OF STATE

VISITOR CENTER. N. C. Department of Transportation Roadside Environmental Unit

BROKER AND BROKER S AGENT COMMISSION AGREEMENT

RHODE ISLAND GOVERNMENT REGISTER PUBLIC NOTICE OF PROPOSED RULEMAKING

Table of Contents 01 Amendments to Bankrkuptcy Rules eff redlined 02 New Rules Dec 2017 Talking Points from Judge Wise1 03 Final Proposed Ch

Secretary of State Certificate and Order for Filing PERMANENT ADMINISTRATIVE RULES

Business Associate Agreement Health Insurance Portability and Accountability Act (HIPAA)

Audit Engagement Letter a. [CPA Firm s Letterhead]

ELECTRONIC RECORDING VENDOR MEMORANDUM OF UNDERSTANDING

(c) "Subject" means the commercial enterprise about which a commercial credit report has been compiled.

GROUP HEALTH INCORPORATED SELLING AGENT AGREEMENT

Standard Form of Agreement Between OWNER AND CONSTRUCTION MANAGER Construction Manager as Owner s Agent

P. O. BOX 19999, RALEIGH, NC / / FAX: 919/

GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 2017 SESSION LAW HOUSE BILL 5

Mini-Brooks Qualifications Based Selection Supplement of Design/Build Statutes

ADVANTAGE PROGRAM WAIVER SERVICES PROVIDER

SENATE FLOOR VERSION February 12, 2018 AS AMENDED

Standard Form of Agreement Between OWNER AND CONSTRUCTION MANAGER Construction Manager At-Risk

PROFESSIONAL SERVICES AGREEMENT. For On-Call Services WITNESSETH:

AIA Document B141 TM 1997 Part

RULES OF TENNESSEE DEPARTMENT OF COMMERCE AND INSURANCE DIVISION OF INSURANCE CHAPTER TENNESSEE CHARITABLE GIFT ANNUITIES REGULATIONS

Payment Example 2

FREEDOM OF INFORMATION REQUEST POLICY Revised 7/01/15

Part Definitions For purposes of this Agreement, the following terms shall have the following meanings as defined in the Act:

SUBCHAPTER 03C - BANKS SECTION ORGANIZATION AND CHARTERING

NC General Statutes - Chapter 96 1

AGREEMENT TO PROVIDE ATHLETIC TRAINING SERVICES

REGISTRATION AND REGULATION OF THIRD PARTY ADMINISTRATORS (TPAs) (An NAIC Guideline)

TASB RISK MANAGEMENT FUND INTERLOCAL PARTICIPATION AGREEMENT

CHAPTER Committee Substitute for Committee Substitute for Senate Bill No. 1128

ADMINISTRATIVE SERVICES AGREEMENT. LIFE INSURANCE COMPANY OF NORTH AMERICA Philadelphia, Pennsylvania ( Company )

DATE ISSUED: 7/17/ of 7 UPDATE 111 DC(LEGAL)-P

UNITED STATES OF AMERICA DEPARTMENT OF THE TREASURY COMPTROLLER OF THE CURRENCY CONSENT ORDER

Tax Amnesty Adopted Emergency and Concurrent Proposed New Rules: N.J.A.C. 18:39-1 et seq.

GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 1993 S 1 SENATE BILL May 25, 1994

FINANCIAL SERVICES COMMISSION, OFFICE OF FINANCIAL REGULATION. Compliance Economic Review, Group 1 Rules

DATE ISSUED: 10/6/ of 7 UPDATE 109 DC(LEGAL)-P

HOW TO COMPLETE A BUSINESS ASSOCIATE AGREEMENT (BAA)

SERVICE LEVEL AGREEMENT. Citizens Property Insurance Corporation Florida Market Assistance Plan

City of Beverly Hills Beverly Hills, CA

SUBCONTRACTOR BUSINESS ASSOCIATE AGREEMENT

Duties of Department of Revenue. NC General Statutes - Chapter 105 Article 15 1

14 NYCRR Part 800 is amended by adding a new Part 812 to read as follows: PART 812 LIMITS ON ADMINISTRATIVE EXPENSES AND EXECUTIVE COMPENSATION

79th OREGON LEGISLATIVE ASSEMBLY Regular Session. Enrolled. Senate Bill 1067

CONTRACT REVIEW SHEET

Senate Bill No. 1 Committee of the Whole

ORDINANCE 1670 City of Southfield

NORTH CAROLINA GENERAL CONTRACT TERMS AND CONDITIONS

Real Estate Settlement Procedures Act UNITED STATES CODE TITLE 12. BANKS AND BANKING CHAPTER 27--REAL ESTATE SETTLEMENT PROCEDURES

MassHealth Flu Vaccine Program Provider Contract

GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 2013 SESSION LAW SENATE BILL 140

PREVIEW. 1. After selection of a corporate name, the next step in forming a corporation is to prepare the Certificate of Formation.

