To amend the Federal Unemployment Tax Act and the Social Security Act to modernize the unemployment insurance system, and for other purposes.

April 11, 2003

Mr. MCDERMOTT (for himself, Mr. SANDERS, Ms. NORTON, Mr. NADLER, Ms. CARSON of Indiana, Mr. EVANS, Mr. OWENS, Ms. SOLIS, Mr. STARK, Mr. KUCINICH, Mr. LANTOS, Ms. LEE, and Mr. FRANK of Massachusetts) introduced the following bill; which was referred to the Committee on Ways and Means

To amend the Federal Unemployment Tax Act and the Social Security Act to modernize the unemployment insurance system, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; ETC.

(a) SHORT TITLE- This Act may be cited as the `Keep America Working Act of 2003'.

(b) TABLE OF CONTENTS-

Sec. 1. Short title; etc.

TITLE I--RESTORING INSURANCE ELIGIBILITY IN AN EVOLVING ECONOMY

Sec. 101. Expansion of circumstances under which unemployment compensation is payable.

Sec. 102. Expansion of unemployment tax wage base.

Sec. 103. Determinations of whether individuals are employees for purposes of employment taxes.

Sec. 104. Repeal of determination of employer's liability for certain employment taxes.

Sec. 105. Effective dates.

TITLE II--ENCOURAGING JOB MOBILITY AND ADEQUATE COMPENSATION

Sec. 201. Separation from work due to a move relating to spouse's or domestic partner's new principal place of work not a bar to receiving unemployment compensation; replacement ratios for lower paid workers who become unemployed.

TITLE III--ENSURING SOLVENCY AND PREPARING FOR RECESSION

Sec. 301. Increase and decrease in earnings credited to State accounts when States meet or fail to meet funding goals.

Sec. 302. Amendments to trigger provisions of extended benefit program.

Sec. 303. Eliminate special Federal eligibility requirements for extended compensation.

TITLE IV--IMPROVING ADMINISTRATIVE FUNDING FOR THE UNEMPLOYMENT SYSTEM

Sec. 401. Funding for administration of State unemployment compensation, State systems of public employment offices and veterans employment service programs.

TITLE I--RESTORING INSURANCE ELIGIBILITY IN AN EVOLVING ECONOMY

SEC. 101. EXPANSION OF CIRCUMSTANCES UNDER WHICH UNEMPLOYMENT COMPENSATION IS PAYABLE.

(a) IN GENERAL- Subsection (a) of section 3304 of the Internal Revenue Code of 1986 (relating to approval of State unemployment compensation laws) is amended by striking `and' at the end of paragraph (18), by redesignating paragraph (19) as paragraph (29), and by inserting after paragraph (18) the following new paragraphs:

`(19) compensation shall not be denied to an individual solely because such individual is seeking only part-time work, if--

`(A) such individual otherwise qualifies for unemployment compensation, based wholly or mostly on part-time work; and

`(B) the part-time work sought by such individual generally requires at least 20 hours per week;

`(20) compensation is payable to an eligible individual in an amount which is not less than the amount determined by applying a base period ending at the close of the calendar quarter most recently completed before the date of the individual's application for benefits;

`(21) except as provided in paragraphs (6) and (13), compensation shall not be denied in such State to any otherwise eligible individual solely on the basis that such individual is a seasonal worker;

`(22)(A) if any individual leaves employment because of sexual harassment, for purposes of determining such individual's eligibility for compensation for any subsequent week for which such individual meets the State law requirements relating to availability for work and active search for work, such individual shall be treated as having left such employment for good cause, and

`(B) for purposes of subparagraph (A), `sexual harassment' shall be considered to have been shown upon the demonstration of facts sufficient to establish a prima facie case that the individual involved was victimized by sexual harassment in violation of title VII of the Civil Rights Act of 1964;

`(23) if any individual leaves employment because of loss of adequate child care for a dependent child under the age of 13, for purposes of determining such individual's eligibility for compensation for any subsequent week for which such individual meets the State law requirements relating to availability for work and active search for work--

