NATIONAL UNEMPLOYMENT INSURANCE PROGRAM UPDATE

G A Y G I L B E R T , A D M I N I S T R A T O R U N E M P L O Y M E N T I N S U R A N C E U S D O L / E T A J U N E 2 7 , 2 0 1 8

UI NATIONAL UPDATE

v Program Highlights v Quick Look at the Data v Strategic Investments/Initiative v The New Permanent RESEA v FY 2018 Budget v What’s Next?

2

PROGRAM HIGHLIGHTS

v  Lowest workload since the 60s v  States experiencing constrained funding, limiting staff capacity v  States continue to struggle with meeting performance standards

and integrity measures, and to successfully implement data validation

v  Many , if not most, states are not ready for the next recession v  IT modernization still needed in a majority of states v  Disaster preparedness highlighted by 2017 hurricanes v  RESEA is now codified in the Social Security Act

3

2017 HURRICANES

State/ Territory

FEMA Funding Disaster Related Claims

Total # DUA Claims # Regular UI Claims

# Total Claims

Puerto Rico $14,349,978 ---* ---* 11,592

Florida $6,747,422 7,237 35,160 42,397

Texas $25,488,162 26,284 143,068 169,352

Georgia $331,085 314 2,410 2,724

Virgin Islands $2,825,640** 1,493*** 2,462***  

4

HURRICANE TAKEAWAYS

v Many/most, states have not automated the DUA program

v State redundant systems are not sufficient v Alternative solutions for supporting states with

significant damage are needed §  Ex: Ability for “helper” state(s) to access the

disaster state’s system to support claims taking v And hurricane season is upon us once again

5

A Quick Look at the Data

6

7 Source: USDOL/BLS

Unemployment Rates by State Seasonally Adjusted, April 2017

(U.S. = 3.9%)

Rates in %0 to 33 to 44 to 55 to 8

Source: US DOL/BLS and US DOL/Office of Unemployment Insurance

8

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

0

2

4

6

8

10

12

1973

19

74

1975

19

76

1977

19

78

1979

19

80

1981

19

82

1983

19

84

1985

19

86

1987

19

88

1989

19

90

1991

19

92

1993

19

94

1995

19

96

1997

19

98

1999

20

00

2001

20

02

2003

20

04

2005

20

06

2007

20

08

2009

20

10

2011

20

12

2013

20

14

2015

20

16

2017

20

18

Firs

t Pay

men

ts

Tota

l Une

mpl

oym

ent R

ate

(%)

First Payments in the Regular Program

TUR (L)

First Payments (Moving Average, R)

Source: US DOL/BLS and US DOL/Office of Unemployment Insurance

0.00

4.00

8.00

12.00

16.00

20.00

24.00

0

2

4

6

8

10

12

1973

19

74

1975

19

76

1977

19

78

1979

19

80

1981

19

82

1983

19

84

1985

19

86

1987

19

88

1989

19

90

1991

19

92

1993

19

94

1995

19

96

1997

19

98

1999

20

00

2001

20

02

2003

20

04

2005

20

06

2007

20

08

2009

20

10

2011

20

12

2013

20

14

2015

20

16

2017

20

18

Aver

age

Dur

atio

n (W

eeks

)

Tota

l Une

mpl

oym

ent R

ate

(%)

Average Duration on UI in the Regular Program

TUR (L)

Average Duration (R)

10

0%

10%

20%

30%

40%

50%

60%

70%

1978

19

79

1980

19

81

1982

19

83

1984

19

85

1986

19

87

1988

19

89

1990

19

91

1992

19

93

1994

19

95

1996

19

97

1998

19

99

2000

20

01

2002

20

03

2004

20

05

2006

20

07

2008

20

09

2010

20

11

2012

20

13

2014

20

15

2016

20

17

Calendar Year

U.S. Recipiency Rates (All Programs, Annual, 1978 - 2017)

11

0

10

20

30

40

50

60

70

80

90

ND

MN

IA

MA VT

HI

NJ

MT CT

WI RI

PA

CA

IL

AK

ME ID

NY

DC

WY

OR MI

WV DE

WA

OH

MO

NV NE KY

KS

IN

CO

AR

MD

NH TX

UT AL

SD

NM

OK VA

SC

TN

MS

GA

LA

AZ

NC FL

InsuredUne

mployed

/TotalUne

mployed

(%)

States

FirstQuarter2018RecipiencyRate(InsuredUnemployed/TotalUnemployed)