NC General Statutes - Chapter 142 Article 9 1

NC General Statutes - Chapter 78C Article 3 1

CHAPTER Committee Substitute for House Bill No. 1511

UNITED STATES OF AMERICA DEPARTMENT OF THE TREASURY COMPTROLLER OF THE CURRENCY CONSENT ORDER

AGENCY: Employment and Training Administration, Labor. SUMMARY: The Employment and Training Administration (ETA) of the U.S.

JOINT LEGISLATIVE OVERSIGHT COMMITTEE ON UNEMPLOYMENT INSURANCE. REPORT TO THE 2017 SESSION of the 2017 GENERAL ASSEMBLY OF NORTH CAROLINA

As Engrossed: H2/10/03. For An Act To Be Entitled

City of Schenectady IDA UNIFORM TAX EXEMPTION POLICY. Agency shall mean the City of Schenectady Industrial Development Agency.

administrative proceeding and that Respondent desires to resolve the contentions of

SUBCHAPTER VIII. LOCAL GOVERNMENT SALES AND USE TAX.

Holly Bakke, Commissioner, Department of Banking and Insurance. See Summary below for explanation of exception to calendar requirement.

COMMERCIAL CARDHOLDER AGREEMENT

JEFFERSON COUNTY FLEXIBLE SPENDING ACCOUNT (FSA) PLAN DOCUMENT

Fair Credit Reporting Act

Action: Notice of Proposed Rulemaking; request for comments. SUMMARY: The Employment and Training Administration (ETA) of the U.S.

NC General Statutes - Chapter 159 1

Online Bill Pay Agreement TERMS AND CONDITIONS OF THE BILL PAYMENT SERVICE

ALPENA COUNTY ROAD COMMISSION FREEDOM OF INFORMATION ACT POLICY

BUSINESS ASSOCIATE AGREEMENT W I T N E S S E T H:

INVITATION FOR BIDS SUPERIOR COURT OF CALIFORNIA COUNTY OF STANISLAUS. REGARDING: IFB Title: Courthouse Signage IFB No

AGREEMENT FOR CONSTRUCTION MANAGEMENT SERVICES FOR

(Statutory Authority: Executive Law, 91)

"Payment Account" is the checking account from which bill payments will be debited.

Referred to Committee on Revenue and Economic Development. FISCAL NOTE: Effect on Local Government: May have Fiscal Impact. Effect on the State: Yes.

C A R A S & S H U L M A N, P C C e r t i f i e d P u b l i c A c c o u n t a n t s B u s i n e s s A d v i s o r s

IHCP Rendering Provider Agreement and Attestation Form

Transcription:

Beverly Eaves Perdue, Governor J. Keith Crisco, Secretary North Carolina Department of Commerce Division of Employment Security November 19, 2012 Dempsey E. Benton Assistant Secretary FISCAL NOTE CONTACT PERSON: PROGRAM AFFECTED: STATUTORY AUTHORITY: IMPACT SUMMARY: Thelma M. Hill (Rulemaking Coordinator), thelma.hill@nccommerce.com; (919) 707-1035 Unemployment Insurance Benefits, Claims and Taxation N.C.G.S. 96-4(d) State Government: Yes Local Government: Yes Substantial Impact: No Federal Impact: Yes Small Business: Yes Individuals: Yes RULES SUMMARY: Rules 04 NCAC 24E.0101,.0102,.0103, and.0104 (see proposed rule text in Appendix 1) notify the public of the required procedures to follow in order to comply with the applicable provisions of the Employment Security Law regarding how to obtain the records or information from the Division of Employment Security (DES) and the cost thereof. Note that the former North Carolina Employment Security Commission (NCESC) had been operating under similar rules and fees, however due to requirements set in Session Law 2011-401, DES is codifying those rules into the North Carolina Administrative Code, or otherwise they would expire. DES believes that these rules would not result in a substantial economic impact on state, federal, and local government, as well as businesses and individuals. The rules would results in annual fee revenues to DES of about $62,000, which would be used to offset staff costs related to filling records requests. Also, those making the records requests would experience costs tantamount to the fee DES would receive, plus any time and mailing costs; however, the would also incur an unquantified benefit from obtaining the records. NECESSITY: 26 U.S.C. 3304(a) requires that the Secretary of Labor approve any state unemployment compensation law that conforms to the federal requirements. Section 3304(b) requires the Secretary to notify the governor of the state of such approval, and section 3304(c) requires the Secretary to certify such approval

