BILL ANALYSIS
AB 23 X3
Page 1
( Without Reference to File )
ASSEMBLY THIRD READING
AB 23 X3 (Coto and Arambula)
As Amended March 9, 2009
2/3 vote. Urgency
INSURANCE 8-2 APPROPRIATIONS 11-4
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|Ayes:|Coto, Blakeslee, |Ayes:|De Leon, Ammiano, |
| |Arambula, Carter, Feuer, | |Charles Calderon, |
| |Hayashi, Nava, Torres | |Fuentes, Hall, Jones, |
| | | |John Perez, Price, |
| | | |Skinner, Solorio, |
| | | |Torlakson |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Garrick, Niello |Nays:|Nielsen, Duvall, Harkey, |
| | | |Miller |
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SUMMARY : Establishes an alternative base period to determine if
unemployed individuals have earned sufficient wages to qualify
for unemployment insurance (UI) benefits, and establishes
eligibility for an additional 20 weeks of federally-funded
extended UI benefits. Specifically, this bill :
1)Specifies that if a person has not been paid sufficient wages
in the first four of the last five completed calendar quarters
to establish a benefit year for purposes of UI benefits, then
the "base period" shall be the last four completed calendar
quarters. This is referred to as an alternative base period
(ABP).
2)Provides that in determining UI benefits under the ABP:
a) The Employment Development Department (EDD) shall base
computations on available wage information processed as of
the close of business on the day preceding the date of
application;
b) If the wage information is not already in EDD's system,
the employer shall, within 10 days after the mailing of the
request from that department, transmit to the department
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the information on the employee's wages and any other
information relevant to the request. The 10-day period may
be extended for good cause;
c) If the requested wage and other relevant information is
not received by EDD, that department shall accept an
affidavit of wages and other relevant information from the
claimant in accordance with EDD regulations. These
regulations will be adopted as emergency regulations;
d) Requires EDD to adjust a claimant's UI benefits when the
quarterly report from the employer is received if that
information causes a change in the determination; and,
e) Provides that, except in the event of fraud, if it is
determined that information provided by the claimant on an
affidavit is erroneous, no penalty or refund of benefits
shall be imposed on the claimant for the period prior to
the calendar week in which the employer provides subsequent
wage information.
3)Sets an "on" indicator for federal-state extended UI benefits
when the average rate of total unemployment in the state in
the most recent three months equals or exceeds 6.5%, and the
average rate of total unemployment in the most recent three
months equals or exceeds 110% of that average for either or
both of the corresponding three month periods ending in the
two preceding calendar years.
4)Specifies that this "on" indicator shall apply to weeks of
unemployment beginning on February 1, 2009, and shall become
inoperative on December 6, 2009, or on the date the federal
sharable extended compensation authorized by Public Law 111-5
(the 2009 federal economic stimulus legislation) expires,
whichever is later.
5)Establishes the total extended compensation amount that an
eligible individual may receive when the total unemployment
rate during the most recent three months exceeds 8%. In that
instance, the amount shall be not less than whichever of the
following is the least:
a) 80% of the total amount of regular compensation payable
to him or her during that benefit year;
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b) 20 times his or her average weekly benefit amount; and,
c) 46 times his or her average weekly benefit amount,
reduced by the regular compensation paid to him or her
during that benefit year.
6)Provides that individuals who continue to meet all other
requirements may not be required to re-apply for federal
extended UI benefits.
7)Specifies that these extended benefits (described in #5 above)
apply to weeks on or after February 1, 2009. This state law
and the authority for the benefits expires on December 6,
2009, or on the date the federal sharable compensation
authorized by Public Law 111-5 expires, whichever is later.
8)Establishes this act as an urgency statute necessary to
address the weakened state economy.
EXISTING LAW :
1)Provides that unemployment insurance benefits shall be based
on wages paid in the first four of the last five completed
calendar quarters. That time period is known as the "base
period."
2)Establishes an "on" indicator for purposes of implementing
federal-state UI extended benefits if during the preceding 13
weeks the insured unemployment rate (IUR) equals or exceeds
6%, or 120% of the average of the rates for the corresponding
13-week period ending in each of the preceding two calendar
years and exceeds 5%.
