1. Maximizing a UI Program Budget and Innovative Funding Strategies

2. Panel Panelist – Jim Van Erden, NASWA Senior Policy Advisor
Panelist – Brett Flachsbarth, Kansas Department of Labor
Panelist – Julie Smith, Ohio Department of Job and Family Services
Moderator – Ryan West , Iowa Workforce Development
Panel

3. UI Administrative Financing
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4. 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 State’s law.
The UI administration program was set up as a state and federal partnership. The federal government was given the responsibility to provide the administrative funding.
The law that governs the funding for UI Administration is contained in Title 3, Section 302 (a) of the Social Security Act.
In short, the law states that, “The Secretary of Labor shall certify to the Secretary of the Treasury for payment to each State which has an unemployment compensation law approved by the Secretary of Labor under the Federal Unemployment Tax Act, such amounts as the Secretary of Labor determines to be necessary for the proper and efficient administration of such law during the fiscal year for which such payment is to be made ”.
The full text of the law can be found at the referenced link.
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5. UI Administrative Funding Why Do We Have Less?
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6. UI Continued Claims
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7. State Administrative Funding Overview
Federal UI Admin Budget is a lengthy process
Estimate is submitted as part of the Presidents Budget to Congress
Congress modifies as necessary, then passes it in a Federal Budget or most often a Continuing Resolution.
Budget estimate is then allocated to the states in the UI Base Budget.
States may earn additional funds by processing workload above that assigned to them in the Base Budget
Developing the Federal UI Admin Budget is a lengthy process lasting some 20 months
Once the Estimate is made it is submitted as part of the Presidents Budget to Congress
Congress takes the President's request and modifies as necessary, then passes it in a Federal Budget or most often a Continuing Resolution.
Once the budget estimate is known, it is then allocated to the states in the UI Base Budget.
States may earn additional funds by processing workload above that assigned to them in the Base Budget
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8. Federal Budget Formulation
Workload Driven
Workloads projected using statistical methods & Administration’s economic assumptions
Key workload item: Continued Claims
Base and Above Base
Projected Continued Claims/52 get the Average Weekly Insured Unemployment (AWIU) trigger
Funding in President’s Request considered adequate to process workloads up to the trigger
Funds automatically available for AWIU above trigger at $28.6M per 100,000 AWIU
The major thrust in budget formulation relates to known and anticipated economic developments relating to volume of UI claims. Considerable weight is given to the economic assumptions promulgated semiannually by the President's Council of Economic Advisors, the Department of the Treasury, and OMB. The Department of Labor uses these assumptions as the basis for estimating national workload levels.
A key workload item is Continued Claims. This is because Continued Claims determines the Average Weekly Insured Unemployment (AWIU) trigger in the appropriation. If workloads exceed what has been anticipated in the AWIU calculation, an opportunity for the receipt of additional UI administrative funding is created. --
Base- the amount of money that the state has given each year prior to the starting fiscal year. And the amount is guaranteed.
Above base- funds that the state gets after it exceeds a certain level. (due to recession or high unemployment level)
Early in the history of the UI program, by agreement between the Executive Branch and the Congress, the total budget request was divided into a base budget, based upon both historical experience and the Administration's economic assumptions, and an above-base budget, designed to take into account variables in the program - largely fluctuations in the unemployment rate and attendant changes in benefit claims, both nationally and by individual state.
The budget is expressed in terms of the number of average weekly insured unemployment (AWIU) that can be processed at a given funding level. The projected total AWIU is a function of the Administration’s economic assumptions and estimates made by the Office of Workforce Security's (OWS) Actuarial Team. The base AWIU is set in a manner that minimizes the risk that some states will fail to earn their allocated base for benefit functions in one or more quarters. Since FY 2001, the base AWIU has been fixed at 2.3 million AWIU. Workloads above this level are funded from the above-base budget.
The base workloads for the benefit functions - initial claims, weeks claimed, eligibility reviews, non-monetary determinations, and appeals - are derived from the base AWIU level. Weeks claimed are, by definition, 52 times the AWIU. The other items are computed as a proportion of weeks claimed. The proportions used are those that would be expected to occur with the level of unemployment indicated by the base AWIU and differ from those proportions (are higher than) that would occur with average or high unemployment.
Base workloads for the wage record and tax functions are the projected total workloads, since there is no division into base and above-base funding for those items. These projections are also based on the Administration's economic assumptions.
The Department uses the AWIU trigger as the basis for the UI Administrative budget request. Therefore, all of the UI Administrative budget dollars relate to providing funding up to the AWIU trigger as submitted in the President’s budget.
If actual AWIU exceeds the trigger during the course of the FY, Congress is obligated to provide additional funding at a rate of $28.6 million per 100,000 AWIU and pro-rated.
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9. Components of Federal Admin Funding
Base—Computed as part of the federal budget process and allocated to states each year
Above Base—Estimated as part of the federal budget process and earned by states if they process workload above base estimates
Postage/Travel—allocated as part of Base
Supplemental Budget Requests (SBR) funding depends on the difference between federal budget levels and actual state usage
Funding for extended benefits or special programs
Funding for special activities--employee misclassification, REA/RES
Contingency funding in times of higher unemployment
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10. UI Administrative Funding
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11. Allocating Base Funds Availability by activity: UI Financing 101 2016
Allocated base funds assigned to functional activities according to proportions reflected in RJM data and funding available for the 2.2 million AWIU base.
- Claims activities
- Tax/Wage Records
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12. Allocating Base Funds Overview
Primary drivers of base allocation levels:
Each state’s projected share of national UI workloads (claims, nonmons, appeals, wage records, tax accounts)
Each state’s PS/PB rates- most recent FY
Time allowed for processing each budgeted workload item (MPUs, which are calculated from RJM data)- most recent FY
Non-personal services spending- most recent FY
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13. Allocating Base Funds Activities Funded Workloads Salaries/Benefits
Non-personal Services
Support
Administrative Staff & Technical Services
Postage
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14. Allocating Base Funds UI Financing 101 2016
Funding provided in two parts:
Base – costs associated with processing an
AWIU of 2.2M FY 2016 & FY 2017
Initial Claims M
Weeks Claimed M
Non-monetary determinations M
Appeals M
All subject employers M
All wage records M
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15. Above Base Funds Same PS/PB & MPUs used for above base funding
Funds for special projects funded through SBRs taken from above base resources.
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16. UI Base and Above Base Funding
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17. 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.
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18. Funding UI Base Administration
Like other workforce programs, the level of UI base funding although “level” with respect to AWIU (note this chart is set at 2.0m AWIU but the trend would be the same for the current base level of 2.3 AWIU) but the funding level in constant dollars has show a steady decline.
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19. Fully Funding the RJM
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20. State Supplemental Funding
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21. AWIU Budget vs. Actual
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22. Utilizing SBR’s
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23. Contingency Funding
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24. FUTA Revenue
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25. Employment Service Funding
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26. Maximizing a UI Budget The Kansas approach:
Create a culture of fiscal responsibility
Trust and empower frontline managers
Careful review of grant opportunities
Retain and incentivize high-performing staff
Maximizing a UI Budget

