oversight

Unemployment Insurance: States' Use of the 2002 Reed Act Distribution

Published by the Government Accountability Office on 2003-03-20.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                            United States General Accounting Office

GAO                         Testimony
                            Before the Subcommittee on Human
                            Resources, Committee on Ways and
                            Means, House of Representatives

For Release on Delivery
Expected at 1:00 p.m. EST
Thursday, March 20, 2003    UNEMPLOYMENT
                            INSURANCE
                            States’ Use of the 2002
                            Reed Act Distribution
                            Statement of Sigurd R. Nilsen, Director
                            Education, Workforce, and Income Security Issues




GAO-03-567T
Mr. Chairman and Members of the Subcommittee:

I am pleased to be here today to discuss how states are using the March
2002 Reed Act distribution, which was part of the Job Creation and
Worker Assistance Act of 2002. This broad stimulus package included an
additional 13 additional weeks of federally-funded extended
unemployment insurance (UI) benefits for all states and a distribution to
states of $8 billion of the unemployment tax revenue it holds in reserve,
referred to as a Reed Act distribution.1 Under the act, these funds may be
used to pay UI benefits, and/or to enhance UI benefits, such as increasing
weekly benefit payments, extending the period of time benefits are paid,
or otherwise expanding eligibility to groups that currently do not qualify
for benefits. States may also appropriate these funds for the administrative
costs of UI, including activities related to program integrity, and
employment services (ES) programs, including one-stop service centers. 2

Today, I will be providing information from our recent report on how
states have used the Reed Act distribution so far.3 I will discuss: (1) the
proportion of Reed Act dollars that states have spent; (2) the proportion of
total Reed Act dollars that remains in state UI trust funds and the effect
this has had on employer UI taxes; and (3) the proportion of Reed Act
dollars that have been appropriated by states for administering the UI, ES,
or one-stop systems.

To determine how Reed Act dollars are being used, we surveyed state
workforce agency administrators in 50 states, the District of Columbia,
Puerto Rico, and the Virgin Islands.4 We also reviewed legislation, federal


1
 The term “Reed Act” refers to a part of the Employment Security Financing Act of 1954.
The Reed Act provides that when federal accounts in the UI trust fund reach their statutory
limits at the end of a federal fiscal year, any excess funds are transferred to state UI trust
funds. Unlike “traditional” Reed Act distributions, the calendar year 2002 distribution was
required regardless of the ceilings and did not take place at the beginning of a fiscal year.
2
 The employment services system, established by the Wagner-Peyser Act of 1933, provides
job seeker and employer labor exchange service and information. The Workforce
Investment Act (WIA) of 1998 amended the Wagner-Peyser Act to require that the
employment service activities be provided as part of the WIA one-stop system, which is a
centralized service delivery structure consolidating delivery of most federally funded state
and local employment and training assistance.
3
See U.S. General Accounting Office, Unemployment Insurance: States’ Use of the 2002
Reed Act Distribution, GAO-03-496 (Washington, D.C.: Mar. 6, 2003).
4
 For UI purposes, federal law designates the District of Columbia, Puerto Rico, and the
Virgin Islands as “states.”


Page 1                                                                         GAO-03-567T
             guidance, and other documents and data relevant to UI and Reed Act
             distributions and interviewed U.S. Department of Labor officials
             responsible for overseeing state activities related to the 2002 Reed Act
             distribution. We also interviewed various interest groups and met with
             state UI and workforce agency officials and state legislative
             representatives in Virginia and New Jersey.

             In summary, we found that about 17 percent ($1.34 billion) of the $8 billion
             2002 Reed Act distribution had been spent as of November 30, 2002,
             primarily on regular UI benefits, and only a small portion had been spent
             on benefit enhancements, or administrative costs of UI, ES, and one-stop
             systems. A total of $6.66 billion (83 percent) remains in state trust funds,
             which, according to state workforce officials, has prevented automatic
             increases in employer taxes in 30 states. Twenty-seven states appropriated
             about $662 million for administrative costs of UI, ES, or one-stop systems,
             of which $74 million has been spent.


