article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Unemployment Compensation Amendments of 1999''. SEC. 2. AMENDMENTS TO EXTENDED BENEFIT PROGRAM. (a) Repeal of Certain State Law Requirements.--Section 202 of the Federal-State Extended Unemployment Compensation Act of 1970 (26 U.S.C. 3304 note) is amended-- (1) by striking paragraphs (3), (4), (5), (6), and (7) of subsection (a); and (2) by repealing subsection (c). (b) Establishment of Mandatory Triggers Based on Total Unemployment.-- (1) State `on' and `off' indicators.--Subsection (d) of section 203 of such Act is amended to read as follows: ``State `On' and `Off' Indicators ``(d) For purposes of this section-- ``(1) There is a State `on' indicator for a week if-- ``(A)(i) the average rate of total unemployment in such State (seasonally adjusted) for the period consisting of the most recent three months for which data for all States are published before the close of the week equals or exceeds 7.5 percent, and ``(ii) the average rate of total unemployment in such State (seasonally adjusted) for the 3-month period referred to in clause (i) equals or exceeds 110 percent of such average for either (or both) of the corresponding 3-month periods ending in the two preceding calendar years; or ``(B) the average rate of total unemployment for such State (seasonally adjusted) for the period consisting of the most recent 3 months for which data for all States are published before the close of the week equals or exceeds 10 percent. ``(2) There is a State `off' indicator for a week unless the requirements of subparagraph (A) or (B) of paragraph (1) are satisfied.''. (2) Determination of rates of total unemployment and insured unemployment.--Subsection (e) of section 203 of such Act is amended to read as follows: ``Determination of Rates of Total Unemployment and Insured Unemployment ``(e)(1) For purposes of this Act, determinations of the rate of total unemployment in any State for any period (and of any seasonal adjustments) shall be made by the Secretary. ``(2)(A) For purposes of subsection (f)(2), the rate of insured unemployment for any thirteen-week period shall be determined by reference to the average monthly covered employment under the State law for the first four of the most recent six calendar quarters ending before the close of such period. ``(B) For purposes of subsection (f)(2), the term `rate of insured unemployment' means the percentage arrived at by dividing-- ``(i) the average weekly number of individuals filing claims for regular compensation for weeks of unemployment with respect to the specified period, as determined on the basis of the reports made by the State agency to the Secretary, by ``(ii) the average monthly covered employment for the specified period. ``(C) Determinations under subsection (f)(2) shall be made by the State agency in accordance with regulations prescribed by the Secretary.''. (c) Requirements for Supplemental Benefits During High Unemployment Periods.-- (1) In general.--Subparagraph (B) of section 202(b)(3) of such Act is amended to read as follows: ``(B) For purposes of subparagraph (A), the term `high unemployment period' means any period during which an extended benefit period would be in effect if-- ``(i)(I) section 203(d)(1)(A)(i) were applied by substituting `10 percent' for `7.5 percent'; and ``(II) section 203(d)(1)(B) were applied by substituting `12.5 percent' for `10 percent'; and ``(ii) section 203(f)(1)(A)(i) were applied by substituting `8 percent' for `6.5 percent'.''. (2) Technical amendment.--Subsection (b) of section 202 of such Act is amended by moving the text of paragraph (3)(A) of such subsection 2 ems to the left. (d) Amendments to Alternative Trigger.--Section 203(f) of such Act is amended-- (1) in paragraph (1), by striking ``Effective with respect to compensation for weeks of employment beginning after March 6, 1993, the'' and inserting ``In lieu of applying the indicator specified in subsection (d)(1)(A), a''; (2) by amending paragraph (2) to read as follows: ``(2) A State may by law provide that, for the purpose of beginning or ending any extended period under this section, in addition to the indicators specified in subsection (d) and paragraph (1) of this subsection-- ``(A) there is a State `on' indicator for a week if the rate of insured unemployment under State law for the period consisting of such week and the immediately preceding twelve weeks equals or exceeds 6 percent; and ``(B) there is a State `off' indicator for a week if the requirement set forth in subparagraph (A) is not satisfied. Notwithstanding the provision of any State law described in this paragraph, any week for which there would otherwise be a State `on' indicator shall continue to be such a week and shall not be determined to be a week for which there is a State `off' indicator.''