Unemployment Insurance Administrative Funding

1
Unemployment InsuranceAdministrative Funding

• Formulation to Allocation
• Target Allocation
• Process Overview

US Department of Labor Employment and Training
Administration Division of Fiscal and Actuarial
Services

2
Presentation Topics

• Funding Background
• Formulation for State Administration
• Resource Justification Model
• Allocation

3
UI Administrative Funding

• Title III Section 302(a) Social Security Act
  Secretary of Labor shall certify to the Secretary
  of Treasury such amounts as necessary for proper
  and efficient administration of each States
  law.
• Social Security Act Title III
• (http//www.socialsecurity.gov/OP_Home/ssact/title
  03/0300.htmft1)

4
Budget Timeline for FY 200Z
June
July
Jan.
Initial Budget Formulation
ETA Request to DOL
Sept.
Initial Workload Projection
DOL Request to OMB
200X
Budget Hearings w/OMB
Oct.
200Y

OMB Passback
Final Workload Projections
Presidents Budget Request
Nov.
Jan.
Feb.
Planning Targets
June
Aug.
Oct.
States Submit SQSP
Final Allocations FY 200Z
5
Budget Formulation

• Workload Driven.
• Workloads projected using statistical methods
  Administrations economic assumptions
• Key workload item Continued Claims.

6
Budget Formulation

• Base and Above Base
• Projected Continued Claims divided by 52 is
  designated the Average Weekly Insured
  Unemployment (AWIU) trigger.
• Funding in Presidents Request considered
  adequate to process workloads up to the trigger.
• Funds automatically made available for AWIU
  above the trigger at rate of 28.6 M per 100,000
  AWIU pro-rated (amounts developed in the
  1990s).

7
Budget Formulation

• Congress obligated to use CBOs economic
  assumptions for scoring.
• CBO AWIU projections typically different due
  primarily to different economic assumptions and
  projecting methodology.
• Funding gap created when CBOs AWIU projection
  higher than Administrations since Congress
  typically accepts the dollars requested or
  something lower.

8
Budget Formulation

• Funding gap example
• For FY 2008, dollars funded AWIU of 2.4M while
  trigger was set at 2.786M.
• Initial budget request included an AWIU of 2.62M
  however a continuing resolution held the AWIU at
  the FY 2007 level of 2.4M

9
Budget Formulation
Budget Item Base Computation Above-Base Computation
Initial Claims WL/SY WL/SY
Weeks Claimed WL/SY WL/SY
Eligibility Review WL/SY WL/SY
Non-Mon Determination WL/SY WL/SY
Appeals WL/SY WL/SY
Benefit Payment Control Previous Year N/A
Wage Records WL/SY N/A
Subject Employer WL/SY N/A
Tax Field Audit WL/SY N/A
Interstate Previous Year N/A
Internal Security Previous Year N/A
UI PERFORMS Previous Year N/A
SAVE WL/SY N/A
Trade N/A WL/SY
Support 12 of above SYs 5 of above SYs
AST 9 of above Sys including Support 2.5 of above Sys including Support

• Number of staff computed using fixed workload per
  staff-year factors.

• SY(WL projected) / (WL/SY factor)

10
Budget Formulation

• Staff costs (SY) X Cost per SY
• Note In FY2010, inflation included for 1st time
  since 1995
• Other activities, e.g., non-personal services
  (utilities, facilities, etc.), overhead, support,
  postage, are established percentages of staff
  costs.
• Key result total dollars for state
  administration.

11
Allocating Base Funds

• What are the primary drivers of the base
  allocation?
• Where does the data that drives the base
  allocations come from?

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Budget Allocation
Workload Staff Year Levels
Projected State level Workload
Staff Year Costs


Non Workload Staff Year Levels
NPS Costs
Total Available for Allocation
13
Allocating Base Funds

• Two key features of allocation
• Based on cost of doing business and
  appropriation.
• Goal provide funding that allows roughly equal
  level of service across all states and recognize
  need for productivity incentives.