to the Secretary of the Treasury. Failure to obtain certification means not only the loss of all Federal Unemployment Tax Act (FUTA) tax credits for private employers, but also the loss to non-certified states of two kinds of federal grants. One grant goes towards the cost of administering the state's unemployment compensation program (42 U.S.C. 501-503). The other goes towards the administration of public employment offices that provide for job placement, employment recruiting and other services (29 U.S.C. 49-49k). G.S. 96-4(x)(4) specifically provides that DES "may provide by rule for procedures by which request for information will be considered and the methods by which such information may be disclosed. The Division is authorized to provide by regulation for the assessment of fees for securing and copying information released under this section." [Emphasis added.] In addition, G.S. 96-15(f) states that "any individual receiving the transcript shall pay to the Division such reasonable fee for the transcript as the Division may by regulation provide. The fee... shall not exceed the lesser of sixty-five cents (65 ) per page or sixty-five ($65.00) per transcript." These rules will offset the Division s expected costs in performing its duties under G.S. 96-4(x) and 96-15(f). Under G.S. 96-4(x), the charges are necessary to be assessed because governing federal regulations prohibit the use of grant funds to underwrite the cost of securing and copying information released to governmental agencies, private companies and individuals, except for those federal and state agencies and purposes specifically identified in federal and state law. (See Certification of Federal Requirement in Appendix 2.) The Division does not receive state funding from the N.C. General Assembly to perform its duties under Chapter 96. IMPACT ANALYSIS: 1) Division of Employment Security In that labor was involved in "securing and copying information", the former NCESC performed a study to ascertain the necessary and minimum amount of time and materials involved in responding to requests for release of information under G.S. 96-4(x). The hourly wage used to make the computation was that of the lowest-level employee that had the appropriate knowledge and skills to perform the tasks involved. The results of the study are reflected in the fees set forth in Rule 04 NCAC.0103 of Appendix 1. Parties to proceedings before the Division and the Board of Review, however, are not charged for the cost of documents and services necessary for the presentation and/or defense of contested issues because the proceedings are required by G.S. 96-4(q) and 96-15 and are an integral part of the administration of the unemployment insurance program. The only exception to the foregoing is when a party requests a written hearing transcript when a free copy of the recording of the hearing is available. The cost of the written transcript was computed based on the contract cost for outsourced transcription services. The Division does not receive state funding from the federal government or the N.C. General Assembly to pay for the outsourced transcription services. The costs DES incurs from providing these services are offset by the fee revenues it collects. DES (formerly NCESC) collected approximately sixty-two thousand dollars ($62,000) annually in fees for the cost of securing and copying information from those who are not exempt from paying the fees or parties to contested proceedings who choose to obtain a written transcript of an evidentiary hearing. These funds are deposited in the unemployment insurance fund as reimbursement for cost of labor performed by DES employees whose positions are supported by federal grants to administer the unemployment insurance program in North Carolina. Over the years, a substantive number of requests for documents and records have fallen into two categories: 1) verification of wages for mortgages and other financial purposes requested by individuals and 2) copies of the record of benefits paid to individuals. Both these requests are straightforward and do not require a lot of staff time to fill, so they carry the fee of $15.00. Given this trend, 2