. SEC. 3. SPECIAL DISTRIBUTIONS TO THE STATES. Section 903(a)(3) of the Social Security Act (42 U.S.C. 1103(a)(3)) is amended-- (1) in subparagraph (A) by amending clauses (i) and (ii) to read as follows: ``(i) be subject to subparagraphs (B) and (C), to the extent such amounts are not in excess of the sum of-- ``(I) $20,000,000, plus ``(II) the amount determined by the Secretary of Labor to be the difference between the amount necessary for the proper and efficient administration of the unemployment compensation program for the succeeding fiscal year (taking into account workload and other appropriate factors) and $2,419,000,000, and ``(ii) be subject to subparagraph (D), to the extent such amounts are in excess of the sum of subclauses (I) and (II) of clause (i).''; (2) in subparagraph (B) by striking ``(A)(i)'' and inserting ``(A)(i)(II)''; (3) by redesignating subparagraphs (B) and (C) as subparagraphs (C) and (D), respectively; and (4) by inserting after subparagraph (A) the following new subparagraph: ``(B) The Secretary of Labor shall reserve the amount specified in subparagraph (A)(i)(I) (at the close of fiscal years 1999, 2000, and 2001) to award grants to the States in fiscal years 2000, 2001, and 2002 to assist in the implementation of alternative base periods for determining the eligibility of claimants. Such alternative base periods shall reduce the period of time between the end of the base period for a claimant and the filing of a claim for compensation. The amounts reserved pursuant to this subparagraph shall be available to the Secretary of Labor for obligation through fiscal year 2002.''. SEC. 4. SOLVENCY REQUIREMENTS. Section 903(b) of the Social Security Act (42 U.S.C. 1103(b)) is amended by adding at the end the following new paragraph: ``(3)(A) If the Secretary of Labor finds that, as of December 31, 2001, a State has not achieved, or made acceptable progress toward achieving, the solvency target established pursuant to subparagraph (B), then, subject to the limitation described in subparagraph (C), the amount available under this section for transfer to such State account for the succeeding fiscal year shall, in lieu of being so transferred, be transferred to the States meeting the requirements of this subsection. The transfers shall be made to such States based on the share of funds of each such State under subsection (a)(2), except that, for purposes of this subparagraph, the ratio under subsection (a)(2) shall be adjusted by excluding the wages attributable to the States failing to meet the requirements of this subparagraph. ``(B)(i) For December 31, 2001, the solvency target shall be an average high cost multiple of 1.0. For purposes of this subparagraph, the average high cost multiple represents the number of years a State could pay unemployment compensation (based on the reserve ratio of such State) if the State paid such compensation at a rate equivalent to the average benefit cost rate such State paid in the three calendar years during the preceding 20 calendar years (or, if longer, during the period consisting of the preceding three recessions as determined by the National Bureau of Economic Research) that the benefit cost rates were the highest. For purposes of making this determination-- ``(I) the term `reserve ratio' means the ratio determined by dividing the balance in the State account at the end of the calendar year by the total covered wages in the State for such year; ``(II) the term `benefit cost rate' means the rate determined by dividing the unemployment compensation paid during a calendar year by the total covered wages in the State for such year; and ``(III) the ratio and rates determined under subclauses (I) and (II) shall exclude the wages and unemployment compensation paid by employers covered under section 3309 of the Internal Revenue Code of 1986. ``(ii) For December 31, 2001, acceptable progress towards achieving the solvency target shall mean that a State has reduced any difference between 1.0 and the average high cost multiple of such State (if such multiple is less than 1.0) that the Secretary found to exist as of December 31, 1998, by an amount equal to or exceeding 5 percent of such difference. ``(iii) The Secretary may adjust the solvency target specified in clause (i), or the criteria for determining whether there is acceptable progress towards achieving the solvency target specified in clause (ii), for States that experience significant increases in unemployment during the period between December 31, 1998, and December 31, 2001. The Secretary shall establish objective criteria for making such adjustments. ``(iv) A State shall include, as part of the annual State plan relating to the administration of grants under this title, such information as the Secretary may request relating to the manner in which the State intends to achieve the solvency target established pursuant to this paragraph. ``(C) The requirements of subparagraph (A) shall apply to excess (referred to in subsection (a)(1)) remaining in the employment security account at the close of fiscal year 2002 that are equal to or less than $2,900,000,000. Such requirements shall not apply to any such excess amounts that are greater than $2,900,000,000.''