NATIONAL UNEMPLOYMENT INSURANCE PROGRAM UPDATE Gay Gilbert, Administrator Unemployment Insurance USDOL/ETA June 18, 2014
NATIONAL UPDATE Turning the Page on the Great Recession & Adjusting to a New Normal Economic Snapshot Data Trends Trust Fund Activity Program Strategic Priorities Implementation of the Middle Class Tax Act Highlights of Program Initiatives Looking Ahead
Private payroll employment (in millions) Unemployment rate Job Growth and Unemployment Unemployment and Job Growth since Jan 2007 118 116 114 112 110 108 106 104 102 2007 2008 2009 2010 2011 2012 2013 2014 12.0 10.0 8.0 6.0 4.0 2.0 0.0 SOURCE: Bureau of Labor Statistics 3
Layoffs are Back to 2006 levels Source: Job Openings Layoffs and Turnover Survey & Mass Layoff Statistics
Data Source: U.S DOL/BLS
Unemployment: By Race/Ethnicity and Age SOURCE: Bureau of Labor Statistics, Current Population Survey
The Long-Term Unemployed Still Need Assistance Source: Bureau of Labor and Statistics: Current Population Survey 10
Source: US DOL/BLS and US DOL/Office of Unemployment Insurance
Source: US DOL/BLS and US DOL/Office of Unemployment Insurance
Source: US DOL/BLS and US DOL/Office of Unemployment Insurance
Effective May 11, 2014 Source: US DOL/Office of Unemployment Insurance
Source: US DOL/Office of Unemployment Insurance
Percent of Covered Wages Benefits Paid as Percent of Covered Wages 7.00 6.00 5.00 4.00 Benefits Paid 3.00 2.00 1.00 0.00 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 Benefits Paid The last data point is for 2012 Source: US DOL/Office of Unemployment Insurance
36 $48.5 B 18 $21.3 B Total Number of States that have Borrowed Number of States with Outstanding Balances April 30, 2014 Peak Amount Advanced to States Outstanding Advance Balance April 30, 2014 17
Billions $ TOTAL BORROWING OVER TIME AND PROJECTED BORROWING THROUGH 2023 45 40 35 End of FY Borrowing 30 25 20 15 10 5 0 Actual Forecast
INTEREST PAYMENTS - 2013 Interest due September 30, 2013 20 states paid $656 million 9 states had cash-flow loans for 2013
FUTA CREDIT REDUCTIONS After two or more January 1sts with a loan balance, employers face a reduction in the FUTA credit 14 states had a credit reduction for 2013 One state with a 0.6% reduction, eleven states with 0.9%, and two states with 1.2% 20 states expected to have a credit reduction for 2013 depends on Nov. 10 loan balance
ESTIMATED FUTA CREDIT REDUCTIONS Potential 2014 Federal Unemployment Tax Act (FUTA) Credit Reductions These states had Title XII advance balances on January 1, 2014 and are potentially subject to a reduction in FUTA credit on their IRS Form 940 for 2014 if the loan is not repaid by November 10, 2014: 2014 2014 2014 2014 Potential Estimated Estimated Eatimated Total State Credit Reduction 2.7 add-on (3) BCR add-on (3) Credit Reduction Arkansas 1.2% (2) 0.0% 0.5% 1.7% California 1.2% (2) 0.0% 1.5% 2.7% Connecticut 1.2% (2) 0.0% 0.5% 1.7% (1) This state is also potentially subject to the 2.7 additional credit reduction formula. Delaware 0.9% (1) 0.0% 0.0% 0.9% This add-on is applicable in states following their third or fourth consecutive Georgia 1.2% (2) 0.0% 0.6% 1.8% January 1 with an outstanding Federal advance. A decription is found in FUTA Indiana 1.5% (2) 0.0% 1.2% 2.7% section 3302 (c)(2)(b) Kentucky 1.2% (2) 0.0% 1.0% 2.2% Missouri 1.2% (2) 0.0% 0.4% 1.6% (2) This state is also potentially subject to the Benefit Cost Rate (BCR) additional credit New Jersey 1.2% (2) 0.0% 0.0% 1.2% reduction formula. This add-on is applicable in states following their fifth consecutive New York 1.2% (2) 0.0% 0.7% 1.9% January 1 with an outstanding Federal advance. A decription is found in FUTA North Carolina 1.2% (2) 0.0% 0.5% 1.7% section 3302 (c)(2)(c) Ohio 1.2% (2) 0.0% 1.4% 2.6% Rhode Island 1.2% (2) 0.0% 1.0% 2.2% (3) The third and fourth quarters of 2013 wages are based on extrapolated values South Carolina 1.5% (2) 0.0% 0.5% 2.0% Virgin Islands 1.2% (2) 0.0% 1.6% 2.8% Wisconsin 1.2% (2) 0.0% 0.1% 1.3%