the average cost assessed by invoice has been about $15.00 with the approximate number of requests received being approximately four thousand (4,000) per year. There is no reason to expect a significant increase in the fees collected in the future or an increase in the staff time to respond to these requests. Given the above historical data, the rules proposed under subchapter 24E that implement the procedures for requesting copies of records and the assessment and payment of associated fees are not expected to have a substantial economic impact. 2) Individuals, Governmental Entities and Businesses The impact on individuals, governmental entities and businesses from the proposed rules is that they pay fees for certain services amounting to about $62,000 per year, given historic data, with an average cost per request of about $15. In addition, they may also incur some time and mailing costs related to filing the request. However, these individuals and entities would also receive a benefit from these services that has at least the same value as the amount of costs incurred, including fees they pay. Services provided include verifying wages for mortgage and other financial matters, responding to public record requests under Chapter 132, providing copies of documents previously filed with DES by individuals and/or employers that were unrelated to a proceeding, etc. DES does not maintain records of the purpose of the information or whether the requests are made by individuals, governmental entities, businesses, etc. Accordingly, how many governmental entities requested or paid for release of records/information is unknown and cannot be determined. However, the share of record request fees paid by government entities is not expected to be large based on historical evidence that a major category of requests comes from individuals and is for verification of wages for mortgages and other financial purposes, and based on employment data from IHS Global Insight showing that roughly 13% of the labor force is employed by state and local governments. Avoided Adverse Consequences on North Carolina's Unemployment Insurance Program: 1. If fees are not charged to reimburse the unemployment insurance fund, the services of securing and copying information/records could not be performed unless funds are appropriated by the North Carolina General Assembly. 2. If fees are not charged to reimburse the unemployment insurance fund and the NC General Assembly does not appropriate funds for these services, the U.S. Secretary of Labor could find that North Carolina does not meet the federal conformity requirement that states are prohibited from using the federal administrative program funds to pay for the cost of such services. This finding would place North Carolina in the position of losing federal administrative grants between $55 and $75 million annually, the only source of funding received to administer the unemployment insurance program in North Carolina. Without federal administrative grants, no federal funds would be available to maintain in employment or hire personnel to carry out the functions of the unemployment insurance program in North Carolina. Furthermore, the employers could lose a credit against their obligation to pay FUTA taxes, which would necessitate the full payment of the FUTA tax by the employers, which would be 6.0% of their total payroll, or a loss of a maximum of 83.33% state credit against the federal unemployment tax. EFFECTIVE DATE: Upon conclusion of rulemaking process; approximately April 1, 2013. 3

APPENDIX 1 RULES FOR THE DIVISION OF EMPLOYMENT SECURITY NORTH CAROLINA DEPARTMENT OF COMMERCE 04 NCAC 24 SUBCHAPTER E - UNEMPLOYMENT INSURANCE DOCUMENTS AND RECORDS NCAC 24E.0101 CONFIDENTIALITY OF UNEMPLOYMENT INSURANCE INFORMATION Information obtained by the North Carolina Department of Commerce, Division of Employment Security ( DES ) from workers, employers, applicants, or other persons, or groups of persons in the course of administering the State Public Employment Service Program will be disclosed only pursuant to law, including by confidentiality waiver as provided in Rule 24E.0102(F). History Note: Authority G.S. 96-4(d); G.S. 96-4(x); G.S. 150B-20. NCAC 24E.0102 REQUEST FOR DOCUMENTS AND RECORDS (a) Any person who desires to inspect or copy any record containing confidential unemployment insurance information will submit a written request to that effect to the Legal Services Section of DES or the section of DES which has custody of the record. (b) Each request should reasonably describe the record or records sought; i.e. in sufficient detail to permit identification and location thereof with a reasonable amount of effort. The request should specify, when possible, the subject matter of the record, the date or approximate date when made, the place where made, the person or office that made it, and any other pertinent identifying details such as a form number. (c) If the description is insufficient so that a professional employee who is familiar with the subject area of the request cannot locate the record with a reasonable amount of effort, the individual processing the request will notify the applicant and, to the extent possible, indicate the additional information required. (d) The request will be evaluated in light of all federal regulatory and state statutory provisions that govern disclosure of the items requested. The individual responsible for determining whether a request for agency records will be complied with in whole or in part will initiate a search for the records within a reasonable time after the request is made. If it is determined that the request will be denied, a reply denying the request will be made in writing to the requester with a brief statement of the reasons for the denial. (e) To the extent required to prevent a clearly unwarranted invasion of personal privacy or to comply with applicable law prohibiting disclosure of specific information, the individual authorized to disclose information from a record may delete identifying details when the requested record is made available. Justification for the deletion will be explained in writing upon request. (f) Nothing in this Rule will be construed to prevent DES, upon written request and on a reimbursement basis which complies with the requirements of this Rule from disclosing any information or records obtained from and releasable to a claimant, employer, applicant, or other persons, to a third party or person clearly identified by name and address in said request and said request will contain a statement 4