. SEC. 5. TREATMENT OF SHORT-TIME COMPENSATION PROGRAMS. (a) General Rule.--Section 3306 of the Internal Revenue Code of 1986 (26 U.S.C. 3306) is amended by adding at the end the following new subsection: ``(u) Short-Time Compensation Program.--For purposes of this chapter, the term `short-time compensation program' means a program under which-- ``(1) the participation of an employer is voluntary; ``(2) an employer reduces the number of hours worked by employees in lieu of temporary layoffs; ``(3) such employees whose workweeks have been reduced by at least 10 percent are eligible for unemployment compensation; ``(4) the amount of unemployment compensation payable to any such employee is a pro rata portion of the unemployment compensation which would be payable to the employee if such employee were totally unemployed; ``(5) such employees are not required to meet the availability for work or work search test requirements while collecting short-time compensation benefits, but are required to be available for their normal workweek; ``(6) eligible employees may participate in an employer- sponsored training program to enhance job skills if such program has been approved by the State agency; ``(7) the State agency may require an employer to continue to provide health benefits, and retirement benefits under a defined benefit pension plan (as defined in section 414(j)) to any employee whose workweek is reduced pursuant to the program as though the workweek of such employee had not been reduced; ``(8) the State agency may require an employer (or an employers' association which is party to a collective bargaining agreement) to submit a written plan describing the manner in which the requirements of this subsection will be implemented and containing such other information as the Secretary of Labor determines is appropriate; and ``(9) the program meets such other requirements as the Secretary of Labor determines are appropriate.''. (b) Conforming Amendments.-- (1) Subparagraph (E) of section 3304(a)(4) of such Code (26 U.S.C. 3304(a)(4)(E)) is amended to read as follows: ``(E) amounts may be withdrawn for the payment of short-time compensation under a short-time compensation program (as defined under section 3306(u));''. (2) Paragraph (5) of section 3306(f) of such Code (26 U.S.C. 3306(f)(5)) is amended to read as follows: ``(5) amounts may be withdrawn for the payment of short- time compensation under a short-time compensation program (as defined under subsection (u)); and''. (3) Section 303(a)(5) of the Social Security Act (42 U.S.C. 503(a)(5)) is amended by striking ``the payment of short-time compensation under a plan approved by the Secretary of Labor'' and inserting ``the payment of short-time compensation under a short-time compensation program (as defined in section 3306(u) of the Internal Revenue Code of 1986)''. SEC. 6. EFFECTIVE DATE. (a) In General.--Except as provided in subsection (b), the provisions of this Act shall take effect on the date of enactment of this Act. (b) Extended Benefit Amendments.-- (1) Except as provided in paragraph (2), the provisions of section 2 of this Act shall take effect for the weeks beginning on or after October 1, 2002. (2) Pursuant to the enactment of appropriate provisions of the State law, the provisions of section 2 may, with respect to such State, take effect for weeks which begin earlier than the weeks specified in paragraph (1), but not earlier than 60 days after the date of enactment of this Act.
summary: Amends title IX (Employment Security Administrative Financing) of the Social Security Act (SSA) to modify the ceiling on the Federal Unemployment Account. Provides for special distributions of funds to the States under SSA title IX. Directs the Secretary of Labor to reserve specified amounts for grants to States to assist in implementing alternative base periods for determining the eligibility of claimants for unemployment compensation. Requires States to achieve or make substantial progress toward achieving certain solvency targets for their unemployment compensation accounts. Directs the Secretary to transfer to other States' accounts the amount that would otherwise be transferred to the account of a State that violates such requirement under SSA title IX. Revises SSA title IX requirements for distribution to States of certain excess amounts in the Employment Security Administration Account as of the close of FY 2002. Amends the North American Free Trade Agreement Implementation Act to extend the self-employment assistance program. Amends the Federal Unemployment Tax Act (FUTA) under the Internal Revenue Code to set forth requirements for treatment of short-time compensation programs.