`(A) such individual shall be treated as having left such employment for good cause, and

`(B) any failure to return to such employment or to otherwise meet such State law requirements, while the lack of such child care continues, shall be disregarded;

`(24) if any individual leaves employment because the individual is a victim of domestic violence, for purposes of determining such individual's eligibility for compensation for any subsequent week for which such individual meets the State law requirements relating to availability for work and active search for work--

`(A) such individual shall be treated as having left such employment for good cause, and

`(B) any failure to return to such employment or to otherwise meet such State law requirements while the risk of further domestic violence is significant shall be disregarded;

`(25) the State law provides for the distribution to unemployed individuals information packets explaining unemployment insurance eligibility conditions in that State;

`(26) the State periodically reviews and adopts the best practices of other States in addressing contract and temporary worker issues, including--

`(A) clarifying the definitions of employee and independent contractor,

`(B) specifying employer liability for payroll taxes,

`(C) licensing, bonding, or regulating the employee leasing industry, and

`(D) the strategic targeting of audits;

`(27) compensation shall not be denied in such State to any otherwise eligible individual solely on the basis that such individual was employed at the applicable minimum wage for not less than 20 hours a week for 30 weeks in the base period;

`(28) compensation is payable to any individual who is a parent of a child by blood or adoption and who takes an unpaid leave of absence from the employer at any time during the first year after--

`(A) in the case of a child by blood, the birth of such child, and

`(B) in the case of a child by adoption by such individual, the adoption of such child; and'.

(b) UNEMPLOYMENT COMPENSATION NOT REDUCED BY EXEMPT TRUST ROLLOVERS- Paragraph (15) of section 3304(a) of such Code is amended by inserting `(other than a rollover described in section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16))' after `periodic payment' the first place it appears.

SEC. 102. EXPANSION OF UNEMPLOYMENT TAX WAGE BASE.

(a) IN GENERAL- Paragraph (1) of section 3306(b) of the Internal Revenue Code of 1986 is amended by striking `$7,000' and inserting `the contribution and benefit base (as determined under section 230 of the Social Security Act)'.

(b) DECREASE IN FUTA TAX RATE- Section 3301 of such Code is amended by striking `equal to--' and all that follows through `thereafter;' and inserting `equal to 5.59 percent'.

SEC. 103. DETERMINATIONS OF WHETHER INDIVIDUALS ARE EMPLOYEES FOR PURPOSES OF EMPLOYMENT TAXES.

(a) REPEAL OF PRIOR AUDIT SAFE HARBOR WITH RESPECT TO DETERMINATIONS OF EMPLOYMENT STATUS-

(1) IN GENERAL- Paragraph (2) of section 530(a) of the Revenue Act of 1978 is amended by striking subparagraph (B) and redesignating subparagraph (C) as subparagraph (B).

(2) CONFORMING AMENDMENTS- Section 530(e) of such Act is amended--

(A) in paragraph (2) by striking subparagraph (A) and redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B), respectively,

(B) in paragraph (4)(B) by striking `subparagraph (A), (B), or (C)' and inserting `subparagraph (A) or (B)'.

(b) REPEAL OF PROHIBITION AGAINST REGULATIONS AND RULINGS ON EMPLOYMENT STATUS- Section 530 of the Revenue Act of 1978 is amended by striking subsection (b).

SEC. 104. REPEAL OF DETERMINATION OF EMPLOYER'S LIABILITY FOR CERTAIN EMPLOYMENT TAXES.

(a) IN GENERAL- Section 3509 of the Internal Revenue Code of 1986 is repealed.

(b) CLERICAL AMENDMENT- The table of sections for chapter 25 of such Code is amended by striking the item relating to section 3509.

SEC. 105. EFFECTIVE DATES.

(a) IN GENERAL- Except as provided by subsection (b), the amendments made by this title--

(1) shall take effect on January 1, 2004, and

(2) in the case of sections 103 and 104, shall apply to periods beginning after December 31, 2003.