that the claimant, employer, applicant, or other person, waives confidentiality as to the information requested. (g) When DES requests an individual or employing entity to supply information about that individual or employing entity, DES will notify the individual or employing entity of the use that will be made of the information, which persons outside of DES might routinely be provided this information, which parts of the requested information are required and which are optional, and the consequences of a failure to provide the information requested. Furthermore, the individual or employing entity will be notified that, while DES takes normal precautions to keep all such information confidential and privileged pursuant to G.S. 96-4(x), DES does not guarantee the confidentiality or privilege of any information transmitted to it by way of the Internet, as it is not possible, and does not accept liability for any loss of confidentiality or privilege resulting from the transmission of the information to DES by way of the Internet or other electronic means. This notice may be given by providing a copy of this Rule, on the written form used to collect the information, on a separate fact sheet or letter, in brochures, in formal agreements, in contracts, in handbooks, or in manuals. (h) Nothing in this Rule will be construed to prevent the DES, upon written request and on a reimbursement basis, as provided in rule 04 NCAC 24E.0103, that complies with the requirements of this Rule from releasing or disclosing to a third party or person information as to an individual's quarterly wage records, including the amount of such wages and names and addresses of the employer(s) reporting wages for said individual; provided that the third party or person is clearly identified by name and address in said request and the request contains a statement that the individual waives confidentiality as to the information requested, and the employing entity from whom such information was collected has been properly provided notice. History Note: Authority G.S. 96-4(d); G.S. 96-4(x); Title 20 Code of Federal Regulations, Part 603; G.S. 150B-20. 04 NCAC 24E.0103 FEES FOR COPIES AND SERVICES (a) Search Fees - (1) Search of the records by DES custodial or clerical personnel carries a fee of $4.40 for each one-quarter hour or fraction thereof of employee worktime required to reach or obtain the records to be searched or make the necessary search. (2) If the search for the requested record requires transportation of the searcher to the location of the records or transportation of the records to the searcher, at a cost in excess of $5.00, actual transportation costs will be added to the search time cost. (3) If the search for requested records requires batch processing by computer, an estimate will be provided to the requesting party as to DES's cost of producing the information to the requesting party. The requesting party will be billed for the actual cost of producing the requested information. (4) Any other provisions of this Rule notwithstanding, an individual receiving records or transcripts or documents under whatever name will be charged a minimum fee of no less than $15.00. (b) Reproduction Fees - The fees payable pursuant to this subpart for obtaining requested copies of records which have been made available for inspection pursuant to applicable law will be computed on the following basis subject to the following conditions: (1) Standard Copying Fee: $0.01 per page (2) Standard Transcript Fee: $3.75 per quarter hour or fraction thereof except for copies provided under G.S. 96-15(f). (3) Not more than 10 copies of any document will be furnished. (4) Standard Duplicate Tape Recording Fee: $3.75 per tape except for copies provided under G.S. 96-15(f). (5) Overhead Processing Costs and Invoicing: $4.50 per invoice. 5

History Note: Authority G.S. 96-4(d); G.S. 96-4(x)(4); G.S. 96-15(f); G.S. 132-1 thru 10; G.S. 150B-20. 04 NCAC 24E.0104 PAYMENT OF FEES (a) Payment of fees as set forth in Rule 04 NCAC 24E.0103 will be made in cash, money order or certified check, except that an agency of state or federal government, a county or municipality may pay by its customary draft. (b) Payment of the known and officially estimated searching and copying fees will be made or assured to the satisfaction of the individual retrieving the information prior to the performance of substantial searching or copying services. (c) No fees will be charged for those records or documents customarily furnished to the parties in connection with a contested claim for unemployment insurance benefits or tax (contributions) liability matters except as provided by statute. (d) No fees will be charged to the North Carolina State Bureau of Investigation for searching and copying records pursuant above when requested by the Bureau as part of an official investigation. (e) The individual transmitting any records, transcript or document under whatever name subject to a fee charge under this Rule will notify the applicant to remit the fee to the North Carolina Department of Commerce, Division of Employment Security, ATTN: Finance and Budget, Post Office Box 25903, Raleigh, North Carolina 27611. History Note: Authority G.S. 96-4(d); G.S. 96-4(x); Title 20 Code of Federal Regulations,; G.S. 132-1 thru 10; G.S. 150B-20. 6

