Governors Reject Stimulus Funds Marked for Expanding Unemployment Benefits

The Stimulus Package’s impact on employers is hardly clear at this stage.  So far there have been three: Governors from Mississippi, South Carolina, and Louisiana each have gone on the record with their intention to reject millions of dollars marked in the $787 billion Stimulus Package (a.k.a. the American Recovery & Reinvestment Act) for states to expand their unemployment insurance benefits. The goal of the $7 billion Unemployment Insurance Modernization Act (UIMA) is to close gaps in current unemployment insurance programs. 3d image of computer mouse and globe with job search online

The Governors have a decent argument. Their concern is that if they expand eligibility for unemployment benefits, the consequence may be that their state is forced to raise unemployment insurance tax – literally a tax on employment, which seems contrary to the notion of economic stimulus. Governor Barbour (Mississippi) told CNN’s “State of the Union” Sunday that he does not want Mississippi to accept UIMA funds because it may require the state to change or somehow loose control of its employment laws.

Data from the National Employment Law Project (NELP) shows that 19 states immediately qualify for UIMA funds and 12 more could quickly become eligible by making a few policy changes. The immediate benefit of increasing unemployment eligibility by using federal funds is that under UIMA states who tap into such funding can receive millions of dollars up front, deposited all at once in their state unemployment trust funds.

Under UIMA, a state qualifies for one-third of its UIMA share if it has in place a policy called the “alternative base period,” which counts a worker’s recent earnings to qualify for benefits. To qualify for the remaining two-thirds, states have the option of providing benefits in two of the following four situations:

  1. part-time workers who are denied benefits because they are required to seek full-time work,
  2. individuals who leave work for compelling family reasons (domestic violence, spouse relocation, illness and disability),
  3. workers with dependent family members who qualify for state benefits but whose benefits should be increased to care for dependents, or
  4. permanently laid off workers who require extra unemployment benefits to participate in training.

According to the National Employment Law Project’s UIMA fact sheet, Delaware does not have an “alternative base period” policy, but it does have programs that would later qualify the state for UIMA funds. If Delaware decides to tap into UIMA, it could be eligible for $21.8 million.

For more information on the impact the Stimulus Package will have on employers, see:

More Employer Compliance Issues from Stimulus Package
Stimulus’ COBRA Premium Subsidy Puts Burden on Employers

One response to “Governors Reject Stimulus Funds Marked for Expanding Unemployment Benefits”

  1. Jim says:

    I’ve already exhausted my 26 weeks of unemployment and only have 10 weeks left on my extension. No job prospects in site. Do you know if I’m eligible for any additional extensions (I’ve heard some say at least 13 more weeks with the stimulus plan). Thanks Unemployed in Delaware.

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