14
Allocating Base Funds

• Funding provided in two parts Base Above Base
• Base costs associated with processing an
  AWIU of 2.3M
• Initial Claims
  16.75M
• Weeks Claimed 119.6M
• Non-monetary determinations 7.000M
• Appeals
  1.128 M
• All subject employers (200X) 7.674M
• All wage records (200X) 641.146M
  

15
Allocating Base Funds

• Base funding determined by applying formulation
  methodology to base workloads.
• Above-base claims activity above 2.3M AWIU

16
Data Source for Allocation

• Resource Justification Model (RJM)
• RJM is a data collection instrument.
• States submit data from cost accounting records
• Expenditures, Hours by functional activity,
  personnel costs
• Data is subject to review verification

17
RJM - Objectives

• Demonstrate true funding need.
• Use data to allow for fair and equitable
  allocation of available funds.
• RJM Website
• (http//www.ows.doleta.gov/rjm/)

18
RJM Use of Data

• Actual cost data for most recent year available
  are the starting point for determining base
  allocations.
• Shows how much and on what activities states
  spent money.
• Supplements to the federal grant not considered
  in allocation formula.

19
Allocating Base Funds

• Availability by activity
• Allocated base funds assigned to functional
  activities according to proportions reflected in
  RJM data collection.
• Claims activities
• Non-personal services
• Tax/Wage Records
• Support
• AST
• BPC/UIP

20
Allocating Base Funds

• Primary drivers of base allocation levels
• Each states share of national UI workloads
  (claims, appeals, wage records, tax accounts)
• Initial Claims
  16.75M
• Weeks Claimed
  119.6M
• Non-monetary determinations 7.000M
• Appeals
  1.128 M
• Each states PS/PB rates (from RJM)

21
Allocating Base Funds

• Primary drivers of base allocation levels
• Time allowed for processing each budgeted
  workload item (MPUs, which are calculated from
  RJM data)
• 3-year average
• Non-personal services spending (from RJM)
• 3-year average

22
FY 200Z Targets
Inflated FY0X Rates (Derived from RJM Data) Inflated FY0X Rates (Derived from RJM Data)
Unreduced Total Percent Shortfall Targets
Workload SY 1,395,198,145 56.9 -161,884,626 1,233, 313,519
Appeals 214,568,805 8.8 -25,188,923 189,379,882
Support SY 311,900,446 12.7 -36,189,865 275,710,581
AST SY 214,325,600 8.7 -24,857,601 189,467,999
NPS 529,661,418 21.6 -61,456,195 468,205,223
Sub. TOTAL 2,451,085,609 100.0 -284,388,287 2,166,697,322
BPC/UIP SY 138,409,793 0.0 0 138,409,793
TOTAL 2,589,495,402 100.0 -284,388,287 2,305,107,115
23
Allocations

• Staff years
• Cost
• MPU reduction algorithm
• MPU values are an average of the most recent
  three years of actual data.

Workload x MPU Minutes Worked Per
Year Per Staff
Staff Years x PS/PB rates
24
1 madj (mpu_st mpu_high10) alpha
2 wadj .75 ( AP_st / (AP_highst4))
MPU Reduction Process - Appeals
1
2
25
Allocations

• Support and AST percentages are reduced by the
  same algorithm used for MPU values.
• BPC, UIP staff years taken after adjustment for
  state dollars.

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Allocations

• Total Allocation
• (Reduced SYs x Inflated PSPB rates) Reduced NPS
  
• SYs for BPC UIP are not reduced
• NPS is decreased across-the-board to equal
  availability.

27
Allocations

• Stop-loss is -5 of total dollars from previous
  years base allocation.
• Stop-gain is not pre-determined.
• Has been as low as 4.56 and as high as 7.71

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Bottom Line Authority

• States have authority to move allocated resources
  among activities.
• Cannot move resources in such a way as to
  increase above base payment.