Employment and Training Administration
Washington, D. C. 20210






July 8, 1999




July 31, 2000











Unemployment Insurance Service




Call Memo for the Fiscal Year (FY) 2000 State Quality Service Plan (SQSP)


  1. Purpose. To issue instructions for the State Employment Security Agencies (SESAs) to use in the preparation of the FY 2000 SQSP.

  2. References. Unemployment Insurance Program Letter (UIPL) No. 41-95, "Draft Narrative Describing the System for Enhancing Unemployment Insurance Performance: The 'UI PERFORMS' System;" UIPL No. 6-99, "Proposed State Quality Service Plan (Draft)."; UIPL No. 37-99, "UI PERFORMS Tier I and Tier II Performance Measures, and Minimum Performance Criteria for Tier I Measures," Federal Register Notice at Volume 64, Number 111 on June 10, 1999, seeking comment on proposed changes to Handbook No. 336.

  3. Background. ET Handbook No. 336, (draft) 16th Edition (attached) provides SESAs with FY 2000 planning guidelines and instructions for reporting UI financial and staff year information. The SQSP, formerly called the Program and Budget Plan (PBP), is one of several implementing documents for UI PERFORMS. UIPL No. 41-95, described the genesis of the new system, UI PERFORMS, and the partnership principles on which it is founded. UIPL No. 37-99, dated July 1, 1999, presents the minimum performance criteria for Tier I measures. A third document is a Federal Regulation establishing UI PERFORMS. The regulation is currently in preparation with publication anticipated in Calendar Year 2000. The SQSP represents a new approach to the UI performance management and planning process, while leaving the budget reporting process (Chapter II) largely unchanged from prior years. At the request of stakeholders, it allows for an exchange of information between the Federal and State partners to enhance the ability of the program to reflect their joint commitment to continuous improvement and client centered services, while insuring that key program administration criteria are met.

  4. Transition. Under the Paperwork Reduction Act, the Office of Management and Budget has approved until September 30, 1999, the information collection accomplished through Handbook No. 336. The Unemployment Insurance Service (UIS) published a Federal Register Notice at Volume 64, Number 111 on June 10, 1999, seeking comment on proposed changes to Handbook No. 336 as part of the process needed to obtain continued OMB approval for the information collection beyond September 30, 1999. The proposed changes to the Handbook are not expected to increase the reporting burden on the 53 SESAs. The increase in burden from the required narrative is expected to be offset by a reduction in burden from fewer CAPs based on performance measured by Tier II measures, compared to the number of Corrective Action Plans (CAPs) required in response to missed Desired Levels of Achievement (DLAs) under the Quality Appraisal program. The SQSP is designed as a permanent instruction for the annual planning and budget process in each SESA. It will be supplemented each year with a UIPL which will serve as a call memo and initiate the annual process. The call memo will provide specific information and instructions for the planning process each fiscal year.

    Pending OMB approval, SESAs may use the formats that are presented in draft ET Handbook No. 336, 16th Edition for preparing FY 2000 plans, or they may choose to use the formats in the directive titled ET Handbook No. 336, 15th Edition transmitted to SESAs on July 16, 1998.

    SESAs may use ET Handbook No. 336 16th Edition when preparing their FY 2000 plans with the understanding that UIS is fully prepared to make additional changes to the Handbook in response to new comments received this summer from SESAs and other commentators responding to the FRN. UIS has already altered the document to incorporate changes in response to SESA comments on UIPL No. 6-99, dated November 10, 1998. At the recommendation of the Performance Enhancement Group, UIS published the proposed changes to Handbook No. 336 in UIPL No. 6-99 as an additional administrative procedure. A summary of comments is attached.

  5. Program Emphasis. The Federal Program Emphasis is a planning guide for the UI program, designating the primary areas in which UIS will focus attention and resources.