Average:32.6%

Stateswithunder26weeksofUnemploymentCompensationAvailable

28StatesareundertheAverageRecipiencyRate

Source: US DOL/BLS and US DOL/Office of Unemployment Insurance

12

0

10

20

30

40

50

60

0

2

4

6

8

10

12

1973

19

74

1975

19

76

1977

19

78

1979

19

80

1981

19

82

1983

19

84

1985

19

86

1987

19

88

1989

19

90

1991

19

92

1993

19

94

1995

19

96

1997

19

98

1999

20

00

2001

20

02

2003

20

04

2005

20

06

2007

20

08

2009

20

10

2011

20

12

2013

20

14

2015

20

16

2017

20

18

Exha

usio

nt R

ate

(%)

Tota

l Une

mpl

oym

ent R

ate

(%)

Exhaustion Rate in the Regular Program

TUR (L) Exhaustion Rate (R)

TOTAL BORROWING OVER TIME AND PROJECTED BORROWING THROUGH END OF FY

2020

13

0

5

10

15

20

25

30

35

40

45

50

Bill

ions

$

End of FY Borrowing

Actual Forecast

Private Borrowing Private Borrowing Forecast

14

0

2

4

6

8

10

12

14

16

18

1980

19

81

1982

19

83

1984

19

85

1986

19

87

1988

19

89

1990

19

91

1992

19

93

1994

19

95

1996

19

97

1998

19

99

2000

20

01

2002

20

03

2004

20

05

2006

20

07

2008

20

09

2010

20

11

2012

20

13

2014

20

15

2016

20

17

2018

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

%

Thou

sand

s

Weeks Claimed, Civilian Labor Force, and TUR

Civilian Labor Force (R)

TUR (L)

Weeks Claimed (R)

0

0.5

1

1.5

2

2.5 OR

W

Y VT

MS UT

SD

N

E OK

AK

ID

M

T IA

LA

WA

NC

ME PR

H

I N

M

DC KS

AR

FL

N

H G

A MI

NV VA

MN

TN

AL

N

D

MD

SC

W

I M

O RI

CO

DE NJ

AZ

KY

PA

IL

CT

NY

MA

WV IN

OH

TX

CA

VI

Average High Cost Multiple, 2007 & 2017*

AHCM 2007

AHCM 2017

Source: DOL/OUI * 2017 AHCM is Preliminary

16

Trust Fund Solvency Report This annual publication provides an opportunity to evaluate and compare each state’s Unemployment Insurance trust fund reserve. Highlights form the 2018 report include:

•  24 states have reached what is considered the minimal level of adequate solvency

•  As of Dec 2017, one state and one jurisdiction still had outstanding Federal loans and face a potential FUTA credit reduction in 2018

•  Three states have outstanding private borrowing of over $3.9 Bil.

•  For 2018 thirty states meet the eligibility criteria for interest-free borrowing

•  The report can be found here: https://oui.doleta.gov/unemploy/docs/trustFundSolvReport2018.pdf

17

APPROPRIATIONS FOR STATE UI ADMINISTRATION PER 2.0 MILLION AWIU

Adjusted into constant 2005 dollars

Dashed Line displays inclusion of Y2K funds in FY98 and FY99

1.7

1.8

1.9

2.0

2.1

2.2

2.3

2.4

2.5

2.6

2.7

86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18

$ B

illio

ns

Fiscal Year

18

0

50

100

150

200

250

300

350

400

450

5001994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Millions

FiscalYear

StateSupplementalFundingforUI

Source:NationalAssociationofStateWorkforceAgencies

19

20

21

IPIA UI IMPROPER PAYMENT RATE Improper Payments Information Act

(7/1/2016 – 6/30/2017)

22

Estimated Overpayment Rate (OP) 12.11%

Estimated Underpayment Rate (UP) 0.39%

Total Improper Payment Rate (OP + UP) 12.50%

Total Estimated Amount Improperly Paid $4.066 B

Dollar amounts are in billions.

Reported in the 2017 DOL Agency Financial Report

23 Overpayment Root Causes by Percentage of Dollars Overpaid July 1, 2016 – June 30, 2017

UI IMPROPER PAYMENT RATE

24

IPIA2013adjustedrateforrecoveries=9.32%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

11%

12%

13%

2008 2009 2010 2011 2012 2013* 2014 2015 2016 2017

FraudandNonfraudOverpayments,andUnderpayments

Fraud Nonfraud Underpayment

UI INTEGRITY CENTER v  National Integrity Training Academy v  Integrity Knowledge Exchange

v Best/Promising Practices v Model BPC Operations Blueprint v State Integrity Services/Business Process Analysis

v  Integrity Data Hub v Suspicious Actor Repository v External Data Cross-match (Identity Verification)

v  Data Analytics Tool v  State Consultation/Business Process Analysis v  Behavioral Insights Messaging Tools

25

STATE INFORMATION DATA EXCHANGE SYSTEM (SIDES)

v  SIDES Employer Response Study (November 2017) §  Evaluated the quality of employer responses to initial requests received

via SIDES to those not using SIDES §  Five states participated in the Study §  Quality scores were significantly higher for SIDES (91.75 percent) and E-

