Once again, the President’s Budget Proposal for FY 2021 provides for a national paid parental leave program “within the UI Program” with no details as to how that might be accomplished. The description of the proposal simply indicates:

The Budget includes a proposal to establish a Federal-state paid parental leave benefit program within the UI program that would begin in 2023. The program will provide six weeks of benefits for mothers, fathers, and adoptive parents. The benefit is provided to help families recover from childbirth and to bond with their new children.

The cost of the program is projected in the budget to be $20.8 Billion over the ten year budget period from FY 2021 to 2030 and to be offset by $7.3 Billion in savings associated with state revenues.

UWC has opposed using state Unemployment Trust Funds as the source for paid parental or family leave. UI trust funds are financed in each state by employers and dedicated to the payment of unemployment compensation. These trust funds should not be diverted for other purposes. Several states and local governments have enacted paid parental or family leave programs but none of them have used the unemployment trust fund for financing.

It is unclear at this point whether the funding of administration and benefits under the President’s proposal is intended to come from UI trust funds or other state sources.

Other items described in the budget summary include:

Minimum Solvency Standard.—Since the end of the most recent recession, many states continue to struggle to maintain adequate Unemployment Insurance (UI) Trust Fund balances. The Budget includes a proposal to add a minimum solvency standard in the UI program to help address the challenge states face in maintaining sufficient balances in their Unemployment Trust Fund accounts. This proposal would strengthen states’ incentive to adequately fund their UI systems by making states that fail to maintain an Average High-Cost Multiple (AHCM) of 0.5 for two consecutive January firsts subject to the same FUTA tax credit reductions applied to states which go below a zero trust fund balance.

UI Program Integrity Package.—The Budget includes a package of program integrity proposals similar to those included in the proposed Unemployment Compensation Program Integrity Act, which the Department previously sent to Congress in response to the UI program’s three consecutive years of high improper payment rates. Specifically, the package includes the following proposals:

Require states to use SIDES.—This proposal will require state UI agencies to use the State Information Data Exchange System (SIDES) to exchange information with employers concerning reasons for a claimant’s separation from employment.

Require states to cross-match against the NDNH.—This proposal will require state UI agencies to use the National Directory for New Hires in their claims to better identify individuals continuing to claim unemployment compensation after returning to work, one of the leading root causes of UI improper payments.

Allow the Secretary of Labor to establish UI corrective actions.—This proposal will allow the Secretary of Labor to require states to implement corrective action measures for poor state performance in the UI program, helping to reduce improper payments in states with the highest improper payment rates. Currently, the Secretary has very limited options to require state UI agencies to take actions to respond to poor performance and high improper payment rates.

Require states to cross-match with SSA’s prisoner database.—Under current law, state UI agencies’ use of cross-matches is permissible and the Social Security Administration’s (SSA) Prisoner Update Processing System (PUPS) is currently only used by some states for UI verification. Requiring states to cross-match claims against the PUPS or other repositories of prisoner information will help identify those individuals ineligible for benefits due to incarceration and reduce improper payments.

Allow states to retain 5 percent of UI overpayments for program integrity use.—This proposal will allow states to retain 5 percent of overpayment recoveries to fund program integrity activities in each state’s UI program. This provides an incentive to states to increase detection and recovery of improper payments and provides necessary resources to carry out staff-intensive work to validate cross-match hits as required by law.

Require states to use penalty and interest collections solely for UI administration.—This proposal will require states to deposit all penalty and interest payments collected through the UI program into the state’s Unemployment Trust Fund account and require the funds be used for improving state administration of the UI program and reemployment services for UI claimants. States with high improper payment rates would be required to use a portion of the funds for program integrity activities. Currently, states have discretion to use these funds for non-UI purposes.

Require states to implement the Integrated Data Hub.—This proposal would require states to implement the Integrated Data Hub developed by the UI Integrity Center of Excellence to gain access to a fraud analytics database, sources of incarceration and mortality records, and a front-end identity verification tool.

Offset Overlapping UI and Disability Insurance Benefits.—The Budget includes a proposal to reduce an individual’s entitlement to a Disability Insurance benefit in any month by the amount the individual receives in unemployment compensation.

UWC is reviewing each of these proposals for potential opposition, support and/or comment.