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Unemployment Insurance Administrative Funding. Formulation to Allocation Target Allocation Process Overview. US Department of Labor Employment and Training Administration Division of Fiscal and Actuarial Services . Presentation Topics. Funding Background

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unemployment insurance administrative funding

Unemployment InsuranceAdministrative Funding

Formulation to Allocation

Target Allocation

Process Overview

US Department of Labor

Employment and Training Administration

Division of Fiscal and Actuarial Services

presentation topics
Presentation Topics

Funding Background

Formulation for State Administration

Resource Justification Model

Allocation

ui administrative funding
UI Administrative Funding

Title III Section 302(a) Social Security Act: Secretary of Labor shall certify to the Secretary of Treasury such amounts as necessary for “proper and efficient administration” of each State’s law.

Social Security Act Title III

(http://www.socialsecurity.gov/OP_Home/ssact/title03/0300.htm#ft1)

budget timeline for fy 200z
Budget Timeline for FY 200Z

Jan.

June

July

Initial Workload Projection

Initial Budget Formulation

ETA Request to DOL

Sept.

DOL Request to OMB

200X

Budget Hearings w/OMB

Oct.

200Y

OMB Passback

Final Workload Projections

President’s Budget Request

Nov.

Jan.

Feb.

Planning Targets

June

Aug.

Oct.

States Submit SQSP

Final Allocations

FY 200Z

budget formulation
Budget Formulation

Workload Driven.

Workloads projected using statistical methods & Administration’s economic assumptions

Key workload item: Continued Claims.

budget formulation6
Budget Formulation

Base and Above Base

Projected Continued Claims divided by 52 is designated the Average Weekly Insured Unemployment (AWIU) trigger.

Funding in President’s Request considered adequate to process workloads up to the trigger.

Funds automatically made available for AWIU above the trigger at rate of $28.6 M per 100,000 AWIU & pro-rated (amounts developed in the 1990s).

budget formulation7
Budget Formulation

Congress obligated to use CBO’s economic assumptions for scoring.

CBO AWIU projections typically different due primarily to different economic assumptions and projecting methodology.

Funding gap created when CBO’s AWIU projection higher than Administration’s since Congress typically accepts the dollars requested or something lower.

budget formulation8
Budget Formulation

Funding gap example:

For FY 2008, dollars funded AWIU of 2.4M while trigger was set at 2.786M.

Initial budget request included an AWIU of 2.62M however a continuing resolution held the AWIU at the FY 2007 level of 2.4M

budget formulation9
Budget Formulation

Number of staff computed using fixed workload per staff-year factors.

  • SY=(WL projected) / (WL/SY factor)
budget formulation10
Budget Formulation
  • Staff costs = (SY) X Cost per SY
    • Note: In FY2010, inflation included for 1st time since 1995
  • Other activities, e.g., non-personal services (utilities, facilities, etc.), overhead, support, & postage, are established percentages of staff costs.
  • Key result: total dollars for state administration.
allocating base funds
Allocating Base Funds

What are the primary drivers of the base allocation?

Where does the data that drives the base allocations come from?

budget allocation
Budget Allocation

Workload Staff Year Levels

Projected State level Workload

Staff Year Costs

+

+

Non Workload Staff Year Levels

NPS Costs

Total Available for Allocation

allocating base funds13
Allocating Base Funds

Two key features of allocation:

Based on cost of doing business and appropriation.

Goal: provide funding that allows roughly equal level of service across all states and recognize need for productivity incentives.

allocating base funds14
Allocating Base Funds

Funding provided in two parts: Base & Above Base

Base – costs associated with processing an AWIU of 2.3M

Initial Claims 16.75M

Weeks Claimed 119.6M

Non-monetary determinations 7.000M

Appeals 1.128 M

All subject employers (200X) 7.674M

All wage records (200X) 641.146M

allocating base funds15
Allocating Base Funds

Base funding determined by applying formulation methodology to base workloads.

Above-base – claims activity above 2.3M AWIU

data source for allocation
Data Source for Allocation

Resource Justification Model (RJM)

RJM is a data collection instrument.

States submit data from cost accounting records

Expenditures, Hours by functional activity, personnel costs

Data is subject to review & verification

rjm objectives
RJM - Objectives

Demonstrate true funding need.

Use data to allow for fair and equitable allocation of available funds.

RJM Website

(http://www.ows.doleta.gov/rjm/)

rjm use of data
RJM – Use of Data

Actual cost data for most recent year available are the starting point for determining base allocations.

Shows how much and on what activities states spent money.

Supplements to the federal grant not considered in allocation formula.

allocating base funds19
Allocating Base Funds

Availability by activity

Allocated base funds assigned to functional activities according to proportions reflected in RJM data collection.

Claims activities

Non-personal services

Tax/Wage Records

Support

AS&T

BPC/UIP

allocating base funds20
Allocating Base Funds

Primary drivers of base allocation levels:

Each state’s share of national UI workloads (claims, appeals, wage records, tax accounts)

Initial Claims 16.75M

Weeks Claimed 119.6M

Non-monetary determinations 7.000M

Appeals 1.128 M

Each state’s PS/PB rates (from RJM)

allocating base funds21
Allocating Base Funds

Primary drivers of base allocation levels:

Time allowed for processing each budgeted workload item (MPUs, which are calculated from RJM data)

3-year average

Non-personal services spending (from RJM)

3-year average

allocations
Allocations

Staff years =

Cost =

MPU reduction algorithm

MPU values are an average of the most recent three years of actual data.

Workload x MPU

Minutes Worked Per Year Per Staff

Staff Years x PS/PB rates

slide24

1 madj = (mpu_st – mpu_high10) * alpha 2wadj = .75 + ( AP_st / (AP_highst*4))

MPU Reduction Process - Appeals

1

2

allocations25
Allocations

Support and AS&T percentages are reduced by the same algorithm used for MPU values.

BPC, UIP staff years taken after adjustment for state dollars.

allocations26
Allocations

Total Allocation

(Reduced SYs x Inflated PSPB rates) + Reduced NPS

SYs for BPC & UIP are not reduced

NPS is decreased across-the-board to equal availability.

allocations27
Allocations

Stop-loss is -5% of total dollars from previous year’s base allocation.

Stop-gain is not pre-determined.

Has been as low as 4.56% and as high as 7.71%

bottom line authority
Bottom Line Authority

States have authority to move allocated resources among activities.

Cannot move resources in such a way as to increase above base payment.