Response (94.64 percent) compared to initial claims using non-SIDES methods (63.34 percent)

§  Employer response rates higher for SIDES (100 percent) and E-Response (99.73 percent) versus non-SIDES methods (81.35 percent)

v  Commitment to Continuous Improvement §  April 2018 Symposium Sessions for States and Employers §  April 2018 SIDES messaging toolkit released §  June 2018 national webinar for states planned

26

UI INTEGRITY LEGISLATIVE PACKAGE

v  In ETA’s FY2018 and FY 2019 Budgets v  Require States to use SIDES v  Require cross match with SSA’s/other prisoner database v  Allow the Secretary of Labor greater authority to require UI

corrective actions v  Allow States to retain up to 5 percent of UI over-payments for

program integrity use v  Require States to use penalty and interest collections solely for UI

administration

27

REEMPLOYMENT SERVICES & ELIGIBILITY ASSESSMENT PROGRAM (RESEA) Codified in Section 306 of SSA, Bipartisan Budget Act (PL 115-123)

Summary: RESEAs are in-person meetings between a UI claimant and appropriately trained AJC Staff Member intended to:

1.  Reduce UI claim duration through improved employment outcomes by providing labor market and career information, a reemployment plan, providing information and access to reemployment services through American Job Centers, and, as needed, referrals to training and education

2.  Ensure UI program integrity by assessing and confirming the continued UI eligibility of RESEA participants.

Availability: This voluntary program currently operates in 52 states and jurisdictions.

28

MEASURING SUCCESS FOR RESEA

v  Improving employment outcomes of individuals receiving UI and to reducing the average duration of receipt of benefits

v  Strengthening program integrity and reducing improper payments through detection and prevention of improper payments

v  Promoting alignment with the broader vision of WIOA of increased program integration and service delivery

v  Establishing RESEA as an entry point for UI claimants into other workforce system partners programs.

29

NEW PROVISIONS IN THE RESEA LAW v Requirement for a State Plan

•  Assurances of proper notice & consequences for non-participation, reasonable scheduling, description of RESEA activities, how the state’s program will meet the evidence requirements in the statute, and information from evaluations conducted

v New Funding Formula to be developed with State consultation

v Requirement to Use Interventions/Service Delivery Strategies that are Evidence-based

v Use of a percentage of the funds to reward states with strong performance in reducing

30

RESEA EVIDENCE REQUIREMENTS

v  Modeled after legislation for HHS home visiting program.

v  States must use grant funds only for interventions/service delivery strategies demonstrated to reduce claim duration by improving employment outcomes for participants.

v  To expand the scope of evidence-based interventions, beginning in 2023, states must use a certain percentage of funds (the % ratchets up in future years) for interventions with a high or moderate causal evidence ratings that show demonstrated capacity to improve employment and earnings outcomes for participants.

v  Also, beginning in 2023, any state interventions without a high or moderate causal evidence rating must be under evaluation at the time of use. States may use up to 10% of their funding for this purpose.

31

FUNDING PROVISIONS

v  For Fiscal Years 2022 – 2027, Congress is authorized to make adjustments to the discretionary spending limits, the allocations to the Committees on Appropriations, and the appropriate budget aggregates to reflect additional new budget authority. Adjustments may not be made in excess of: v  FY 2022 - $133 million v  FY 2023 - $258 million v  FY 2024 - $433 million v  FY 2025 - $533 million v  FY 2026 - $608 million v  FY 2027 - $633 million

v  Through use of a “cap adjustment,” authorizes (but does not necessarily appropriate) significant funding increases (from $117 million baseline) overtime as result of expected savings due to reduced duration v  FY 2019 - $33 million increase v  FY 2020 - $58 million increase v  FY 2021 - $83 million increase

32

OTHER REEMPLOYMENT STRATEGIES

v My Reemployment Plan https://rc.workforcegps.org/resources/2016/10/03/05/28/My_Reemployment_Plan v Workforce Connect Tools Next Steps http://itsc.org/Pages/WF_Connect.aspx

v My Reemployment Plan Online v Case Management Module

v Pathway to Reemployment Framework – Improving State Work Search Requirements

https://rc.workforcegps.org/resources/2016/10/03/05/36/Pathway_to_Reemployment_Framework

33

FY 2019 PRESIDENT’S BUDGET

v Administrative Funding v  Integrity Center v  Integrity Proposal v Paid Parental Leave

34

WHAT’S NEXT?

v  RESEA Implementation v  Continued focus on UI improper payments v  New NPRM on Drug Testing Expected Soon v  Work Search Guidance v  UI ITSC under new leadership (Ben Peirce) and refocusing on

ways to support UI IT modernization v  Work to modernize the Interstate Connection Network (ICON) Hub

35

???QUESTIONS??? COMMENTS

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