             The UI program was established by Title III of the Social Security Act in
Background   1935 and is a key component in ensuring the financial security of
             America’s workforce. This complex program, which is jointly administered
             by the U.S. Department of Labor’s Employment and Training
             Administration and the states, provides temporary cash benefits to
             workers who lose their jobs through no fault of their own. By providing
             unemployed workers money for basic needs, UI helps boost demand for
             goods and services, thereby stabilizing the economy during recessions.
             Although Labor provides oversight and guidance, primary responsibility
             for administering the program lies with the states.

             The UI program is funded through federal and state taxes levied on
             employers. The federal tax generally covers the administrative costs of the
             UI and ES programs,5 loans to states, and the federal share of extended UI
             benefits.6 State taxes are used to pay UI benefits. States deposit their taxes


             5
              Labor provided about $2.2 billion to states in fiscal year 2003 to administer these
             programs.
             6
              The federal tax accumulates in three separate accounts. These three accounts are the (1)
             Employment Security Administration Account (ESAA) , which covers both federal and
             state administrative costs of UI and ES; (2) Extended Unemployment Compensation
             Account (EUCA), which covers the federal share of extended UI benefits and has been
             used to fund temporary extended unemployment compensation benefits; and (3) Federal
             Unemployment Account (FUA), which funds loans to insolvent state accounts.



             Page 2                                                                         GAO-03-567T
                        with the U.S. Treasury, which maintains one trust fund with a separate
                        account for each state. States are responsible for ensuring the solvency of
                        their individual trust funds. To ensure trust fund solvency, states can build
                        up trust fund reserves during good economic times, so that they have
                        sufficient reserves to pay UI benefits if unemployment rises, without
                        raising taxes or borrowing money from the federal government. Forty-nine
                        states set triggers that automatically increase employer taxes when UI
                        trust funds fall below specific levels.

                        The current Reed Act distribution was authorized by the Job Creation and
                        Worker Assistance Act of 2002 on March 9, 2002, and provided $8 billion,
                        the largest Reed Act distribution to date, to the UI trust funds of all 50
                        states, the District of Columbia, Puerto Rico, and the Virgin Islands.
                        Appendix I presents the Reed Act allotment by state, the percent
                        expended, and the percent unexpended. The allotted amounts ranged from
                        $1.95 million to the Virgin Islands to $936.9 million to California. Each
                        state’s share was based on its proportionate share of the Federal
                        Unemployment Tax Act (FUTA) taxable wages for calendar year 2000.

                        To use the funds for administrative costs of state UI, ES or one-stop
                        systems, states are required to have a specific appropriation from their
                        legislatures. In addition, there is no time limit on using the 2002 Reed Act
                        dollars for administrative purposes. Finally, Labor issued guidance
                        encouraging states to use 2002 Reed Act dollars to support one-stop
                        systems.


                        Only 17 percent of the $8 billion Reed Act distribution had been spent as
Only A Small Portion    of November 30, 2002. (See fig. 1.) Of the $1.34 billion spent as of
Of The 2002 Reed Act    November 30, 2002, almost all was used to pay regular UI benefits in three
                        states with very low trust fund reserves. New York spent most of its Reed
Distribution Had Been   Act distribution ($302.5 million) on regular UI benefits, and the remainder
Spent As Of             ($188.8 million) to repay a federal UI loan. North Carolina spent all of its
                        Reed Act funds ($240.9 million) on regular UI benefits. Texas used 90
November 30, 2002       percent of its Reed Act funds ($534.7 million) to pay regular UI benefits.
                        According to Labor, Texas has since spent its remaining Reed Act dollars
                        on UI benefits, and along with New York, has received a federal loan to
                        continue paying UI benefits.




