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On February 22nd, President Obama signed legislation to extend emergency unemployment insurance benefits through 2012 and makes various changes to the UI program, such as decreasing the amount of available weeks of benefits.

As part of a larger payroll tax extension and Medicare fix package, the law overturns a 1960s-era Labor Department ban on states’ screening and testing UI applicants for illegal drugs.

The new law permits all states to screen any UI applicants who either lost their job because of drug use, or are seeking a job that generally requires a drug test.

The law cuts 30 weeks of total benefits, by September, in states with an average unemployment rate of between 8 percent and 8.4 percent from 93 maximum weeks to 63 maximum weeks.

The cost of the UI extension is estimated at $30 billion, which the law offsets by spectrum auctions, and by requiring new civilian federal employees and members of Congress to contribute more toward their defined benefit pension programs.

Under the bill, new federal employees—defined as those hired after Dec. 31, 2012—will help pay for the extension of emergency UI benefits by contributing an additional 2.3 percent of their salaries toward their retirements. The provision also will apply to those
who become new members of Congress after Dec. 31, 2012.

Federal executive branch employees currently contribute 0.8 percent of their salaries toward the defined benefit portion of the Federal Employees Retirement System, meaning that new employees will pay a total of 3.1 percent of their salaries toward their retirement. The increased retirement contributions will be permanent.

The law includes the following decreases in available unemployment compensation benefits:

  • In states with an unemployment rate of under 6 percent, the law reduces the number of available weeks from 60 to 40.
  • In states with an unemployment rate of between 6 percent and 6.4 percent, the law reduces the number of available weeks from 73 to 54.
  • In states with an unemployment rate of between 6.5 percent and 6.9 percent, the law reduces the number of available weeks from 86 to 54.
  • In states with an unemployment rate of between 7 percent and 7.9 percent, the law reduces the number of available weeks from 86 to 63.
  • In states with an unemployment rate of between 8.5 percent and 8.9 percent, the law reduces the number of available weeks from 99 to 63.
  • In states with an unemployment rate of 9 percent and above, the law reduces the number of available weeks from 99 to 73.

In addition, the law creates new cost-neutral “waiver” authority, permitting states flexibility in how they can use UI benefit funds for promoting pro-work reforms.

The law also, for the first time, creates national job search requirements for everyone collecting state and federal UI benefits, from the first through the last week of benefits.

The law requires re-employment eligibility assessments for every long-term unemployed person who begins collecting federal UI benefits, to determine what services and activities they need to return to work. The law provides states nearly $1 billion in new,
time-limited funds to assist the long-term unemployed, partially unemployed and self-employed.

To rein in overpayments, the law requires states to reduce current state and federal UI benefit checks to recover prior overpayments of UI benefits, in order to more quickly and effectively recover the current $12 billion in annual UI overpayments.
02.26.2012