(b) EXCEPTION- In the case of any State the legislature of which has not been in session for at least 30 calendar days (whether or not successive) between the date of the enactment of this Act and December 31, 2003, the amendments made by section 101 shall take effect 30 calendar days after the first day on which such legislature is in session on or after January 1, 2004.

TITLE II--ENCOURAGING JOB MOBILITY AND ADEQUATE COMPENSATION

SEC. 201. SEPARATION FROM WORK DUE TO A MOVE RELATING TO SPOUSE'S OR DOMESTIC PARTNER'S NEW PRINCIPAL PLACE OF WORK NOT A BAR TO RECEIVING UNEMPLOYMENT COMPENSATION; REPLACEMENT RATIOS FOR LOWER PAID WORKERS WHO BECOME UNEMPLOYED.

(a) REVENUES FROM INDIVIDUAL INCOME TAXES ATTRIBUTABLE TO UNEMPLOYMENT COMPENSATION TO BE CREDITED TO UNEMPLOYMENT ACCOUNTS OF QUALIFYING STATES-

(1) IN GENERAL- There is hereby appropriated to accounts of certified States in the Unemployment Trust Fund (as described in section 903 of the Social Security Act (42 U.S.C. 1103)) amounts equivalent to the amount of tax liabilities under chapter 1 of the Internal Revenue Code of 1986 which is attributable to the application of section 85 of such Code to payments from such accounts.

(2) TRANSFERS- The amounts appropriated by paragraph (1) to any such account shall be transferred from time to time (but not less frequently than quarterly) from the general fund of the Treasury on the basis of estimates made by the Secretary of the Treasury, in consultation with the Secretary of Labor, of the amounts referred to in such paragraph. Any such quarterly payment shall be made on the first day of such quarter and shall take into account unemployment compensation estimated to be received from such account during such quarter. Proper adjustments shall be made in the amounts subsequently transferred to the extent prior estimates were in excess of or less than the amounts required to be transferred.

(3) CERTIFIED STATES- For purposes of this subsection, the term `certified State' means a State for which a certification under subsection (d) is in effect.

(4) REPORTS- The Secretary of the Treasury shall submit annual reports to the Congress on--

(A) the transfers made under this subsection during the year, and the methodology used in determining the amount of such transfers and the account to which made, and

(B) the anticipated operation of this subsection during the next 5 years.

(b) CONDITIONS FOR APPROVAL OF STATE LAWS- The Secretary of Labor shall (for purposes of this section) approve any State law submitted to the Secretary under this section, within 30 days of such submission, which the Secretary finds provides that--

(1) compensation shall not be denied to any individual by reason of such individual's separating from employment, if--

(A) that separation is related to a change in such individual's spouse's place of residence in connection with the commencement of work by the spouse (as an employee or as a self-employed individual) at a new principal place of work;

(B) the spouse's new principal place of work satisfies the condition under subsection (c)(1) of section 217 of the Internal Revenue Code of 1986 (relating to the minimum distance required, between a taxpayer's former residence and new principal place of work, in order to qualify for a moving expenses deduction under such section); and

(C) the separating individual has both the former residence and the new residence as his principal place of abode; and

(2) in the case of any individual who becomes entitled to receive compensation from such State, and whose average weekly wages (for the period on the basis of which such individual qualifies for such compensation, determined without any limitation on amount) do not exceed 50 percent of the average weekly wages subject (determined without any limitation on amount) to contributions under the unemployment compensation law of such State (as determined by the Secretary based on the data the Secretary considers most appropriate), compensation shall be computed in a manner that results in a wage replacement ratio for such individual that is at least equal to the sum of--

(A) 50 percent, plus

(B) 1/4 of 1 percent times the percentage by which such individual's average weekly wages (for the aforementioned period) are less than the average weekly wages subject to contributions under the unemployment compensation law of such State (as so determined).