                        Page 3                                                           GAO-03-567T
Figure 1: Status of the $8 Billion Reed Act Distribution (as of November 30, 2002)

                                                        Total dollars spent
                                                        ($1.34 billion)


                                                                                                          Dollars appropriated for
                                                                                                          administrative costs of UI,
                                                                                                          ES, and one-stops (7% of
                     17%                                                             $ .59 billion        total Reed Act distribution)


                                                                                     $1.27 billion        Dollars obligated to
                                                                                                          trust fund (16% of total
                                                                                                          Reed Act distribution)




                                                        Total dollars
                                                        in trust fund
                                                        ($6.66 billion)              $4.80 billion        Unobligated dollars in
                                83%                                                                       trust fund (60% of total
                                                                                                          Reed Act distribution)




Source: GAO survey of states.



                                          Although nine states reported that they made or plan to make
                                          enhancements to UI benefits with the help of Reed Act dollars, Vermont is
                                          the only state that reported spending any Reed Act funds to do so during
                                          calendar year 2002. Vermont spent $1.67 million to increase weekly UI
                                          benefit payments. Five states reported that Reed Act dollars enabled their
                                          states to use non-Reed Act dollars in their trust funds to make UI benefit
                                          enhancements in 2002:

                                      •   Alabama, Maryland, and Oregon increased weekly UI benefit payments,
                                      •   Minnesota extended benefits to individuals who have exhausted coverage,
                                          and
                                      •   Oklahoma implemented an alternative base period.7


                                          7
                                           Most states use previous earnings—recorded on a quarterly basis in state wage records—
                                          to measure whether a claimant has had a sufficient employment history. For the most part,
                                          states require that a claimant have earned a certain minimum amount over a specified four
                                          calendar quarters (the “base period”). Typically, the base period consists of the first four of
                                          the last five completed calendar quarters immediately preceding the filing of a claim, which
                                          is referred to as a “regular base period.” An “alternative base period” uses wages earned in
                                          more recent quarters as a basis for determining eligibility.


                                          Page 4                                                                              GAO-03-567T
                        Connecticut, the District of Columbia, and Georgia reported that they are
                        planning to use Reed Act dollars to implement an alternative base period
                        in calendar year 2003.

                        A relatively small amount of Reed Act funds was spent for administrative
                        costs of the UI, ES, or one-stop systems. Seventeen states spent a total of
                        about $74 million (1 percent of the total Reed Act distribution) to cover
                        the administrative costs of the UI, ES, or one-stop systems.


                        Eighty-three percent of the Reed Act distribution had not been spent as of
Most Reed Act Dollars   November 30, 2002. This $6.66 billion boost in state UI trust fund reserves
Remained In State       enabled 30 states to avoid automatic employer tax increases or surcharges
                        in 2002, according to the workforce agency officials from those states.
Trust Funds And         (See app. II.) Five states—Alaska, the District of Columbia, Maine, the
Helped Many States      Virgin Islands, and Wyoming—reported lowering employer tax rates for
                        2003. The District of Columbia and Maine were able to lower them
Avoid UI Tax            because of the Reed Act distribution.
Increases
                        Nine states made binding policy decisions that obligated 16 percent, or
                        $1.27 billion, of the Reed Act dollars to their trust funds. (See fig. 2.) States
                        are not required to pass legislation or take other official action to retain
                        Reed Act dollars in their UI trust funds, yet these nine states explicitly
                        specified in legislation, the governor’s budget, or other official
                        documentation, that some or all Reed Act dollars should be kept in their
                        trust funds. State officials most frequently cited their desire to avoid
                        raising employer taxes as the reason for obligating Reed Act dollars to UI
                        trust funds. Other reasons they gave for obligating these funds to the trust
                        fund included: to avoid borrowing from the federal government, to avoid
                        cutting benefits, and to enhance benefits.




