article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Unemployment Insurance Modernization Act''. SEC. 2. SPECIAL TRANSFERS TO STATE ACCOUNTS IN THE UNEMPLOYMENT TRUST FUND. (a) In General.--Section 903 of the Social Security Act (42 U.S.C. 1103) is amended by adding at the end the following: ``Special Transfers in Fiscal Years 2008 Through 2012 ``(f)(1)(A) In addition to any other amounts, the Secretary of Labor shall provide for the making of unemployment compensation modernization incentive payments (in this subsection referred to as `incentive payments') to the accounts of the States in the Unemployment Trust Fund, by transfer from amounts reserved for that purpose in the Federal unemployment account, in accordance with succeeding provisions of this subsection. ``(B) Subject to paragraph (5), the maximum incentive payment allowable under this subsection with respect to any State shall, as determined by the Secretary of Labor, be equal to the amount obtained by multiplying $7,000,000,000 times the same ratio as is applicable under subsection (a)(2)(B) for purposes of determining such State's share of any funds to be transferred under subsection (a) as of October 1, 2007. ``(C) Of the maximum incentive payment determined under subparagraph (B) with respect to a State-- ``(i) one-third shall be transferred upon a certification under paragraph (4)(B) that the State law of such State meets the requirements of paragraph (2); and ``(ii) the remainder shall be transferred upon a certification under paragraph (4)(B) that the State law of such State meets the requirements of paragraph (3). ``(2) The State law of a State meets the requirements of this paragraph if such State law-- ``(A) uses a base period that includes the most recently completed calendar quarter before the start of the benefit year for purposes of determining eligibility for unemployment compensation; or ``(B) provides that, in the case of an individual who would not otherwise be eligible for unemployment compensation under the State law because of the use of a base period that does not include the most recently completed calendar quarter before the start of the benefit year, eligibility shall be determined using a base period that includes such calendar quarter. ``(3) The State law of a State meets the requirements of this paragraph if such law includes provisions to carry out at least 2 of the following subparagraphs: ``(A) An individual shall not be denied compensation under any State law provisions relating to availability for work, active search for work, or refusal to accept work, solely because such individual is seeking only part-time (and not full-time) work, except that such law may provide for the provisions carrying out this subparagraph to require up to, but not to exceed, a majority of weeks of work of such individual's base period to consist of part-time employment. ``(B) An individual shall not be disqualified from compensation for separating from work for compelling family reasons, which, for purposes of this subparagraph, shall include at least the following: ``(i) A separation from employment in which domestic violence causes the individual reasonably to believe that such separation is necessary for the safety of the individual or the individual's family, as verified by such reasonable and confidential documentation that may be required by the State. ``(ii) A separation from employment resulting from the illness or disability of a member of the individual's immediate family. ``(iii) A separation from employment resulting from the individual's need to accompany a spouse-- ``(I) to a place from which it is impractical for such individual to commute; and ``(II) due to a change in location of the spouse's employment. ``(C) Weekly unemployment compensation is payable under this subparagraph to any individual who is unemployed (as determined under the State unemployment compensation law), has exhausted all rights to regular and (if applicable) extended unemployment compensation under the State law, and is enrolled and making satisfactory progress in a State-approved training program or in a job training program authorized under the Workforce Investment Act of 1998. Such program shall prepare individuals who have been separated from a declining occupation, or who have been involuntarily and indefinitely separated from employment as a result of a permanent reduction of operations at the individual's place of employment, for entry into a high-demand occupation. In addition, such program may prepare other unemployed individuals deemed eligible by the State. The amount of unemployment compensation payable under this subparagraph to an individual for a week of unemployment shall be equal to the individual's average weekly benefit amount (including dependents' allowances) for the most recent benefit year, and the total amount of unemployment compensation payable under this subparagraph to any individual shall be equal to at least 26 times the individual's average weekly benefit amount (including dependents' allowances) for the most recent benefit year. ``(D) The maximum amount of compensation-- ``(i) payable to the individual during a