Gay Gilbert, Administrator Unemployment Insurance USDOL/ETA June 22, 2016
Where is Our Program Today? Most Critical Challenges A Program in Transition Using our Valuable Resources What s Important for the Future? 2
We are experiencing the lowest workload since the 70s States are experiencing really constrained funding which limits staffing capacity As a result, states continue to struggle with meeting performance standards and integrity measures States are not ready for the next recession Many states have severely restricted benefit availability Taxing structures in many states do not distribute the tax burden fairly among employers 3
Administrative Funding Not Sufficient & Budget Climate Remains Poor UI Customers Are Paying the Price for Poor Program Performance Over Half of State Trust Funds Are Not Solvent Loss of Institutional Knowledge and Staff Capacity Putting the Program At Risk IT Modernization Still Needed by a Majority of States Fraud Has Increased and Becoming Harder to Fight 4
A Quick Look at the Data 5
Unemployment Rates by State Seasonally Adjusted, April 2016 (U.S. = 5.0%) Rates in % 0 to 4 4 to 5 5 to 6 6 to 7 7 to 13 Source: USDOL/BLS 6
The Long-Term Unemployed Still Need Assistance Incidence of Long Term Unemployed 18,000 16,000 May 2016 Long-Term Unemployment 1.9 Million People (Thousands of Persons) 14,000 12,000 10,000 8,000 25.1% of Unemployed Population Unemployed over 27 Weeks 6,000 4,000 Unemployed under 27 Weeks 2,000 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: Bureau of Labor and Statistics: Current Population Survey 7
First Payments in the Regular Program 12 1,400,000 Total Unemployment Rate (%) 10 8 6 4 TUR (L) First Payments (Moving Average,R) 1,200,000 1,000,000 800,000 600,000 400,000 First Payments 2 200,000 0 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0 Source: US DOL/BLS and US DOL/Office of Unemployment Insurance 8
Exhaustion Rate in the Regular Program 12 60 Total Unemployment Rate (%) 10 8 6 TUR (L) Exhaustion Rate (R) 50 40 30 Exhausiont Rate (%) 4 20 2 10 0 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0 Source: US DOL/BLS and US DOL/Office of Unemployment Insurance 9
12 Average Duration on UI in the Regular Program 24.00 Total Unemployment Rate (%) 10 8 6 Average Duration (R) TUR (L) 20.00 16.00 12.00 Average Duration (Weeks) 4 8.00 2 4.00 0 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0.00 Source: US DOL/BLS and US DOL/Office of Unemployment Insurance
36 $48.5 B 3 $3.3 B Total Number of States that have Borrowed Number of States with Outstanding Balances June 15, 2016 Peak Amount Advanced to States Outstanding Advance Balance June 15, 2016
50 45 40 35 30 Billions $ 25 20 15 10 5 0 Title XII Advances Private Borrowing Forecast Private Borrowing Forecast 12
As of Dec 31 Loans Outstanding Bonds Outstanding 2002 310,560,000 2003 1,581,134,000 2004 1,102,896,000 2005 595,576,000 2006 135,457,000 2007 134,600,000 2008 932,631,000 2009 26,470,242,000 2010 40,220,176,000 1,959,880,000 2011 36,433,321,000 5,377,450,000 2012 27,054,005,000 9,704,070,000 2013 20,656,443,000 9,725,720,000 2014 13,937,734,000 9,319,495,000 2015 7,355,478,000 8,300,295,000 13
Potential FUTA Credit Reductions - 2016 Updated: May 2016 These states had Title XII advance balances on January 1, 2016 and are potentially subject to a reduction in FUTA credit on their IRS Form 940 for 2016, if the outstanding advance is not repaid by November 10, 2016: State (1) 2016 Potential Credit Reduction Due to Outstanding Advance (2) Preliminary Estimate 2016 Potential "2.7 addon" (3) Preliminary Estimate 2016 Estimated "BCR add-on" (4) Preliminary Estimate 2016 Potential Total Credit Reduction (5) California 1.8% 0.0% 0.4% 2.2% Connecticut 1.8% 0.0% 0.1% 1.9% Ohio 1.8% 0.0% 0.3% 2.1% Virgin Islands 1.8% 0.0% 1.3% 3.1% (1) These states have passed at least two consecutive January 1's with an outstanding Federal advance and are therefore subject to a FUTA credit reduction. (2) For each consecutive January 1 a state passes with an outstanding advance, following the second one, employers in the state are subject to an additional 0.3% reduction in their FUTA credit. (3) Following their third consecutive January 1 with an outstanding advance states are subject to an additional FUTA credit reduction called the 2.7 add-on. A description of this add-on is in FUTA 3302(c)(2)(B). This value was preliminarily estimated based on extrapolated wages and tax contributions for the third and fourth quarter of 2015. (4) These states are also potentially subject to the Benefit Cost Rate (BCR) additional credit reduction formula for having passed five consecutive January 1's with an outstanding Federal advance- FUTA section 3302 (c) (2). This value was preliminarily estimated based on extrapolated wages and tax contributions for the third and fourth quarter of 2015. (5) The potential FUTA credit reduction for 2016 is calculated by adding the credit reduction due to having an outstanding advance plus the reduction from the 2.7% add-on or the BCR add-on, which can be waived and replaced by the 2.7 add-on, FUTA section 3302(c)(2)(C). 14