                        Page 5                                                              GAO-03-567T
Figure 2: Reed Act Dollars Obligated to UI Trust Funds (as of November 30, 2002)




Dollars (in millions)
1,000
                     States that obligated
            100% of Reed Act dollars to UI trust funds
  800
                                                                                36%

  600




  400


  300
                                                                                          37%
                                                                                64%
  200


                                                                                          63%     58%
  100                                                                                                           34%        30%
           100%
                                100%           100%                                               42%                   70%
                                                             100%                                           66%
     0
          Missouri              Kansas         Nevada       Delaware         California   Ohio   Indiana   Puerto     Nebraska
                                                                                                            Rico


                  Obligated to UI trust fund            Remaining Reed Act dollars

Source: GAO survey of states.




                                                        Page 6                                                         GAO-03-567T
                            Twenty-seven states had appropriated a total of $662 million (8 percent)
Over Half of the            for administrative costs of UI, ES, and one-stop systems—$74 million had
States Appropriated         been spent and about $590 million had not been spent—as of November
                            30, 2002.8 (See app. III.) Close to half the states appropriated Reed Act
Some Funds for              dollars for ES and one-stop systems. (See table 1.)9 About the same
Administrative Costs        number of states appropriated these funds to enhance UI system
                            technology, operations, and program integrity. Some states plan to use
of the UI, ES, or One-      Reed Act dollars to replace funding that previously came from other state
Stop Systems                and/or federal sources.

                            Table 1: Number of States That Appropriated Reed Act Dollars for Administrative
                            Costs of UI, ES, and One-Stop Systems, as of November 30, 2002

                                System                                                             Number of states
                                UI systems, only                                                                  5
                                ES/one-stop systems, only                                                         6
                                Both UI and ES/one-stop systems                                                  16
                                Total                                                                            27
                            Source: GAO survey of states



States Appropriated Reed    Twenty-one states appropriated $313 million for UI administrative costs, of
Act Dollars to Enhance UI   which $22 million had been spent by nine states, as of November 30, 2002.
System Technology,          (See app. IV.) Many states appropriated funds for more than one UI
                            administrative activity. Close to half of the 21 states that appropriated
Operations, and Program     Reed Act dollars for UI activities did so for at least one of four major
Integrity                   purposes. These included establishing, maintaining, or enhancing
                            technology; improving systems for handling UI claims; maintaining or
                            increasing the number of UI staff; and improving tax filing and payment
                            systems for employers. (See table 2.)




                            8
                             Two states, Montana and Michigan, have appropriated all or almost all of their Reed Act
                            funds to administer UI, ES, or one-stop systems.
                            9
                             Together, Michigan and New Jersey reported spending about $41 million of the total $74
                            million spent on UI and ES/one-stop systems. Neither state was able to report the amount
                            spent on each system, however.



                            Page 7                                                                      GAO-03-567T
                            Table 2: Number of States That Appropriated Reed Act Dollars for Various UI
                            Administrative Activities, as of November 30, 2002

                                                                                             Number of states
                             UI administrative activities                                              (n=21)
                             Establishing, maintaining, or enhancing technology                            14
                             Improving systems for handling UI claims                                      13
                             Maintaining/increasing Staff                                                  10
                             Improving tax filing and payment systems for employers                         9
                            Source: GAO survey of states.


                            States targeted Reed Act dollars toward a variety of UI administrative
                            activities. Idaho and New Jersey, reported that the Reed Act distribution
                            provided the “shot in the arm” they needed to upgrade outdated computer
                            systems. New Jersey is funding a complete overhaul of its 1970’s benefit
                            payment system, which will allow it to provide more self-service
                            information to claimants so that they will be able to track their own
                            claims. Michigan earmarked funds to enhance an Internet-based UI claims
                            system, updating computer software systems to improve customer service.
                            A number of states targeted funds to improve tax filing and payment
                            systems for employers, including California, which is funding a review of
                            its employment tax system.

                            Eighteen of the 21 states that targeted Reed Act dollars for UI systems
                            reported that these investments would enhance program integrity by
                            improving wage reporting for employers, strengthening eligibility
                            procedures, and enhancing benefit payment control systems. For example,
                            Virginia is increasing staff in the benefit payment control center, including
                            fraud investigators. New Jersey is enhancing its Benefits Audit Report and
                            Tracking system, which cross matches data on newly hired employees
                            with current UI recipients.


