Bills › 89th General Assembly
Where it is now
- Done: IntroducedApril 26, 2021
- Done: SubcommitteeApril 26, 2021
- Done: Senate committeeApril 28, 2021
- Skipped: Passes the SenateContinued as SF 617
- Next: House committee
- Next: Passes the House
- Next: To the Governor
- Next: Signed into law
Became SF 617 → Its progress continues under the new number. Go to SF 617 What’s a funnel?
What’s in it
This bill concerns unemployment insurance under Code chapter 96. _____ The bill defines “able to work”, for purposes of unemployment benefits, to mean the individual is physically and mentally able to perform work. The bill defines “available for work”, for purposes of unemployment benefits, to mean the individual is ready and willing to accept suitable work. The bill defines “severance pay”, for purposes of Code chapter 96, as any payment in connection with separation from employment that is not conditioned on the individual giving up any legal right or the release of any rights.
Read the full explanation
The bill strikes language requiring the director of the department of workforce development to recompute wage credits for purposes of calculating an individual’s maximum total amount of unemployment benefits payable during a benefit year. The stricken language applied to an individual who is laid off due to the individual’s employer going out of business at the factory, establishment, or other premises at which the individual was last employed by crediting the individual’s account with one-half, instead of one-third, of the wages for insured work paid to the individual during the individual’s base period. The bill also strikes language providing an additional weeks of benefits to such individuals if the state “off” indicator, which relates to the rate of insured unemployment in the state, is in effect. The bill authorizes the department of workforce development to establish by rule a process to waive or alter the work search requirements for a claim for unemployment benefits if an individual has a reasonable expectation that the individual will be returning to employment and is attached to a regular job or industry or a member in good standing of a union therein eligible for referral for employment. To be considered attached to a regular job or industry, an individual must be on a short-term temporary layoff, as defined in the bill. The bill authorizes an employer to request an extension of the waiver or alteration as specified in the bill. _____ unemployment benefits, an individual must satisfy a single one-week waiting period during the individual’s benefit year. To satisfy the one-week waiting period, the individual, with respect to the week in question, must be eligible for benefits from this state, but must not have received benefits from this state, and must not be eligible for benefits from another state. The provision of the bill providing for a process to waive or alter the work search requirements for a claim for unemployment benefits takes effect upon enactment. The remainder of the bill takes effect July 1, 2022. The provision of the bill providing for a process to waive or alter the work search requirements for a claim for unemployment benefits applies to any new claim of unemployment benefits beginning on or after the first Sunday after the effective date of that provision. The provision of the bill providing for a one-week waiting period in order to be eligible for unemployment benefits applies to any new claim of unemployment benefits beginning on or after July 3, 2022. The remainder of the bill applies to any week of unemployment benefits beginning on or after July 3, 2022.
Senate subcommittee
Named April 26, 2021. Meeting: Wednesday, April 28 · 8:30 AM · 217 Conference Room.
Three legislators hear a bill first and recommend what the committee should do; it’s the best time to weigh in. How to take part
Fiscal note
AI summary This bill changes unemployment insurance rules by altering benefit calculations for closed businesses, allowing work search waivers for certain workers, and reinstating a one-week waiting period for benefits. It is estimated to reduce federal administrative expenses by $251,000 beginning in fiscal year 2023 and reduce payments from the unemployment insurance trust fund by approximately $4.6 million annually starting in fiscal year 2023 and $23.3 million annually starting in fiscal year 2023. The bill would increase federal administrative expenses by $60,000 in fiscal year 2022, and the impact on trust fund benefits or employer taxes cannot be estimated.2
Read the fiscal note
Description
Senate File 617 relates to unemployment insurance benefits. The Bill:
- For individuals whose employers have gone out of business, removes language requiring the Director of the Iowa Department of Workforce Development (IWD) to recompute wage credits from 33.0% to 50.0% for purposes of calculating an individual’s maximum total amount of unemployment benefits payable during a benefit year. The Bill also eliminates the ability of these individuals to collect an extra 13 weeks of benefits. This section of the Bill takes effect on July 1, 2022.
- Allows the IWD to establish by rule a process to waive or alter work search requirements for individuals who will be returning to employment and are attached to a regular job or industry or a member in good standing of a union. The section applies to temporary layoffs of 16 weeks or less due to seasonal weather conditions for highway construction, repair, or maintenance workers. This section of the Bill takes effect on enactment.
- Reinstates a one-week waiting period for those eligible to collect unemployment insurance during the individual’s benefit year. This section of the Bill takes effect on July 1, 2022.