The condition under paragraph (2) shall not be considered met if, in order to satisfy such paragraph, the State modifies its State law in a way that, as determined by the Secretary, has the general effect of reducing the replacement ratio for individuals whose average weekly wages equal or exceed the 50-percent threshold described in such paragraph, except for good cause shown.

(c) NOTIFICATION- The Secretary of Labor shall, upon approving such law for purposes of this section, notify the governor (or, if none, the chief executive officer) of the State of the Secretary's approval.

(d) CERTIFICATION- On October 31 of each year, the Secretary of Labor shall certify to the Secretary of the Treasury each State whose law the Secretary of Labor has previously approved for purposes of this section, except that the Secretary of Labor shall not certify any State which, after reasonable notice and opportunity for hearing to the State agency, the Secretary of Labor finds has amended its law so that it no longer contains the provisions specified in subsection (b) or has with respect to the 12-month period ending on such October 31 failed to comply substantially with either provision of such subsection.

(e) NOTICE OF NONCERTIFICATION- If at any time the Secretary of Labor has reason to believe that a State whose law the Secretary has previously approved for purposes of this section may not be certified under subsection (d), the Secretary shall promptly so notify the governor (or, if none, the chief executive officer) of such State.

(f) DEFINITIONS- For purposes of this section--

(1) the terms `State', `State law', `State agency', `compensation', and `week' have the respective meanings given such terms under section 205 of the Federal-State Extended Unemployment Compensation Act of 1970;

(2) the terms `wages' and `contributions' have the respective meanings given such terms under section 3306 of the Internal Revenue Code of 1986;

(3) the term `wage replacement ratio' shall have such meaning as the Secretary of Labor shall by regulation prescribe consistent with the purposes of this section; and

(4) the term `spouse' shall include a domestic partner, as defined under regulations of the Secretary of Labor.

TITLE III--ENSURING SOLVENCY AND PREPARING FOR RECESSION

SEC. 301. INCREASE AND DECREASE IN EARNINGS CREDITED TO STATE ACCOUNTS WHEN STATES MEET OR FAIL TO MEET FUNDING GOALS.

(a) IN GENERAL- Section 904 of the Social Security Act (42 U.S.C. 1104) is amended by adding at the end the following new subsection:

`Increase and Decrease in Amount of Earnings Allocated to State Accounts When States Meet or Fail to Meet Funding Goals

`(h)(1) If the average daily balance in a State account in the Unemployment Trust Fund for any calendar quarter exceeds the funding goal of such State, the amount otherwise creditable to such account under subsection (e) for such quarter shall be increased by the interest premium on such excess. If the average daily balance in such a State account for any calendar quarter is less than the funding goal of such State, the amount otherwise creditable to such account under subsection (e) for such quarter shall be decreased by the interest penalty.

`(2) Paragraph (1) shall not apply with respect to any interest premium or interest penalty to the extent that such application would result in an increase or decrease

of more than $2,500,000 in the amount creditable to any State account for any calendar quarter.

`(3) For purposes of this subsection, the term `interest premium' means, for any calendar quarter--

`(A) with respect to the State with the largest percentage value of excess of the average daily balance in the State account in the Unemployment Trust Fund over the funding goal of such State,

one-half of one percent of the amount of such excess, and

`(B) with respect to each other State, the product of--

`(i) the amount of the excess of the average daily balance in the State account in the Unemployment Trust Fund over the funding goal of such State, and

`(ii) the percentage which bears the same ratio to one-half of one percent as--

`(I) the percentage value of such excess, bears to

`(II) the percentage value of the excess of the State referred to in subparagraph (A).

The Secretary shall make appropriate adjustments in the interest premium for any calendar quarter if the aggregate interest premiums payable for such quarter exceed the aggregate interest penalties for such quarter.