States Appropriated Reed    Twenty-two states appropriated $349 million for ES and one-stop
Act Dollars to Improve ES   administrative costs, of which just under $12 million had been spent by 6
and One-Stop Systems in a   states, as of November 30, 2002. (See app. V.) As with funds states
                            appropriated for administration of UI systems, most of the 22 states
Variety of Ways             appropriated Reed Act dollars for enhancing technology in ES or one-stop
                            systems. (See table 3.) For example, Massachusetts, is building a database
                            for its one-stops that integrates the performance management systems of a
                            number of programs.




                            Page 8                                                               GAO-03-567T
                          Table 3: Number of States That Appropriated Reed Act Dollars for Various ES and
                          One-Stop Administrative Activities, as of November 30, 2002

                                                                                               Number of states
                           ES and one-stop administrative activities                                     (n=22)
                           Enhancing technology                                                              17
                           Providing labor exchange and employment services                                  14
                           Maintaining/increasing staff                                                      12
                           Providing reemployment services to UI claimants                                   10
                           Enhancing resource room resources, outreach efforts, or
                           informational materials                                                           9
                           Covering the shared costs of operating one-stop centers                           7
                           Improving access for clients with disabilities or limited English
                           proficiency                                                                       5
                          Source: GAO survey of states.


                          Most of the states that appropriated Reed Act dollars for ES or one-stop
                          administration, targeted these funds for labor exchange and employment
                          services; half appropriated them to maintain or increase the number of ES
                          or one-stop staff; and some earmarked Reed Act dollars to reemployment
                          services for UI claimants. For example, Louisiana reported expanding its
                          reemployment services by updating the state’s UI client profiling model,
                          and designing job search workshops for at-risk youth, older workers,
                          single heads of households, ex-offenders, and other high-risk groups.
                          Some states committed these funds to enhancing one-stop resource
                          rooms, outreach efforts, or information materials.

                          A number of states reported that they appropriated Reed Act dollars to
                          improve one-stops in other ways. Virginia, for example, targeted Reed Act
                          dollars for economic recovery crisis centers, enhanced one-stops that
                          grew out of a center that was established to help workers in northern
                          Virginia in the aftermath of the September 11, 2001, terrorist attacks. New
                          Jersey is using Reed Act dollars to pilot test and expand a scan card
                          technology statewide for all of its one-stop centers, and to support
                          business service centers that provide services to employers within the one-
                          stop centers. According to a state official in New Jersey, these and other
                          Reed Act-funded investments to improve one-stops and core services have
                          helped transform New Jersey’s ES system into a significant partner in that
                          state’s one-stop system.

Some States Plan to Use   As allowed by law, nine states reported they plan to use Reed Act dollars
Reed Act Dollars to       to replace funding for UI, ES, or one-stop systems that previously came
Replace Funding from      from other state and/or federal sources. Five states reported planning to
                          replace funds that previously came from state funding sources such as
Other Sources

                          Page 9                                                                  GAO-03-567T
                   general revenue funds or penalty and interest funds. Three states reported
                   planning to replace funds that previously came from a combination of
                   state funding sources and federal sources such as the Workforce
                   Investment Act or the Temporary Assistance for Needy Families (TANF)10
                   programs. One state reported planning to replace funds that previously
                   came from the TANF program.


                   Mr. Chairman, this concludes my prepared statement. I would be pleased
                   to answer any questions you or other members of the subcommittee may
                   have.


                   If you or other members of the Subcommittee have questions regarding
GAO Contacts and   this testimony, please contact Sigurd Nilsen at (202) 512-7215 or Clarita
Acknowledgments    Mrena at (202) 512-3022. Individuals making key contributions to this
                   testimony include Laura Heald, Carolyn Blocker, Cheri Harrington, and
                   Patrick DiBattista.




