Unemployment Insurance
Allotment Formula Description
The allotments for the Unemployment Insurance (UI) program fund the base
level operations of the program and are calculated using an administrative,
not statutory, formula. States are provided with preliminary
and final planning estimates of the projected allotments. The preliminary
allotment estimates for the upcoming fiscal year beginning October 1 are
based on the estimated UI program appropriation for that fiscal year. They
are typically prepared in the spring and issued to the States in May .
Once the final appropriation is known, the final estimates are
prepared and issued in the fall. Additional contingency funding beyond
the base funding is given to the States on a quarterly basis throughout the
fiscal year, based on additional workloads experienced.
From the amount appropriated for base operations of the UI program, an estimated
amount is first set aside to cover State postage costs related to UI activities
paid to the U.S. Postal Service by the ETA Office of Comptroller. From
the remaining balance, State allotments are calculated. The allotment for
each State is a composite of funding estimated for personal salaries
and benefits and nonpersonal services, for base staff and special projects
staff, as well as other special State-specific project costs. Each
component has a specified methodology for calculating staff and/or dollars.
For those functions involving staff, the first step is the calculation of
the number of staff. The base staff methodology is the predominant
component of a State's allotment, both in terms of number of staff and dollars.
Regular Base Staff Methodology
The regular base staff represents staff needed to process UI claims and subject
employers. Conceptually, base staff represents forecast workload multiplied
by minutes-per-unit (MPU) and divided by minutes per staff year.
Salary and personnel benefit rates and nonpersonal services rates are
then applied to the calculated staff years to develop the total dollar level
for base staff. This is described in more detail as follows: Workloads
for subject employers and wage records are funded at total forecasted
levels.
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Workload Forecasts
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Using the economic assumptions (total unemployment rate, employment growth,
and inflation measures) in the President's budget for the fiscal year , national
base workloads are determined for the four broadband claims items of initial
claims, weeks claimed, nonmonetary determinations, as well as subject employers
and wage records. Statistical models are then used to project total
workload levels for each of these workload items for each State, using historical
using historical patterns and relationships over the last 10-20 years. The
State base workloads for initial claims, weeks claimed, nonmonetary
determinations are then determined by proportionally reducing the total workload
forecasts such that they sum to the budgeted national base workloads. Workloads
for wage records and subject employers are similarly adjusted to match the
budgeted national base workloads.
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Allowable Minutes per Unit Factors
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MPU's were historically developed for the mix-level workload items using
a time measurement system called the Cost Model. Budgeted MPU's are
reduced from historical Cost Model MPU's so that the number of targeted positions
equal the number of available positions for the fiscal year. In this
process, the lowest MPU's in each category are not reduced, and States with
smaller workloads are protected from the full reduction. Other adjustments
in selected MPU's are made to reflect major procedural changes in certain
functions known among States, since the Cost Model is no longer operational.
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Hold-Harmless Provision
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For each of the four broadband claims activities (initial claims, weeks claimed,
nonmonetary determinations, appeals), States receive at least 80 percent
of their relative share of total staff years for all States for the preceding
fiscal year. In addition, sparsely-populated States (same definition
as used for the Employment Service 3 percent reserve allotment methodology)
have a minimum of the higher of the 80 percent hold-harmless staff years
calculated or their FY 1990 allocation, for each of the four broadband items.
The additional staff years needed to increase States to these minimum levels
are obtained by reducing the States with the largest gains in an iterative
process until all States at the minimum are satisified.
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Voluntary Withholding
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Public Law 103-454 (GATT Uruguay Round) mandates that, effective January
1, 1997, the States offer claimants the option of voluntary tax withholding
from their benefit payments. The President's budget for FY 1997 included
additional funds for this new responsibility, which was calculated using
an estimated add-on MPU value for initial claims. For each State, base
staff resources are added equal to the number of staff years needed for voluntary
withholding at that MPU level, adjusted for the effective date.
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Other Base Staff
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For several specified non-MPU functions (for example, eligibility review
program, benefit payment control, internal security, UI support, and travel),
staff years are developed using ratios to one of the broadband items, historical
operating levels, or estimated level of activity.
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Personnel Compensation Costs
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Separate State-specific salary rates are used for UI base, contingency, and
Administrative Staff and Technical Services (AS&T) staff. These
rates are based on approved rates developed from a 1992 salary survey, increased
each subsequent year by the inflation factor, if any, used in the President's
budget.
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Administrative Staff and Technical Services (AS&T) Staff
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AS&T staff are determined by applying State historical percentages of
AS&T staff to regular UI staff years to the above calculated base UI
staff level( plus other selected functions). A pro rata adjustment
is then applied to match the total AS&T staff level with the total budgeted
AS&T staff year availability. This staff level is then multiplied
by the State AS&T salary/benefit rate to determine State AS&T funding.
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Nonpersonal Services (NPS)
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State-specific NPS rates are based on historical unit costs increased for
the inflation factor used for NPS in the President's budget for the specified
fiscal year. A further adjustment is made for those States losing staff
from the previous year to ensure that a portion of the NPS unit cost is retained
by the State. This unit cost is multiplied by the above-calculated
UI staff years (base, interstate, Voluntary Withholding, Trade and AS&T)
to determine the State AS&T dollar level. A pro rata adjustment
is applied, as necessary, to match the total calculated State AS&T dollars
with the budget availability.
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Special Projects
Staff for special projects (examples are UI PERFORMS, Interstate Claims and
Interstate Connection Network, Trade Adjustment Assistance Coordinator) are
determined based on the needs of the project activities for the upcoming
fiscal year, adjusted to the availability of funds. Generally, the dollar
allotments for these staff are calculated using the same salary, personnel
benefit, nonpersonal services and AS&T rates as used for regular base
staff, although special salary/benefit dollars are allocated for certain
positions. Additional resources are provided for travel, telephone,
etc., as needed.
Other Items
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Automation Grants Payback
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All State Employment Security Agencies (SESA's) have received UI Automation
Support (UIASA) grants and have agreed to pay back the grants from subsequent
base allotments according to payback schedules submitted. The scheduled
payback amounts applicable to the year for which the base allotments are
determined are subtracted from those allotments. (Payback expires in FY 1999.)
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SESA Retirement Funds
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These funds represent the UI share of the annual amortization cost of the
unfunded liabillity for two State agencies with independent retirement plans.
The dollar levels are based on the most recent actuarial studies from
each agency involved.
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Shortfall Assessment
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If the dollars formulated in the allotment calculations are more than can
be funded by the appropriation, each State is assessed an equal percentage.
This amount is subtracted from the bottom line for each State allotment.
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