Actions Taken By States To Reduce Benefits: States Reducing Benefit Duration: Arkansas (25) Florida (12-23) Georgia (14-20) Illinois (25) Kansas (16-26) Michigan (20) Missouri (20) North Carolina (5-20) Pennsylvania (18-26) South Carolina (20) Other Types of Actions Used to Reduce Benefits: Elimination of dependents benefits Raised qualifying earnings Changed definitions of misconduct Increased number of weeks of employment needed to requalify for UI after being declared ineligible due to misconduct
SIGNIFICANT CHANGES IN STATE BENEFITS/TAXES SINCE THE RECESSION ENDED Increased Reduced Benefit Issued Bonds to Taxable Wage Base 1 Duration 2 Repay Title XII Arkansas Arkansas (25) Arizona Colorado Florida (12-23) Colorado Florida Georgia (14-20) Idaho Illinois Illinois (25) Illinois Indiana Kansas (16-26) Michigan Kentucky Michigan (20) Nevada Mississippi Missouri (20) Pennsylvania New York North Carolina (5-20) Texas Rhode Island Pennsylvania (18-26) South Carolina South Carolina (20) Changed Experience Vermont Rating System Wisconsin New Mexico South Carolina 1. May include a further indexing of the wage base, a phased-in increase, or a delayed increase. 2. States that lowered their maximum potential duration or raised their minimum qualifying duration.
First Payment Timeliness 92% Million 20 90% 88% 18 16 86% 84% 82% 80% 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 14 12 10 8 Percent of First Payments made within 14/21 days GPRA Target for FY 2014 (87.1%) Number of New Initial Intrastate Claims Filed (right scale) Each data point represents the one year period up to and including the given quarter.
2001_1 2001_2 2001_3 2001_4 2002_1 2002_2 2002_3 2002_4 2003_1 2003_2 2003_3 2003_4 2004_1 2004_2 2004_3 2004_4 2005_1 2005_2 2005_3 2005_4 2006_1 2006_2 2006_3 2006_4 2007_1 2007_2 2007_3 2007_4 2008_1 2008_2 2008_3 2008_4 2009_1 2009_2 2009_3 2009_4 2010_1 2010_2 2010_3 2010_4 2011_1 2011_2 2011_3 2011_4 2012_1 2012_2 2012_3 2012_4 2013_1 2013_2 2013_3 2013_4 Millions 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Lower Authority Appeals 45-Day Timeliness Rolling 4 Qtrs 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0.0 Number of LAAs Filed (right scale) Secretary's Standard in Regulation (80%) Percent of LAAs decided within 45 days
2005_2 2005_3 2005_4 2006_1 2006_2 2006_3 2006_4 2007_1 2007_2 2007_3 2007_4 2008_1 2008_2 2008_3 2008_4 2009_1 2009_2 2009_3 2009_4 2010_1 2010_2 2010_3 2010_4 2011_1 2011_2 2011_3 2011_4 2012_1 2012_2 2012_3 2012_4 2013_1 2013_2 2013_3 2013_4 Days Millions 60 50 40 Average Age of Pending Appeals Lower Authority Appeals 2.0 1.8 1.6 1.4 1.2 30 20 10 1.0 0.8 0.6 0.4 0.2 0 0.0 Number of LAAs Filed (right scale) Average Age of Pending LAAs ALP for LAAs (30 days)
2001_1 2001_2 2001_3 2001_4 2002_1 2002_2 2002_3 2002_4 2003_1 2003_2 2003_3 2003_4 2004_1 2004_2 2004_3 2004_4 2005_1 2005_2 2005_3 2005_4 2006_1 2006_2 2006_3 2006_4 2007_1 2007_2 2007_3 2007_4 2008_1 2008_2 2008_3 2008_4 2009_1 2009_2 2009_3 2009_4 2010_1 2010_2 2010_3 2010_4 2011_1 2011_2 2011_3 2011_4 2012_1 2012_2 2012_3 2012_4 2013_1 2013_2 2013_3 2013_4 Millions 100% 95% 90% 85% 80% Lower Authority Appeals Quality Rolling 4 Qtrs 2.0 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 75% 0.0 Number of LAAs Filed (right scale) Acceptable Level of Performance (80%) Percent of LAAs scoring at least 85% of potential points
Timeliness of New Employer Status Determinations 100% Million 1.2 95% 1 90% 85% 80% 75% 0.8 0.6 0.4 0.2 70% 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 0 Percent of New Employer SDs made within 90 days of quarter-ending date GPRA Target for FY 2014 (88.9%) Number of New Employer Status Determinations (right scale) Each data point represents the one year period up to and including the given quarter.