States Reducing Benefit Duration: Arkansas (25) Florida (12-23) Georgia (14-20) Kansas (16-26) Michigan (20) Missouri (13-20) North Carolina (5-20) Pennsylvania (18-26) South Carolina (20) Other Actions Used to Reduce Benefits: Elimination of dependents benefits Raised qualifying earnings Changed definitions of misconduct Increased number of weeks of employment needed to requalify for UI after being declared ineligible due to misconduct 15
0% 10% 20% 30% 40% 50% 60% 70% 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 U.S. Recipiency Rates (All Programs) 16
Fourth Quarter 2015 Recipiency Rate (Insured Unemployed / Total Unemployed) Insured Unemployed / Total Unemployed (%) 80% 70% 60% 50% 40% 30% 20% 10% States with maximum duration less than 26 weeks 27 States are under the Average 0% ND WY AK MN PA NJ MT MA IA VT CT WV NY WI CA HI DC AR CO OR RI IL TX OK DE WA NV ME KS MI ID OH UT MD NE MO KY NM PR IN VA AL NH AZ GA TN SC MS SD LA NC FL Average: 28.50% States 17
Weeks Claimed, Civilian Labor Force, and TUR 18 180,000 16 160,000 14 Civilian Labor Force (R) 140,000 12 120,000 % 10 8 6 TUR (L) 100,000 80,000 60,000 Thousands 4 2 40,000 20,000 0 0 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Weeks Claimed (R) 18
Increased Taxable Wage Base 1 Arkansas Colorado Florida Illinois Indiana Kansas Kentucky Mississippi New York Rhode Island South Carolina South Dakota Vermont Wisconsin Issued Bonds to Repay Title XII Arizona Colorado Idaho Illinois Michigan Nevada Pennsylvania Texas Changed Experience Rating System New Mexico South Carolina 1. May include a further indexing of the wage base, a phased-in increase, or a delayed increase. 19
2.5 Average High Cost Multiple, 2007 & 2015 2 AHCM 2007 AHCM 2015 1.5 1 0.5 0 WY OK MS OR UT NE SD AK MT WA LA VT ID IA HI NH ME MN PR DC FL TN KS MD MI AL ND AR NM VA NC CO GA NV WI IL SC DE MO NJ TX MA RI WV PA AZ NY CT IN KY OH CA VI Source: DOL/OUI 2015 Data Preliminary
Adjusted into constant 2005 dollars Dashed Line displays inclusion of Y2K funds in FY98 and FY99 2.7 2.6 2.5 2.4 2.3 $ Billions 2.2 2.1 2.0 1.9 1.8 1.7 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 Fiscal Year 21
Millions 400 350 State Supplemental Funding for UI 300 250 200 150 100 50 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: National Association of State Workforce Agencies Fiscal Year 22
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Improper Payments Information Act (7/1/2014 6/30/2015) Estimated Overpayment Rate (OP) 10.287% Estimated Underpayment Rate (UP) 0.444% Total Improper Payment Rate*(OP + UP) 10.732% Total Estimated Amount Improper Paid $3.530 *Excludes improper payments determined technically proper under State law Dollar amounts are in billions. Based on completion rate of 99.55% of BAM cases 26
Base Period Wage Iss. 0.465% Able & Available 0.596% Separation Issues 1.894% Sev./Vac./SSI/ Pension 0.325% Other Eligibility 0.242% Benefit Year Earnings 3.431% Work Search 3.025% Overpayment Root Causes by Percentage of Dollars Overpaid July 1, 2014 June 30, 2015 27
Fraud and Nonfraud Overpayments, and Underpayments 12% 11% 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% 2008 2009 2010 2011 2012 2013* 2014** 2015** Fraud Nonfraud Underpayment IPIA 2013 adjusted rate for recoveries = 9.32% IPIA 2014 and IPIA 2015 rates exclude all technically proper payments 28
WIOA Implementation Reengineering UI Benefit Accountability Processes Reemployment Services and Eligibility Assessment Program (RESEA) Re-envisioning UI Work Search Requirements Important New Guidance 29
Must provide assistance to help claimants file claims in One-Stop Centers UI as Mandatory One-Stop Partner New language emphasizing the role of Wagner-Peyser in providing reemployment services to UI claimants Alignment of data systems Increased demand for wage record data for performance 30
Ensuring that UI is an integral part of the workforce system Opportunities to leverage UI programs: RESEA, SEA, STC Opportunities to better link UI IT infrastructure to workforce system infrastructure in ways that support reemployment and ensure UI claimant eligibility 31
WIOA Explicitly Reinforces RESEA Gaining Traction and More Funding FY 2016 RESEA transitioning to uniform targeting of claimants most likely to exhaust and UCX claimants RESEA merging with Worker Profiling and Reemployment Services (WPRS) Program FY 2017 Budget contains proposal for mandatory RESEA program in all states 32
DOL Sponsored/NASWA Supported Workgroup Goal to Bring Work Search Requirements into 21 st Century With Focus on Successful Reemployment Adaptable Framework for States Consideration My Reemployment Plan Coming Soon 33
Nine states piloted new state self-assessment tool for program operations in FY 2016 Piloted new process for identifying high priority states and use of expert teams to support technical assistance om FY 2016 Moving through OMB clearance now Full implementation during FY 2017 34
Training Academy State Engagement/Capturing Best Practices Model BPC Operations Suspicious Actor Repository Integrated Data Hub Digital Library Data Analytics State Grants for Innovative Solutions 35
Bringing Key Stakeholders to the Table To Address Program Challenges Shoring Up the Foundations of the Program Ensuring a Safety Net for American Workers UI as an Economic Stabilizer in Economic Downturns Making UI Policies in a Balanced and Collaborative Process Addressing Program Funding Issues Across the Board Quality Administration of the Program 36
???QUESTIONS??? COMMENTS 37