BILL NUMBER:S3928

TITLE OF BILL:

An act
to amend the labor law, in relation to unemployment insurance extended
benefits

PURPOSE:

This bill would amend Labor Law § 601(1)(a) to allow New York to take
advantage of provisions contained in the recently enacted federal Tax
Relief, Unemployment Insurance Reauthorization, and Job Creation Act
of 2010 (P.L.111-312) by modifying provisions concerning
unemployment insurance extended benefit "on" and "off' indicators.
Specifically, the bill would allow the Commissioner of Labor to make
a determination of whether the State has satisfied an "on" or "off'
indicator for such extended benefits by comparing current
unemployment rates to the corresponding period in the preceding three
years rather than the prior two years under current law. This
temporary "look back" provision will allow New York to remain
eligible for extended benefits, authorizing tens of thousands of
unemployed New Yorkers to receive 100% federally funded unemployment
benefits for a period of up to 20 additional weeks. Ultimately, the
bill will result in the State's receipt of approximately $620 million
in federal reimbursement funds and add as much as $1.24 billion in
              

economic benefits to the state economy.

SUMMARY OF PROVISIONS:

Section 1 of the bill would amend Labor Law § 601(1)(a) to add a new
subparagraph (5), extending to three years the look back periods
against which the current insured unemployment rate (IUR) and the
total unemployment rate (TUR) are measured, when such extended look
back periods are authorized under federal legislation.

Section 2 of the bill would provide that the bill be effective
immediately, and be deemed to be in full force on and after February
1, 2011.

LEGISLATIVE HISTORY:

This is a new bill. However, in 2009, a similar bill adopted the
current extended benefit indicators enacted by Congress under P.L.
111-5 (The American Recovery and Reinvestment Act) to allow for
receipt of federally-funded extended benefits by unemployed New
Yorkers, and was enacted as Chapter 35 of the Laws of 2009.

STATEMENT IN SUPPORT:

Extended unemployment insurance benefits are intended to provide
additional relief to unemployed individuals during periods of
sustained or serious unemployment. These benefits
are based on the recognition that during economic downturns,
reemployment can be delayed despite efforts made by claimants to find
new jobs. Entitlement to extended benefits is triggered based upon a


state's overall levels of unemployment, using one of two alternate
indicators: the insured unemployment rate (IUR) or the total
unemployment rate (TUR).

Under the mandatory IUR indicator, a state will begin and remain in an
extended benefit period (under which up to 13 weeks of extended
benefits will be available) if the IUR for the previous 13 weeks is
at least 5% and equals or exceeds 120% of the average of the rates
for the corresponding period in each of the two previous years
(referred to as a "look back" provision).
Under the optional TUR indicator, a state will begin and remain in an
extended benefit period (under which up to 13 weeks of extended
benefits will be available) if the average seasonally (adjusted TUR
for the most recent three months is at least 6.5% and equals or
exceeds 110% of the rate for the corresponding three month
period in either or both of the two previous years.
There is also an additional optional TUR indicator, under which up to
20 weeks of extended benefits will be available) if the TUR is at
least 8% and equals or exceeds 110% of the rate for the
corresponding 3 month period in either or both of the two previous
years.

Under the existing statutory scheme containing a two-year "look
back" period, because of sustained high unemployment rates during the
last two years, many states, including New York, will trigger "off'
extended benefit entitlement based on the TUR indicator by early
Spring 2011.
This will occur because even though New York's TUR is expected to
remain high enough to meet the first part of the TUR indicator
equation (i.e. 6.5% or higher), New York will not likely continue to
meet the "look back" requirement because the average seasonally
adjusted TUR for the most recent three months would no longer equal
or exceed 110% of the rate for the corresponding three-month period
in either or both of the two previous years.

To address this situation and enable states like New York to remain
eligible for federally funded extended benefits, Congress included
provisions in the recently enacted Tax Relief, Unemployment Insurance
Reauthorization, and Job Creation Act of 2010 to permit states to use
a temporary three-year look back for the mandatory IUR and/or the
optional TUR indicator. The intent behind the new federal three-year
look back period is to provide a better baseline for assessing the
impact of the recession on states. This change will allow New York to
continue to qualify for extended benefits because in general,
unemployment rates three years ago were low enough to meet the look
back requirements for the extended benefit triggers. Adopting a
three-year look back will thus ensure that unemployed New Yorkers will
continue to be eligible for the federally funded extended benefits.

Since extended benefits are payable under state law, New York must
amend its state law to conform to the federal Tax Relief,
Unemployment Insurance Reauthorization, and Job Creation Act of 2010
if it is to continue to meet the standard for such benefits.
The language of this bill conforms to requirements set forth in
federal law and would ensure that New York State's UI claimants would
continue to be eligible for 20 weeks of 100 percent federally funded
extended benefits available to states with high unemployment.


Without this amendment, New York's unemployed workers' entitlement to
extended benefits would most likely cease completely by early Spring
201 1 based on the March, 2011 TUR. Once
the state triggers off extended benefits, it must wait thirteen weeks
before it can trigger an "on" indicator. Failure to enact this
legislation promptly would result in a loss of an estimated $620
million in entirely federally funded unemployment insurance benefits,
to be paid between May and December 2011. As it has been estimated
that every $1 of unemployment insurance benefits paid returns $2 to
the state economy, the loss of these benefits would cost the state
economy $1.24 billion.

BUDGET IMPLICATIONS:

This bill would result in approximately $620 million in federal
reimbursement funds. These funds will cover the full cost of extended
benefits for private employers or ninety-seven percent of all
extended benefit cost in New York. Public employees are not covered
under this provision, which would result in a budgetary impact of $3
million to the state and $14 million to localities in extended
unemployment benefits paid between May and December 2011. That said,
the direct tax receipts associated with the extended benefits as well
as the indirect economic benefits to the State and local governments
are expected to exceed these additional costs.

EFFECTIVE DATE:

This act will take effect immediately and shall be deemed to have been
in full force and effect on and after February 1, 2011.