                   10
                     Welfare reform legislation in 1996 created the Temporary Assistance for Needy Families
                   (TANF) block grants to help move welfare recipients into jobs and provide greater
                   flexibility to states in designing training services for TANF clients.




                   Page 10                                                                     GAO-03-567T
Appendix I: Status of CY 2002 Reed Act
Dollars by State, as of 11/30/2002


                                                                        Unexpended
                                                            Percent appropriated for    Percent officially Percent neither
                       Total Reed Act                       administration of UI, ES,       obligated to     appropriated
State                        allotment Percent expended         or one-stop systems         UI trust fund   nor obligated
Alabama                 $110,623,477                    0                        15.0                    0            85.0
Alaska                     14,820,932                0.5                         19.7                    0            79.8
Arizona                   144,079,575                   0                           0                    0             100
Arkansas                   63,958,998                   0                           0                    0             100
California                936,873,766                 0.6                         3.7                 64.0            31.6
Colorado                  142,666,574                   0                           0                    0             100
Connecticut               100,418,304                   0                         9.0                    0            91.0
Delaware                   26,024,719                   0                           0                  100               0
District of Columbia       25,765,401                   0                        31.3                    0            68.7
Florida                   449,667,718                 0.4                         3.2                    0            96.4
                                                                                    a
Georgia                   249,673,858                   0                                                0             100
Hawaii                     30,761,048                   0                          0                     0             100
Idahob                     32,244,586               21.7                           0                     0            78.3
Illinois                  376,244,918                   0                          0                     0             100
Indiana                   174,573,012                   0                          0                  42.4            57.6
Iowa                       82,395,262                1.2                        35.2                     0            63.6
Kansas                     78,166,750                   0                          0                   100               0
Kentucky                  103,829,381                   0                          0                     0             100
Louisiana                 105,499,296                   0                       24.9                     0            75.1
Maine                      32,486,816                   0                          0                     0             100
Maryland                  142,929,005                   0                          0                     0             100
Massachusetts             193,639,110                   0                        1.3                     0            98.7
Michigan                  291,485,481               13.9                        85.0                     0             1.2
Minnesotab                163,061,573                 7.4                          0                     0            92.6
Mississippi                64,670,097                1.4                        23.3                     0            75.3
Missouri                  161,426,814                   0                          0                   100               0
Montana                    18,551,627                3.0                        97.0                     0               0
Nebraska                   48,380,203                   0                          0                  28.9            71.1
Nevada                     68,082,942                   0                          0                   100               0
New Hampshire              38,475,620                   0                          0                     0             100
New Jersey                242,816,310                 0.2                       15.1                     0            84.8
New Mexico                 38,599,338                   0                          0                     0             100
New York                  491,343,135                100                           0                     0               0
North Carolina            240,892,032                100                           0                     0               0
North Dakota               15,267,835                0.4                         1.1                     0            98.5
Ohio                      343,709,635                 0.4                       14.4                  63.0            22.1
Oklahoma                   81,441,628                   0                        2.5                     0            97.5
Oregon                     98,029,105                   0                          0                     0             100
Pennsylvania              337,595,975                 0.1                        4.3                     0            95.6