`(4) For purposes of this subsection, the term `interest penalty' means, for any calendar quarter--

`(A) with respect to the State with the largest percentage value of excess of the funding goal of such State over the average daily balance in the State account in the Unemployment Trust Fund, one-half of one percent of the amount otherwise creditable to such account under subsection (e), and

`(B) with respect to each other State, the product of--

`(i) the amount otherwise creditable to such account under subsection (e), and

`(ii) the percentage which bears the same ratio to one-half of one percent as--

`(I) the percentage value of the excess of the funding goal of the State over such

average daily balance of such State, bears to

`(II) the percentage value of such excess of the State referred to in subparagraph (A).

`(5) For purposes of this subsection, the term `funding goal' means, for any State for any calendar quarter, the average of the unemployment insurance benefits paid by such State during each of the 3 years, in the 20-year period ending with the calendar year containing such calendar quarter, during which the State paid the greatest amount of unemployment benefits.

`(6) For purposes of this subsection, the term `percentage value' means--

`(A) with respect to any excess of the average daily balance in a State account in the Unemployment Trust Fund over the funding goal of such State, the percentage which such excess bears to such funding goal, and

`(B) with respect to any excess of such funding goal over such average daily balance, the percentage which such excess bears to such funding goal.'.

(b) CONFORMING AMENDMENTS-

(1) AMOUNTS CREDITED TO STATE ACCOUNTS- Subsection (e) of section 904 of the Social Security Act (42 U.S.C. 1104(e)) is amended in the first sentence by inserting `(as modified by subsection (h))' after `a proportionate part'.

(2) INTEREST RATE ON REPAYMENT OF ADVANCES DETERMINED WITHOUT REGARD TO INTEREST PREMIUMS OR PENALTIES ON AMOUNTS CREDITED TO STATE ACCOUNTS- Subparagraph (A) of section 1202(b)(4) of such Act (42 U.S.C. 1322(b)(4)) is amended by inserting `(determined without regard to section 904(h))' after `preceding calendar year'.

(c) REPORT- Not later than 6 months after the date of the enactment of this Act, the Secretary of Labor shall submit to the Congress a report recommending sources of funding for the crediting of interest premiums under subsection (h) of section 904 of the Social Security Act (42 U.S.C. 1104), as added by this section, in the event that the imposition of interest penalties under such subsection is insufficient to fund such premiums.

(d) EFFECTIVE DATE- The amendments made by this section shall apply to calendar years beginning after December 31, 2005.

SEC. 302. AMENDMENTS TO TRIGGER PROVISIONS OF EXTENDED BENEFIT PROGRAM.

(a) LOWERING OF EXTENDED BENEFIT `ON' INDICATOR- Section 203(d) of the Federal-State Extended Unemployment Compensation Act of 1970 (26 U.S.C. 3304 note) is amended--

(1) in paragraph (1)(B), by striking `5 per centum' and inserting `4 per centum', and

(2) in the first sentence following paragraph (2)--

(A) by striking `5' and inserting `4', and

(B) by striking `6' and inserting `5'.

(b) ALTERNATIVE TRIGGER- Section 203(f) of such Act is amended--

(1) by striking `(f)(1)' and all that follows through `section--' and inserting the following:

`(f)(1) Effective with respect to compensation for weeks of unemployment beginning after December 31, 2003, for purposes of this section--'; and

(2) in the last sentence of paragraph (1), by striking `Notwithstanding the provision of any State law described in this paragraph,' and inserting `Notwithstanding any other provision of this subsection,'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply for purposes of determining whether there are State `on' or `off' indicators for weeks beginning on or after January 1, 2004.

SEC. 303. ELIMINATE SPECIAL FEDERAL ELIGIBILITY REQUIREMENTS FOR EXTENDED COMPENSATION.

(a) IN GENERAL- Section 202(a) of the Federal-State Extended Unemployment Compensation Act of 1970 (26 U.S.C. 3304 note) is amended by striking paragraphs (3) through (7).

(b) CONFORMING AMENDMENT- Section 202(a)(2) of such Act is amended by striking `Except' and all that follows through `title, the' and inserting `The'.