Facilitation of Reemployment 68% 66% 64% 62% 60% 58% 56% 54% 52% 50% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2005 2006 2007 2008 2009 2010 2011 2012 2013 Reemployment Rate GPRA Target for FY 2013 (63%) Each data point represents the one year period up to and including the given quarter. Referenced quarter is that of reemployment.
IPIA UI IMPROPER PAYMENT RATE IPIA 2013 Improper Payment Measures Rate Amount 3 ($ Billions) Amount 4 ($ Billions) Benefits Paid $66.79 $38.99 IPIA Report 2 9.32% Annual Report 11.00% $7.08 $4.48 Underpayment Rate 0.50% $0.31 $0.20 Gross Improper Rate 11.50% $7.68 $4.68 Recoveries $1.46 $1.01 Operational 6.25% $4.17 $2.54 2 Includes overpayments and underpayments - recoveries 3 Includes State UI, UCFE, UCX, EUC, EB, and FAC 4 Includes State UI, UCFE, and UCX only
UI IMPROPER PAYMENT RATE Overpayment Rate UI Overpayment Rates and Amounts by IPIA Year 12% Amount OP (In $ Bil.) 10% $16 $14 8% $12 6% $10 $8 4% $6 2% $4 $2 0% $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Annual Rpt. Rate Operational RateIPIA Year Annual Rpt. $ OP Operational $ OP $18
Detection of Overpayments 70% 65% 60% 55% 50% Million 300 250 200 150 100 45% 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 50 Amount Established by BPC as a % of BAM Estimated Operational Overpayment Amount GPRA Target for FY 2014 (54.2%) Number of Intrastate Continued Weeks Claimed (right scale) Each data point represents the one year period up to and including the given quarter.
ROOT CAUSES
PROGRAM STRATEGIC PRIORITIES Improved program integrity and reduction of the UI improper payment rate Improved program performance Improved reemployment outcomes for UI claimants Trust fund solvency Increasing state capacity for UI administration UI information technology modernization
MIDDLE CLASS TAX RELIEF AND JOB CREATION ACT OF 2012 Still to Come: Short Time Compensation Financial Incentives The Clock is Running Out! Getting States into Conformity Some states still working on new legislation Drug Testing Regulation Defining the Occupations that Regularly Drug Test & Overall Drug Testing Guidance
UI IMPROPER PAYMENTS ACCOMPLISHMENTS Activity Everyone Owns Integrity High Priority States SIDES (State Information Data Exchange System) Treasury Offset Program (TOP) Employment Service (ES) Registration Online Work Search Record Financial Data Pilot Accomplishments to-date All states regularly convene cross-functional UI task forces and identify state specific strategies to address state specific root causes. Customized technical assistance to states with persistently high improper payment rates led to all 8 decreasing their rate in 2013, with 3 of the states achieving and maintaining a rate below 10 percent. 38 states have implemented and 10 additional states are on track to implement. 42 states have implemented and 5 additional states are in various stages of implementation. The UI program recovered $1.46 billion in overpayments and DOL met its annual recapture target for FY 2013. Customized technical assistance provided to states with the highest ES Registration error rates resulted in a 53 percent reduction in the rate from the 2011 baseline. New York State developed an online tool to effectively capture, organize and share individual UI claimant work search activity information using open source technologies. Research phase with three pilot states showed that financial data cross-matches would have detected approximately 28,000 improper claims totaling $65 million. This detection was 9 to 35 weeks earlier than the date of discovery using current tools. 36
MORE INTEGRITY ACTIVITIES UI Integrity Center of Excellence Building data analytics capacity Secure online fraud portal State program integrity training Capturing and sharing successful practices Incarceration data matching Developing model for state BPC operations Review of BAM Methodology Mandatory use of Treasury Offset Program
TRUST FUND SOLVENCY President s Budget contains trust fund solvency proposal New cash flow loan conditions be phased in beginning in 2014 (TEN 13-20) which include a solvency target and states must demonstrate a maintenance of tax effort over years prior to the year for which a cash flow loan is requested Webinar: https://www.workforce3one.org/view/5001032841185368250/info
REEMPLOYMENT INITIATIVES Reemployment Connections 5 original states 6 new states 12 states receiving on-site technical assistance 2 new tools close to roll-out for all states Supplemental Budget Opportunity Focus on Long Term Unemployed State Ready to Work Grants Asking Employers to Reexamine Hiring Practices
BUILDING SYSTEM CAPACITY Continued support for state consortia as strategy to modernize UI IT infrastructure new models being tested and products of early consortia being leveraged ITSC focused squarely on support for state UI modernization efforts Reengineering UI Program Accountability Processes
LOOKING AHEAD Continued focus on rebuilding and re-strengthening the UI program Restoring solvency of UI trust funds Sustained and significant focus on reducing improper payments Improving program performance Reemployment with particular focus on long term unemployed