                                      Page 11                                                               GAO-03-567T
                                                                                            Unexpended
                                                                                Percent appropriated for           Percent officially Percent neither
                                       Total Reed Act                           administration of UI, ES,              obligated to     appropriated
 State                                       allotment Percent expended             or one-stop systems                UI trust fund   nor obligated
 Puerto Rico                               48,875,605                  0                             33.8                        66.2               0
 Rhode Island                              27,123,409                  0                              9.6                           0            90.4
 South Carolina                           108,203,982                1.5                                0                           0            98.5
 South Dakota                              19,140,671                  0                                0                           0             100
 Tennessee                                162,633,730                  0                              4.6                           0            95.4
 Texas                                    596,446,497               89.7                                0                           0            10.3
 Utah                                      61,627,678                  0                              3.5                           0            96.5
 Vermont                                   16,395,967               10.2                                0                           0            89.8
 Virgin Islands                              1,950,917               5.1                              2.9                           0            92.0
 Virginia                                 214,949,942                1.2                             13.2                           0            85.6
 Washington                               167,011,815                  0                                0                           0             100
 West Virginia                             36,210,068                  0                             10.3                           0            89.7
 Wisconsin                                166,214,419                  0                                0                           0             100
 Wyoming                                   12,043,444                  0                                0                           0             100
 United States                         $8,000,000,000               16.8                              7.4                        15.9            60.0
Source: GAO data and U.S. Department of Labor data.
                                                      a
                                                       Appropriated Reed Act funds for administration of UI, but could not specify the dollar amount
                                                      allocated for this purpose.
                                                      b
                                                      Appropriated Reed Act funds for administration of UI, ES, or one-stop systems and expended all the
                                                      dollars appropriated.




                                                      Page 12                                                                               GAO-03-567T
Appendix II: Effect of Reed Act Distribution
on Employer Taxes as Reported by States


               States where automatic increases in UI                  Reed Act funds prevented
               tax/surcharge are triggered if trust fund falls below   triggering an increase in a
               certain level                                            tax or surcharge in 2002a
               Alabama                                                              •
               Alaska
               Arkansas                                                            •
               California                                                          •
               Colorado                                                            •
               Connecticut                                                         •
               Delaware                                                            •
               District of Columbia
               Florida                                                             •
               Georgia
               Hawaii
               Idaho
               Illinois
               Indiana                                                             •
               Iowa                                                                •
               Kansas
               Kentucky                                                            •
               Louisiana
               Maine
               Maryland                                                            •
               Massachusetts                                                       •
               Michigan
               Minnesota                                                           •
               Mississippi                                                         •
               Missouri                                                            •
               Montana                                                             •
               New Hampshire                                                       •
               New Jersey
               New Mexico
               New York                                                            •
               North Carolina                                                      •
               Ohio                                                                •
               Oklahoma                                                            •
               Oregon                                                              •
               Pennsylvania                                                        •
               Puerto Rico
               Rhode Island
               South Carolina                                                      •
               South Dakota
               Tennessee                                                           •



               Page 13                                                                 GAO-03-567T
    States where automatic increases in UI                        Reed Act funds prevented
    tax/surcharge are triggered if trust fund falls below         triggering an increase in a
    certain level                                                  tax or surcharge in 2002a
    Texas                                                                      •
    Utah                                                                       •
    Vermont                                                                    •
    Virgin Islands
    Virginia                                                                     •
    Washington                                                                   •
    West Virginia
    Wisconsin
    Wyoming
    Total: 49                                                                    30
Source: GAO Survey of States.
a
According to the Department of Labor, for most states, any increases triggered in CY 2002 would not
have gone into effect until CY 2003.




Page 14                                                                               GAO-03-567T
Appendix III: States with Reed Act Dollars
Appropriated by Law for UI, and ES, or One-
Stop Systems, as of 11/30/2002

                                                                                   Reed Act dollars
                                              Reed Act dollars appropriated   appropriated for ES or one-
               State                                 for UI system                   stop system
               Alabama                                      •                              •
               Alaska                                       •                              •
               California                                   •                              •
               Connecticut                                  •                              •
               District of Columbia                         •
               Florida                                                                     •
               Georgia                                      •
               Idaho                                        •                              •
               Iowa                                         •
               Louisiana                                    •                              •
               Massachusetts                                                               •
               Michigan                                     •                              •
               Minnesota                                    •
               Mississippi                                                                 •
               Montana                                      •                              •
               New Jersey                                   •                              •
               North Dakota                                 •
               Ohio                                         •                              •
               Oklahoma                                                                    •
               Pennsylvania                                 •                              •
               Puerto Rico                                  •                              •
               Rhode Island                                                                •
               Tennessee                                    •                              •
               Utah                                                                        •
               Virgin Islands                               •                              •
               Virginia                                     •                              •
               West Virginia                                •                              •
               Total: 27                                   21                             22
              Source: GAO survey of states.