27. Close collaboration between fiscal and agency leadership
Avoid complacency on IT costs
Focus on return on investment
Maintain a “rainy day fund”
Maximizing a UI Budget

28. Maximizing a UI Budget The Ohio Approach: Define the challenges
Funding vs. Spending
Loss of knowledge and technical expertise
Aging systems
State leaders not understanding program
Customer expectations
Maximizing a UI Budget

29. Maximizing a UI Budget Be transparent and inclusive All Staff meetings
Empower staff to be part of the solution
Explain “why” decisions are made
Invite and value input and creative ideas
Maximizing a UI Budget

30. Maximizing a UI Budget Think strategically and holistically
Using LEAN and Six Sigma
Cross training
Push technology
The importance of Data
Manage customer and stakeholder expectation
Maximizing a UI Budget

31. Maximizing a UI Budget Celebrate Successes
Reduction of staff by attrition and realignment
Reduction in non-payroll spending
Lean events leading to elimination of waste, duplication and inefficiencies
Leverage other funding source
Maximizing a UI Budget

32. Maximizing a Budget The Iowa approach:
Consistent evaluation of current and vacant positions as related to agency needs
Value of cross-training and ongoing education to sustain lost technical experience
Work performance standard and holding employees accountable
Don’t try to reinvent the wheel when it comes to system upgrades
Maximizing a Budget