benefit year is equal to at least 26 times the individual's weekly benefit amount; or ``(ii) the individual receives during a benefit year exceeds half of the individual's total wages during the base period. A State shall not be considered to satisfy clause (i) if it reduced the maximum weekly benefit amount of compensation payable to an individual during a benefit year below the amount that was in effect as of the date of enactment of this subsection. ``(E) Dependents' allowances are provided to all individuals with a dependent (as defined by State law) equal to at least $15 per dependent per week, subject to any aggregate limitation on such allowances which the State law may establish (but which aggregate limitation on the total allowance for dependents paid to an individual may not be less than the lesser of $50 for each week of unemployment or 50 percent of the individual's weekly benefit amount for the benefit year). ``(4)(A) Any State seeking an incentive payment under this subsection shall submit an application therefor at such time and in such manner as the Secretary of Labor shall by regulation prescribe. Such application shall include information on how the State intends to use incentive payments to improve or strengthen the State's unemployment compensation program. The Secretary of Labor shall, within 90 days after receiving any such application, notify the State agency of the State as to the Secretary's findings with respect to the requirements of paragraph (2) or (3) (as the case may be). ``(B) If the Secretary of Labor finds that the State law provisions (disregarding any State law provisions which are not then currently in effect or which are subject to discontinuation under certain conditions) meet the requirements of paragraph (2) or (3) (as the case may be) and that unemployment compensation claimants have begun to qualify for benefits under such requirements, the Secretary of Labor shall thereupon make a certification to that effect to the Secretary of the Treasury, together with a certification as to the amount of the incentive payment to be transferred to the State account pursuant to that finding. The Secretary of the Treasury shall make the appropriate transfer within 30 days after receiving such certification. ``(C)(i) No certification of compliance with the requirements of paragraph (2) or (3) may be made with respect to any State whose State law is not otherwise eligible for certification under section 303 or approvable under section 3304 of the Federal Unemployment Tax Act. ``(ii) No certification of compliance with the requirements of paragraph (3) may be made with respect to any State whose State law is not in compliance with the requirements of paragraph (2). ``(iii) No application under subparagraph (A) may be considered if submitted before October 1, 2007, or after the latest date by which it must be submitted (as specified by the Secretary of Labor in regulations) to ensure that all incentive payments under this subsection are made before October 1, 2012. ``(5)(A) If the Secretary of Labor determines, within 30 days after the deadline described in paragraph (4)(C)(iii), that there are amounts reserved for incentive payments under paragraph (7) for which the Secretary of the Treasury has not received a certification under paragraph (4)(B), from such amounts-- ``(i) first, 10 percent of such amounts shall be made available for transfer to the accounts of States under subsection (g); and ``(ii) second, from the remainder of such amounts, incentive payments that are in addition to those made under paragraph (1) shall be made to States described in subparagraph (E). ``(B)(i) The amount of additional incentive payments to a State under subparagraph (A)(ii) shall be an amount equal to the sum of-- ``(I) the amount obtained by multiplying the total amount determined by the Secretary of Labor under subparagraph (A) (after application of clause (i) of such subparagraph) times the same ratio as is applicable under subsection (a)(2)(B) for purposes of determining such State's share of any funds to be transferred under subsection (a) as of October 1, 2007; and ``(II) an amount equal to the total amount determined by the Secretary of Labor under subparagraph (A) (after application of clause (i) of such subparagraph) less the total amount of additional incentive payments under subclause (I) for all States, divided by the total number of States receiving additional incentive payments. ``(ii) In no case may the amount of an additional incentive payment transferred to a State under this paragraph exceed an amount equal to 2 times the total amount of the incentive payment transferred to the State under paragraph (1)(C). ``(C) For each State described in subparagraph (E), the Secretary shall make a certification to that effect to the Secretary of the Treasury, together with a certification as to the amount of the additional incentive payment to be transferred to the State account pursuant this paragraph. The Secretary of the Treasury shall make the appropriate transfer within 30 days after receiving such certification. ``(D) The Secretary of Labor shall certify to the Secretary of the Treasury the