(c) EFFECTIVE DATE-

(1) IN GENERAL- Except as provided in paragraph (2), the amendments made by this section shall apply in the case of compensation paid to individuals during eligibility periods beginning on or after January 1, 2004.

(2) SPECIAL RULE FOR CERTAIN STATES- In the case of any State the legislature of which has not been in session for at least 30 calendar days (whether or not successive) between the date of the enactment of this Act and January 1, 2004, the amendments made by this section shall apply in the case of compensation paid to individuals during eligibility periods beginning after the end of the first session of the State legislature which begins on or after January 1, 2004.

TITLE IV--IMPROVING ADMINISTRATIVE FUNDING FOR THE UNEMPLOYMENT SYSTEM

SEC. 401. FUNDING FOR ADMINISTRATION OF STATE UNEMPLOYMENT COMPENSATION, STATE SYSTEMS OF PUBLIC EMPLOYMENT OFFICES AND VETERANS EMPLOYMENT SERVICE PROGRAMS.

(a) IN GENERAL- Paragraph (1) of section 901(c) of the Social Security Act (42 U.S.C. 1101(c)(1)) is amended by striking all that precedes clause (i) of subparagraph (B) and inserting the following:

`(c)(1)(A) There are hereby appropriated out of the employment security administration account for each fiscal year--

`(i) the amount determined under subsection (g) for such year for assisting the States in the administration of their unemployment compensation laws as provided in title III (including administration pursuant to agreements under any Federal unemployment compensation law),

`(ii) the amount determined under subsection (h) for such year for providing reemployment services, including administering the work test for the State unemployment compensation system and providing job finding and placement services, to unemployment compensation claimants,

`(iii) the amount determined under subsection (i) for such year for the establishment and maintenance of systems of public employment offices in accordance with the Wagner-Peyser Act (29 U.S.C. 49 et seq.), and

`(iv) the amounts determined under sections 4103A(a)(1) and 4104(a)(1) of title 38 of the United States Code for such year for carrying out sections 4103A and 4104 of such title, respectively.

The Secretary of Labor may reserve not more than 0.4 percent of the funds appropriated under clauses (i) and (ii), respectively, for any fiscal year to carry out national activities that benefit the Federal-State unemployment compensation system as a whole, are interstate or multistate in nature, or are more efficiently and effectively performed on a centralized basis.

`(B) There are hereby authorized to be made available for expenditure out of the employment security administration account for each fiscal year such amounts (not in excess of the limit provided by paragraph (4) with respect to subparagraph (A)(iii)) as the Congress may deem appropriate for the necessary expenses of the Department of Labor for the performance of its functions under--'.

(b) FUNDING FORMULAS- Section 901 of the Social Security Act (42 U.S.C. 1101) is amended by adding at the end the following:

`Amounts Appropriated for Administrative Costs of State Unemployment Compensation Programs

`(g)(1) For fiscal year 2004 and each fiscal year thereafter, the amount appropriated for funding costs of

administering State unemployment compensation programs under subsection (c)(1)(A)(i), shall be the sum of--

`(A)(i) the amount determined under this clause for the prior fiscal year (except that in determining funding for fiscal year 2004, the amount for the prior fiscal year shall equal $789) multiplied by the projected change in the gross domestic product price index for the fiscal year for which the determination is being made, multiplied by

`(ii) the projected average weekly number of individuals filing claims for compensation (within the meaning of section 85(b) of the Internal Revenue Code of 1986) for such fiscal year, except that an individual shall not be included in such number solely by reason of filing a claim for assistance under section 410(a) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5177(a)); and

`(B)(i) the amount determined under this clause for the prior fiscal year (except that in determining the funding for fiscal year 2004, the amount for the prior fiscal year shall equal $138) multiplied by the projected change in the gross domestic product price index for the fiscal year for which the determination is being made, multiplied by

`(ii) the average quarterly number of employers subject to State unemployment compensation laws projected for such fiscal year.