    1. Government Performance and Results Act (GPRA).  The five-year DOL and the ETA Strategic Plans, as well as the DOL and ETA Annual Performance Plans, form the basis for Program Emphasis. These plans may be found on the DOL webpage, and printed versions are also available. Required by Congress under the GPRA, they are an integral part of the budget process. They are outcome-driven, and require a commitment from all DOL programs to attain expressed goals and outcomes. ETA is revising the Strategic Plans to reflect the goals and direction embodied in the Workforce Investment Act (WIA). UIS is currently consulting with the States through ICESA on the goals and outcomes.

      The primary DOL goal under which the UI program may be found is: A SECURE WORKFORCE,and the ETA strategic goal that speaks to this is:

      Expand the effectiveness of the temporary income maintenance programs in order to meet the needs of the 21st Century economy while continuing to deliver high-quality and timely service to existing customers.

      Under this ETA goal, UIS has responded by developing the following preliminary objectives to be attained by the end of FY 2002:

      1. Meet or exceed the Secretary's standard for promptness in paying workers' initial intrastate and interstate claims for UI, and for deciding lower authority appeals.

      2. Increase the rate of UI claimants' reemployment in suitable jobs, as evidenced by their entered employment rates and by a benefit exhaustion rate of 28 percent.

      3. Increase to 40 percent the proportion of unemployed workers, including low-wage and part-time workers, who receive temporary income support (recipiency rate), particularly in States with relatively low recipiency rates.

      4. To promote adequate wage replacement rates, increase the number of States specifying in laws, without restrictions, a maximum weekly benefit amount of at least 2/3 the State's average weekly wage in covered employment to 15.

      5. Increase system solvency by identifying and promulgating appropriate reserve levels (expressed in terms of the Average High Cost Multiple, AHCM) to encourage States to position reserves to sustain benefit payments in case of recession.

      6. The percentage of quarterly UI Tax and Wage Reports filed on a timely basis by employers voluntarily complying with filing and payment dates will improve to 92 percent.

      To achieve these outcomes as defined requires State commitment to these objectives. The Department intends to continue its dialogue/discussion with States via ICESA and to encourage voluntary commitment rather than prescribing mandatory action. Strategies include:

      • Encourage States to review current policies, procedures and legislation to find opportunities for change that would enable movement towards these goals.

      • Provide technical assistance and resources to States to expand service delivery options available to claimants and employers.

      • Provide leadership for the review and reform of the UI program.

      • Provide leadership for the review and reform of UI administrative financing.

      • Explore and improve points of connection between UI and other programs to improve integration of services for our customers.

    2. Integrity Programs.  The continuous erosion of administrative funding available to the States over the past several years has resulted in a need for State Administrators to prioritize the use of available funding. States understandably have focused on the delivery of payments to claimants as the primary objective of the program. While that was appropriate, it resulted in less emphasis on integrity functions especially in the areas of nonmonetary separation issues determinations; eligibility reviews; benefit overpayments detection and collection and field tax audits.

      Additional funding has been requested in FY 2000 to the States for increased activity in these four integrity areas. This reflects a renewed program emphasis in the administration of the program.

      States must utilize new integrity funding for one or more of these four areas, and must use the State Plan Narrative to show in which integrity areas they will use the increased base resources during FY 2000.

    3. Year 2000 (Y2K) Automation Modifications. The modification of automated systems within each of the 53 jurisdictions that administers the UI program must continue to be a focus of Federal Program Emphasis for FY 2000. In addition to insuring that our internal systems are compliant, it is vital to insure that all external systems with which SESAs' systems interact are tested to ensure the capability of handling the necessary transactions. SESAs Y2K compliance efforts must encompass an independent verification and validation (IV&V) process to provide assurance that Y2K compliance efforts have been successful.

      In addition, prudent management of the UI system demands that each SESA develop and test business continuity plans (BCCP) to ensure that critical business unctions can continue in the event of automated systems failures due to unanticipated events, either internal or external. SESAs have been advised that they must prepare and test BCCPs which provide for the continuation of at least the critical functions associated with the UI benefits and tax operations.