              Page 15                                                                          GAO-03-567T
Appendix IV: UI Administrative Activities for
which CY2002 Reed Act Dollars had been
Appropriated, as of 11-30-2002

                                                                              Tax filing and
                                  General              Claims system             paying                Appeals system   Direct deposit/
 State                          technology   Staff     developments           enhancements              improvements     debit cards
 Alabama                             •         •             •                       •
 Alaska                                                                              •
 California                                      •
 Connecticut                        •                          •                       •
 District of                                     •                                                                            •
 Columbia
 Georgiaa
 Idaho                              •            •             •
 Iowa                               •                          •                       •                     •                •
 Louisiana                          •                          •                       •
 Michigan                                        •
 Minnesota                          •                          •                       •                     •                •
 Montana                            •            •             •
 New Jersey                         •                          •                                             •
 North Dakota                       •
 Ohio                               •            •             •                       •                     •
 Pennsylvaniaa
 Puerto Rico                        •            •             •                       •                     •                •
 Tennessee                          •            •             •                       •
 Virgin Islands                     •                          •
 Virginia                                        •
 West Virginia                      •                          •
 Total: 21                         14            10           13                       9                     5                4
Source: GAO survey of states.
                                             a
                                              State was unable to report how dollars were allocated.




                                             Page 16                                                                       GAO-03-567T
Appendix V: ES and One-Stop Administrative
Activities for which CY2002 Reed Act Dollars
had been Appropriated, as of 11-30-2002

                               Labor                                                             Resource room    Improve access
                             exchange    Maintain   Shared cost                                     resources,      for those with
                                and         or      of operating   Reemployment                    outreach or      disabilities or
                            employment   increase     one-stop     services to UI    Enhance      informational    limited English
 State                        services     staff       centers       claimants      technology       material        proficiency
 Alabama                                                                                 •
 Alaska                                                                                  •
 California                     •           •
 Connecticut                    •           •                            •              •                                •
 Florida                        •                         •                             •              •
 Idaho                          •           •                            •              •              •                 •
 Louisiana                      •                                        •              •              •                 •
 Massachusetts                  •           •                            •              •
 Michigan                                                                               •
 Mississippi
 Montana                        •           •             •                             •
 New Jersey                     •                         •              •              •              •                 •
 Ohio                           •           •                            •              •              •
 Oklahoma                       •           •             •                             •              •
 Pennsylvania                   •           •             •              •              •
 Puerto Rico                                •                            •              •
 Rhode Island                   •           •             •              •                             •
 Tennessee                                                                              •
 Utah                           •           •
 Virgin Islands
 Virginia                       •           •             •              •              •              •                 •
 West Virginia                                                                          •              •
 Total: 22                      14         12             7             10             17              9                 5
Source: GAO survey of states.




                                                Page 17                                                              GAO-03-567T
Related GAO Products


             Unemployment Insurance: States’ Use of the 2002 Reed Act Distribution.
             GAO-03-496. Washington, D.C.: Mar. 6, 2003.

             Unemployment Insurance: Increased Focus on Program Integrity Could
             Reduce Billions in Overpayments. GAO-02-697. Washington, D.C.: July 12,
             2002.

             Strategies to Manage Improper Payments: Learning From Public and
             Private Sector Organizations. GAO-02-69G. Washington, D.C.: Oct. 1,
             2001.

             Unemployment Insurance: Role as Safety Net for Low-Wage Workers Is
             Limited. GAO-01-181. Washington, D.C.: Dec. 29, 2000.

             Benefit and Loan Programs: Improved Data Sharing Could Enhance
             Program Integrity. GAO/HEHS-00-119. Washington, D.C.: Sept. 13, 2000.

             Unemployment Insurance: Program’s Ability to Meet Objectives
             Jeopardized. GAO/HRD-93-107. Washington, D.C.: Sept. 28, 1993.




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