APPENDIX 2 Certification of Federal Requirement Title 20, Code of Federal Regulations PART 603 FEDERAL-STATE UNEMPLOYMENT COMPENSATION (UC) PROGRAM; CONFIDENTIALITY AND DISCLOSURE OF STATE UC INFORMATION Subpart B Confidentiality and Disclosure Requirements 603.8 What are the requirements for payment of costs and program income? (a) In general. Except as provided in paragraph (b) of this section, grant funds must not be used to pay any of the costs of making any disclosure of UC information. Grant funds may not be used to pay any of the costs of making any disclosures under 603.5(d)(2) (third party (other than an agent) or disclosure made on an ongoing basis), 603.5(e) (optional disclosure to a public official), 603.5(f) (optional disclosure to an agent or contractor of a public official), and 603.5(g) (optional disclosure to BLS), 603.6(b) (mandatory disclosures for non-uc purposes), or 603.22 (mandatory disclosure for purposes of an IEVS). (b) Use of grant funds permitted. Grant funds paid to a State under Section 302(a), SSA, may be used to pay the costs of only those disclosures necessary for proper administration of the UC program. (This may include some disclosures under 603.5(a) (concerning public domain information), 603.5(c) (to an individual or employer), and 603.5(d)(1) (to an agent).) In addition, grant funds may be used to pay costs of disclosures under 603.5(i) (for UC Program Oversight and Audits) and 603.6(a) (for the proper administration of the UC program). Grant funds may also be used to pay costs associated with disclosures under 603.7(b)(1) (concerning court-ordered compliance with subpoenas) if a court has denied recovery of costs, or to pay costs associated with disclosures under 603.7(b)(2) (to officials with subpoena authority) if the State UC agency has attempted but not been successful in obtaining reimbursement of costs. Finally, grant funds may be used to pay costs associated with any disclosure of UC information if not more than an incidental amount of staff time and no more than nominal processing costs are involved in making the disclosure. (c) Calculation of costs. The costs to a State or State UC agency of processing and handling a request for disclosure of information must be calculated in accordance with the cost principles and administrative requirements of 29 CFR part 97 and Office of Management and Budget Circular No. A-87 (Revised). For the purpose of calculating such costs, any initial start-up costs incurred by the State UC agency in preparation for making the requested disclosure(s), such as computer reprogramming necessary to respond to the request, and the costs of implementing safeguards and agreements required by 603.9 and 603.10, must be charged to and paid by the recipient. (Startup costs do not include the costs to the State UC agency of obtaining, compiling, or maintaining information for its own purposes.) Postage or other delivery costs incurred in making any disclosure are part of the costs of making the disclosure. Penalty mail, as defined in 39 U.S.C. 3201(1), must not be used to transmit information being disclosed, except information disclosed for purposes of administration of State UC law. As provided in Sections 453(e)(2) and 453(g) of the SSA, the Secretary of HHS has the authority to determine what constitutes a reasonable amount for the reimbursement for disclosures under Section 303(h), SSA, and Section 3304(a)(16)(B), FUTA. (d) Payment of costs. The costs to a State or State UC agency of making a disclosure of UC information, calculated in accordance with paragraph (c) of this section, must be paid by the recipient of the information or another source paying on behalf of the recipient, either in advance or by way of reimbursement. If the recipient is not a public official, such costs, except for good reason must be paid in advance. For the purposes of this paragraph (d), payment in advance means full payment of all costs before or at the time the disclosed information is given in hand or sent to the recipient. The requirement of payment of costs in this paragraph is met when a State UC agency has in place a reciprocal cost agreement or arrangement with the recipient. As used in this section, reciprocal means that the relative benefits received by each are approximately equal. Payment or reimbursement of costs must include any initial start-up costs associated with making the disclosure. (e) Program income. Costs paid as required by this section, and any funds generated by the disclosure of UC information under this part, are program income and may be used only as permitted by 29 CFR 97.25(g) (on program income). Such income may not be used to benefit a State's general fund or other program. 7