Unemployment Insurance Committee
Information Update - February 24, 2009

Federal Stimulus UI Law & Benefit Provisions

In addition to continuing the current extension of up to 33 weeks of UI benefits through December 31, 2009 (phasing out May 31, 2010), the federal stimulus includes an additional $25 per week benefit increase through December 31, 2009.  Federal income taxes on the first $2,400 of unemployment benefits per recipient are temporarily suspended.  The extension and benefit increase is financed through federal general revenue and not through FUTA funds. 

The legislation also temporarily waives interest payments and the accrual of interest on advances to State unemployment funds by amending Section 1202(b) of the Social Security Act.  The interest payments that come due from the time of enactment until December 31, 2010 would be deemed to have been made by the State.  No interest on advances accrue during the period. 

The Stimulus also includes a $7 billion Unemployment Compensation Modernization “incentive payment distribution” to the states conditioned upon state unemployment laws meeting certain eligibility standards.  It is estimated that New York's share, including  a separate $500 million national distribution for UI administration, could equal $442 million.  One-third of the allocation is to be distributed if a state statute permits calculation of benefits on an alternate base period.  The remaining two-thirds would be distributed  if a state's law meets at least two of 4 conditions: limiting work search to part-time employment; leaving work for compelling family reasons, specifically domestic violence, “trailing spouse,” and family member's illness; dependent allowances ($15 per dependent); or extra 26 weeks of UI benefits while in training.

New York appears to be one of only 4 states whose current law would make it eligible to receive the full incentive funding without any modifications to state statute.  These incentive funds can only be used for the payment of unemployment insurance benefits, unless the state legislature appropriates funding for the administration of the state UI law and public employment offices.


Given the limitations on the use of funds, this substantial Reed Act distribution to NYS will help to delay federal loans as NY seeks to maintain solvency in the Trust Fund.  It will also increase pressure at the state level to implement an increase in the maximum weekly unemployment insurance benefit.

The Labor Committee Chairs in each house have introduced legislation (S2245/A4921) which would increase the maximum UI benefit over four years to $625 in 2012; while also gradually increasing the taxable wage base over the same period of time from its current level of $8,500 to $13,000. The bill is substantially similar to the Governor's Program Bill introduced last year on the last day of the legislative session.

The Business Council will be commencing meetings with both houses and the Executive to understand the intended use of the federal stimulus funds for  the administration of the unemployment system (one stop centers and benefit administration) and benefit payments.  We will be reaching out to our members to convene workgroups around proposed modifications we wish to advance around issues of unemployment insurance.

Please feel free to contact me with any questions or concerns you may have or to participate in any of our meetings on this topic.