      Finally, UI Administrators should realize that an inability to process workload in a number of business areas could precipitate a general economic downturn, as some economists are warning, compounding the processing problem with significant workload increases.

    4. UI Reform.  The UI Program is an integral part of the emerging Workforce Development System. It is the largest provider of income maintenance services within that system, and is a major link for unemployed workers to reemployment services and jobs. Even so, this system is over 60 years old, and it must continually assess its strengths and weaknesses in consultation with its various stakeholders. The economy, the workforce, and the workplace have all changed significantly in the last half century. We need to make sure that the UI program is keeping up with these changes and serving both the workers and employers of today. Begun in 1998, this effort will continue to be a program focus for much of FY 2000. As partners in the Federal-State UI system, SESAs have a significant role to play as the point of service delivery for the UI customer.

      The focus of this effort is to examine the program in the context of how well it performs in the following areas:

      • Individual Economic Adjustment

      • Macroeconomic Stabilization

      • Insurance Concept

      • Financing Benefits

      • Financing Administration

      • Federal-State System

  6. Mandatory Spending Authority Increase.  H.R. 1830, introduced May 17, 1999, would provide additional funding to recapture the shortfall between administrative needs and the current baseline through a distribution from the Employment Security Administration Account for fiscal years 2000-02. The bill also includes $20 million for each of the three years to fund start-up costs for States that adopt an alternative base period. The Congress has taken no action on this bill as of the date of this UIPL.

  7. Special Planning Requirements for FY 2000. In accordance with the Balanced Budget Act of 1997, the Department will allocate $100 million to the States through a distribution from the Employment Security Administration Account. Each State's share of these funds will be the same percentage as its share of base dollars (less integrity) divided by the total base dollars. Together with $91 million for integrity, this mandatory distribution would partially offset the cumulative discretionary funding cuts for workload increases and inflation. The Treasury Department will distribute the $100 million directly into SESAs' Unemployment Trust Fund accounts after the final allocations have been determined. This special Reed Act distribution may be used only for UI administration.

  8. Opportunities for Targeted Funding in FY 2000.  Base reserves are included in the President's budget request for the following areas. Special instructions for requesting targeted funds will be issued in separate directives.

    1. Wage Record Initiative.  The budget request includes $40 million to encourage the SESAs to expand their wage record files to collect and store workers' full names so that they will better interface with the National Directory of New Hires.

    2. Remote Initial Claims-Taking Grants. The budget request contains $9 million for implementation of claims-taking by telephone or other remote means.

    3. nterstate Connection (ICON) Programmer. Staff years for ICON will not be included in the planning targets this year, but will be funded through a supplemental budget request (SPR) process.

  9. Funding Period. Proposed appropriation language provides for obligation of FY 2000 UI allocations by States through December 31, 2000 (with 90 additional days to complete expenditure of funds). However, States may obligate FY 2000 UI funds through September 30, 2002, if such obligations are for automation acquisitions. Therefore, the end of the FY 2000 funding period is December 31, 2000, for UI regular allocations, and September 30, 2002, for automation acquisitions.

  10. Data Availability. he Regional Office (RO) will provide SESAs with data reports to judge performance against the Tier I criteria and for Tier II measures. SESAs may also access current performance data on the Internet at http://www.itsc.state.md.us/ as an additional administrative procedure.

  11. Deadline for SESA SQSP Submittal.  Each RO will set a deadline for SESAs to submit their SQSPS for FY 2000 that balances the time needed for the SESAs to prepare their respective SQSPS, and the time needed for the Regional review.

  12. Action Required.  SESAs should prepare their SQSPs according to planning and reporting instructions contained in Handbook No. 336.

  13. Attachment. 

    1. ET Handbook NO 336, 16th Edition (draft)

    2. Summary of Comment Received on UIPL No. 6-99