`(2) In addition to the amounts determined under paragraph (1) for a fiscal year, if the weekly average of insured unemployed individuals for such fiscal year (as projected using the economic assumptions released by the President during such fiscal year under section 1106 of title 31, United States Code, and excluding the same claimants as are excluded under paragraph (1)(A)(ii)) exceeds the projection used in such paragraph (1)(A)(ii), then additional amounts shall be appropriated under subsection (c)(1)(A)(i) for funding the costs of administering the State unemployment compensation programs equal to--

`(A)(i) the amount determined under this subparagraph for the prior fiscal year (except that in determining funding for fiscal year 2004, the amount for the prior fiscal year shall equal $298) multiplied by the projected change in the gross domestic product price index for the fiscal year for which the determination is being made, multiplied by

`(ii) the difference between the weekly average of insured unemployed individuals (as measured using the most recent economic assumptions released by the President during such fiscal year) and the weekly average of insured unemployed individuals projected under paragraph (1)(A)(ii) for such fiscal year.

The additional amounts made available pursuant to this paragraph for a fiscal year shall be available to be allocated to the States only to the extent that the projected weekly average of insured unemployed individuals for such fiscal year, as referred to in the preceding sentence (in the matter preceding subparagraph (A)) exceeds the projection used in paragraph (1)(A)(ii).

`Amounts Appropriated to States for the Provision of Reemployment Services

`(h) For fiscal year 2004 and each fiscal year thereafter, the amount appropriated for funding costs of providing reemployment services to unemployment compensation claimants under subsection (c)(1)(A)(ii) shall be--

`(1) the amount determined under this paragraph for the prior fiscal year (except that in determining funding for fiscal year 2004, the amount for the prior fiscal year shall equal $11.10) multiplied by the projected change in the gross domestic product price index for the fiscal year for which the determination is being made, multiplied by

`(2) the projected number of payments of unemployment compensation representing first weeks compensated in a benefit year for such fiscal year.

`Amounts Appropriated for Administration of State Public Employment Offices

`(i) For fiscal year 2004 and each fiscal year thereafter, the amount appropriated for funding the costs of administering the State system of public employment offices under subsection (c)(1)(A)(iii) shall be--

`(1) the amount determined under this paragraph for the prior fiscal year (except that in determining funding for fiscal year 2004, the amount for the prior fiscal year shall equal $7.30) multiplied by the projected change in the gross domestic product price index for the fiscal year for which the determination is being made, multiplied by

`(2) the projected average monthly number of individuals in the civilian labor force for such fiscal year.

`Calculation of Appropriated Amounts by the Secretary of Labor

`(j) For purposes of subsections (g), (h) and (i)--

`(1) each projection shall be made by the Secretary of Labor using the economic assumptions released by the President for such fiscal year, during the preceding fiscal year, under section 1106 of title 31, United States Code, except as otherwise provided under subsection (g)(2) or (h)(2), and

`(2) the projected change in the gross domestic product price index for the fiscal year for which the determination is being made shall equal the sum of 1 and the quotient of the percent change in the gross domestic product price index projected for such fiscal year divided by 100.

`Special Rules Relating to Use of Amounts Appropriated

`(k)(1) Amounts appropriated under paragraphs (1)(A)(i)-(ii) and (6) of subsection (c) with respect to a fiscal year shall remain available for obligation by the States during such fiscal year and the first quarter of the following fiscal year, except that funds used for automation acquisitions shall remain available for obligation by the States through the end of the second fiscal year following the fiscal year in which such funds are appropriated.

`(2) Amounts reserved by the Secretary of Labor under the second sentence of subsection (c)(1)(A) may be obligated in contracts, grants, or agreements with non-State entities.

`(3) Amounts appropriated under paragraph (1)(A) and paragraph (6) of subsection (c) may be used by the States to fund integrated employment service and unemployment compensation automation efforts notwithstanding the cost allocation principles prescribed under Office of Management and Budget Circular No. A-87.'.