amount to be made available for transfer under subparagraph (A)(i). ``(E) For purposes of subparagraph (A), a State is described in this subparagraph if the Secretary of the Treasury received a certification under paragraph (4)(B) that the State law of such State meets the requirements of paragraphs (2) and (3). ``(6)(A) Except as provided in subparagraph (B), amounts transferred to a State account pursuant to paragraphs (4)(B) and (5)(C) may be used only in the payment of cash benefits to individuals with respect to their unemployment. ``(B) A State may, subject to the same conditions as set forth in subsection (c)(2) (excluding subparagraph (B) thereof, and deeming the reference to `subsections (a) and (b)' in subparagraph (D) thereof to include this subsection), use any amount transferred to the account of such State under paragraphs (4)(B) and (5)(C) for the administration of its unemployment compensation law and public employment offices. ``(7) Out of any money in the Federal unemployment account not otherwise appropriated, the Secretary of the Treasury shall reserve $7,000,000,000 to carry out this subsection. For purposes of section 902, the net balance in the Federal unemployment account as of any time is the amount in such account as of such time reduced by an amount equal to the total amount so reserved less the total of the incentive payments transferred under this subsection (and the total amount transferred under paragraph (5)(A)(i)) as of such time. ``Special Transfers in Fiscal Years 2008 Through 2012 ``(g)(1) Notwithstanding any other provision of this section, the total amount available for transfer to the accounts of the States pursuant to subsection (a) as of the beginning of each of fiscal years 2008, 2009, 2010, 2011, and 2012 shall be equal to the total amount which (disregarding this subsection) would otherwise be so available, increased by $100,000,000 (or, in the case of fiscal year 2012, $100,000,000 plus the amount made available for transfer under subsection (f)(5)(A)(i)). ``(2) Each State's share of any additional amount made available by this subsection shall be determined, certified, and computed in the same manner as described in subsection (a)(2) and shall be subject to the same limitations on transfers as described in subsection (b). For purposes of applying subsection (b)(2), the balance of any advances made to a State under section 1201 shall be credited against, and operate to reduce (but not below zero)-- ``(A) first, any additional amount which, as a result of the enactment of this subsection, is to be transferred to the account of such State in a fiscal year; and ``(B) second, any amount which (disregarding this subsection) is otherwise to be transferred to the account of such State pursuant to subsections (a) and (b) in such fiscal year. ``(3) Any additional amount transferred to the account of a State as a result of the enactment of this subsection-- ``(A) may be used by the State agency of such State only in the payment of expenses incurred by it for-- ``(i) the administration of the provisions of its State law carrying out the purposes of subsection (f)(2) or any subparagraph of subsection (f)(3); ``(ii) improved outreach to individuals who might be eligible for compensation by virtue of any provisions of the State law which are described in clause (i); ``(iii) the improvement of unemployment benefit and unemployment tax operations; and ``(iv) staff-assisted reemployment services for unemployment insurance claimants; and ``(B) shall be excluded from the application of subsection (c). ``(4) The total additional amount made available by this subsection in a fiscal year shall be taken out of the amounts remaining in the employment security administration account after subtracting the total amount which (disregarding this subsection) is otherwise required to be transferred from such account in such fiscal year pursuant to subsections (a) and (b).''. (b) Regulations.--The Secretary of Labor may prescribe any regulations necessary to carry out the amendment made by subsection (a). SEC. 3. EXTENSION OF FUTA TAX. Section 3301 of the Internal Revenue Code of 1986 (relating to rate of tax) is amended-- (1) by striking ``2007'' in paragraph (1) and inserting ``2012'', and (2) by striking ``2008'' in paragraph (2) and inserting ``2013''.
summary: Unemployment Insurance Modernization Act - Amends the Social Security Act to require the Secretary of Labor to make unemployment compensation modernization incentive payments in FY2008-FY2012 by certain transfers from the federal unemployment account to the accounts of the states in the Unemployment Trust Fund. Prescribes a formula for determining the maximum allowable incentive payments. Specifies requirements state law must meet for the state to qualify for such a payment. Limits the use of transferred amounts to the payment of cash unemployment benefits to individuals. Requires the Secretary of the Treasury to reserve specified funds out of the federal unemployment account for such incentive payments. Amends the Internal Revenue Code to extend through FY2013 the Federal Unemployment Tax Act (FUTA) excise tax imposed on every employer.