Background
The UI Trust Fund, administered by the U.S. Department of Labor, is used to pay UI benefits to eligible claimants. The balance of the Fund at the end of calendar year (CY) 2016 was $1.006 billion, rising to $1.252 billion at the end of CY 2019. The Fund balance as of April 2, 2021, was $856.2 million. The table below shows historical claims paid from the Fund to Iowans:
The UI Trust Fund is replenished through insurance taxes paid by Iowa employers based on a formula that includes an employer’s five-year average annual benefit payment and the employer’s five-year average annual taxable payroll. This formula results in a benefit ratio, which is compared to every other employer’s benefit ratio in determining the employer tax rate. The lowest employer benefit ratios receive the lowest tax rates. The Contribution Rate Table below shows the tax rates paid by Iowa employers and is set on a scale of 1 (highest tax rate paid) to 8 (lowest tax rate paid). For 2021, the Contribution Rate Table is set at 7, with tax rates ranging from 0.00% for those with the lowest benefit ratios to 7.50% for those with the highest benefit ratios. In 2020, $490.0 million was transferred from federal funds deposited into the Iowa Coronavirus Relief Fund to the UI Trust Fund to keep the Contribution Rate at 7.Year 2016 2017 2018 2019 2020 Benefits 423,511,364$ 402,624,842$ 364,712,930$ 381,788,782$ 1,254,245,440$ UI Benefits Paid — CY 2016-2020* *Source: U.S. Department of Labor Unemployment Insurance Taxes Contribution Rates Table Iowa Code Section 96.1A(37) defines temporary unemployment for a period lasting up to four consecutive weeks when the individual is unemployed due to a plant shutdown, vacation, inventory, lack of work, or emergency from the individual’s regular job. After four weeks, under current law, work search requirements apply to these temporarily unemployed workers. Many states currently impose a one-week waiting period for payment of UI benefits because federal funds are not available for the first week after a claim is filed. Iowa does not have a waiting week. The Coronavirus, Aid, Relief, and Economic Security (CARES) Act provided 100.0% federal reimbursement to states for the first week of UI for the time period March 29, 2020, through December 16, 2020, saving Iowa $105.5 million. The Consolidated Appropriations Act, 2021, provided a 50.0% reimbursement for the first week of all claims paid from December 27, 2020, through March 13, 2021, while the American Rescue Plan Act of 2021 retroactively provided a 100.0% reimbursement for the first week of all claims paid from December 31, 2020, through September 6, 2021.
Assumptions
- 2020 UI data was not used as a model due to high claims paid from COVID-19 closures.
- Two percent inflation beginning in FY 2023 was used for projected costs of salary and benefits.
- Business failure projections going forward are based on FY 2014 to FY 2019 data from the IWD, as an average of $4.6 million in UI benefits were paid out to 2,741 recipients due to closings.
- Waiving of work search requirements to those with a temporary layoff for 16 weeks instead of 4 weeks will impact 5,000 highway construction workers statewide, according to IWD data.
- The IWD would need to spend $60,000 in FY 2022 for information technology costs to administer the changes to work search requirements.
- Reinstating an initial waiting week would reduce withdrawals to cover UI benefits by 5.5% annually. According to the IWD, the annual average in first week benefit payments from FY 2015 to FY 2019 to 62,000 recipients who would no longer receive them was $23.3 million.
Fiscal Impact
- The Bill will eliminate the need for 3.0 full-time equivalent (FTE) Workforce Advisor positions within IWD due to elimination of the benefit to claimants when employers go out of business, reducing federal UI administrative expenses by an estimated $251,000 beginning in FY 2023, and increasing via inflation every year thereafter. This provision will also reduce payments from the UI Trust Fund by approximately $4.6 million annually beginning in FY 2023.
- Waiving or altering work search requirements will increase IWD federal UI administrative expenses by an estimated $60,000 in FY 2022. The Bill may, depending if or how IWD establishes new administrative rules to enact this section, marginally increase benefits paid from the UI Trust Fund by an amount that cannot be estimated due to a lack of data.
- Reinstating the one-week waiting period for payment of UI benefits would reduce withdrawals from the UI Trust Fund by an estimated $23.3 million annually beginning in FY 2023. See chart below for the overall fiscal impact of the Bill.
- Employer taxes paid into the UI Trust Fund would be expected to decrease in later years, absent any other law changes, due to a reduction in benefit payments. These cannot be estimated due to lack of data.Section of Bill FTE Category FY 2022 FY 2023 Funding Source -3.0 IWD Employee Salary and
Benefits 0$ -251,000$ Federal UI
Administrative Funding
Benefits to Claimants 0 -4,600,000 UI Trust Fund
Work Search
Requirements IWD System Expenses 60,000$ 0 Federal UI
Administrative Funding
Reinstate Waiting Week Benefits to Claimants 0$ -23,300,000$ UI Trust Fund TOTAL -3.0 60,000$ -28,151,000$ Estimated Fiscal Impact of SF 617
Business Closings -
Wage Credits
Sources
- Legislative Services Agency
- Iowa Department of Workforce Development
- United States Department of Labor
- Iowa Department of Management
- Unemployment Trust Fund · May 3, 2021 · $251,000
Iowa Code it changes
Lobbying
6 for · 14 against · 13 undecided · Who →
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