(c) FUNDING FOR IMPROVED TECHNOLOGY TO ASSIST IN DETERMINING BENEFIT ELIGIBILITY- Section 901(c) of the Social Security Act (42 U.S.C. 1101(c)) is amended by adding at the end the following new paragraph:

`(6) In addition to amounts provided under paragraph (1)(A)(i)-(ii), there is hereby appropriated out of the employment security administration account $60,000,000 for fiscal year 2004 for the purpose of assisting States in funding technology and other costs that accelerate access to wage and employment information in order to determine eligibility for unemployment compensation.'.

(d) CONFORMING AMENDMENTS-

(1) PAYMENTS TO STATES FOR REEMPLOYMENT SERVICES- Section 302 of the Social Security Act (42 U.S.C. 502) is amended by adding at the end the following:

`(d) The Secretary of Labor shall from time to time certify to the Secretary of the Treasury for payment to each State such amounts as the Secretary of Labor determines appropriate for providing reemployment services, including administering the work test for the State unemployment compensation system and providing job finding and placement services, to claimants for unemployment compensation.'.

(2) EXPENDITURE OF FUNDS FOR REEMPLOYMENT SERVICES- Section 303(a)(8) of the Social Security Act (42 U.S.C. 503(a)(8)) is amended--

(A) by inserting `subsections (a) and (b) of' after `pursuant to'; and

(B) by inserting before the semicolon at the end the following: `and the expenditure of all moneys received pursuant to section 302(d) of this title solely for the purposes and in the amounts found necessary by the Secretary of

Labor for providing reemployment services to claimants for unemployment compensation'.

(3) REPLENISHMENT OF FUNDS NOT USED FOR REEMPLOYMENT SERVICES- Section 303(a)(9) of the Social Security Act (42 U.S.C. 503(a)(9)) is amended--

(A) by inserting `subsections (a) and (b) of' after `pursuant to'; and

(B) by inserting before the semicolon at the end the following: `and the replacement, within a reasonable time, of any moneys received pursuant to section 302(d) of this title which, because of any action or contingency, have been lost or have been expended for purposes other than, or in amounts in excess of, those found necessary by the Secretary of Labor for providing reemployment services to claimants for unemployment compensation'.

(4) REPEALS- The following provisions of the Social Security Act are repealed:

(A) Paragraph (3) of section 901(c).

(B) The second sentence of section 901(f)(3)(A).

(5) AMOUNT OF AUTHORIZATION UNDER THE WAGNER-PEYSER ACT-

(A) Section 901(c)(4) of the Social Security Act (42 U.S.C. 1101(c)(4)) is amended--

(i) by striking `paragraphs (1)(A)(ii) and' and inserting `paragraph';

(ii) by striking `the proportion of the total cost of administering the system of public employment offices in accordance with the Act of June 6, 1933, as amended, and of'; and

(iii) by striking the last sentence.

(B) Section 901(c)(1)(B) of the Social Security Act (42 U.S.C. 1101(c)(1)(B)) is amended by moving clauses (i) through (v) 2 ems to the left, and by striking clause (iii) and inserting the following:

`(iii) the Wagner-Peyser Act (29 U.S.C. 49 et seq.),'.

(6) APPROPRIATION REFERENCE IN THE WAGNER-PEYSER ACT- Section 5 of the Wagner-Peyser Act (29 U.S.C. 49d) is amended--

(A) by striking all that precedes subsection (b) and inserting the following:

`SEC. 5. (a) The amounts available to carry out sections 1 through 13 of this Act shall be appropriated in accordance with section 901 of the Social Security Act.';

(B) by striking subsection (b); and

(C) by redesignating subsection (c) as subsection (b).

(e) BUDGET JUSTIFICATION- No funds may be expended under the amendments made by this section unless the Secretary of Labor includes in the Department of Labor's annual budget justification to Congress a detailed description of the specific activities for which the funds made available by such amendments have been used in the prior and current years (if applicable) and the activities and costs planned for the budget year.

(f) EFFECTIVE DATE- The amendments made by this section shall apply to fiscal year 2004 and subsequent fiscal years.

END