3)Requires that in order to qualify for federal extended
benefits, an unemployed individual must have previously been
found eligible for regular UI, have exhausted their regular UI
benefits, must continue to seek work, and have had earnings
exceeding 40 times the weekly UI benefit during a one-year
base period, or earnings exceeding 1.5 times the highest
calendar quarter of earnings.
FISCAL EFFECT : The Assembly Appropriations Committee analysis
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states the following:
One-time increase of $840 million in federal funds into the UI
Trust Fund as a result of establishing the ABP. Increased
federal funding in the range of $2.5 billion to $3 billion for
20 weeks of additional emergency UI benefits during 2009. The
increased federal funding is offset by ongoing ABP benefit
payments beginning in 2009-10 from the UI Trust Fund of $50
million to $70 million. Potential, likely minor, General Fund
costs to state and educational agencies (schools and colleges)
related to ABP and emergency benefit increases. Unknown impacts
to local public agencies to the extent increased federally
funded benefits require an increased employer contribution.
COMMENTS :
1)The UI Program is administered by EDD as part of a
federal-state system to provide unemployment compensation to
workers who lose their job through no fault of their own. The
benefits range from $40 to $450 per week in California
depending upon earnings during a 12-month base period. The
regular UI Program is financed by employers who pay
unemployment taxes on the first $7,000 of earnings by each
worker. Federal extended benefits are fully paid by the
federal government.
In the most recent period in which data are available, January
2009, there were 1,863,000 people unemployed in California and
the unemployment rate was 10.1%. In January 2009, 717,525
people received regular UI benefits during the survey week.
Another 259,903 people were certified for federal emergency UI
benefits in California in January 2009. Thus, only 52% of
unemployed workers in California receive UI benefits.
2)This bill proposes to establish an alternative base period
(ABP) to determine if unemployed workers have sufficient
earnings to qualify for UI benefits. California's existing
base period excludes earnings in the last three to six months
of employment. This bill specifies that unemployed persons
who fail to qualify for benefits under the existing base
period would then have their eligibility determined under the
ABP in which earnings as recent as one to three months may be
counted. This can establish UI eligibility for some workers
such as seasonal or low-wage workers.
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3)A new federal law, titled the American Recovery and
Reinvestment Act (ARRA, commonly referred to as the "federal
stimulus legislation"), provides monetary incentives to states
that modernize their unemployment insurance programs. The
federal law would provide California with $839 million in
federal funds (one-time) to support the UI Program if
California adopts the ABP method for calculating UI benefits.
California already meets the other federal ARRA criteria
including UI eligibility for part-time employment, retraining
instruction, and unemployment due to recognized family
situations.
4)Adoption of the ABP would provide UI benefits to an estimated
30,000 workers annually in California who are now falling
through the cracks of the unemployment program. EDD estimates
the ABP will provide $69 million in UI benefits each year.
The following is an example of how the ABP can help an
unemployed individual. An employee who was unemployed for one
year, then works and earns $3,600 in a three-month period, and
is subsequently laid off of work, would not be eligible for UI
under the existing base period method until 6 months had
elapsed, but could promptly qualify for $115 in weekly UI
benefits under the alternative base period method.
5)The federal ARRA legislation also provides authority for
states with high rates of unemployment to enact state
legislation which permits long-term unemployed people to
access up to an additional 20 weeks of extended benefits under
the UI Program that are 100% payable by the federal
government. This bill proposes to accomplish this for
California.
Under existing law, the maximum duration of regular UI
benefits is 26 weeks and the maximum duration of federal
emergency unemployment benefits is 33 weeks. Thus, the
present maximum duration of UI benefits in California is 59
weeks. The enactment of the federal ARRA and this bill will
make it possible for long-term unemployed Californians, who
meet specific criteria, to obtain up to a total of 79 weeks of
unemployment benefits (26+33+20 weeks). These 20 weeks of
extended benefits would not affect employers' reserve
accounts.
6)The federal extended UI benefits made available by this bill
to unemployed residents of California will result in 100%
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federal funding during calendar year 2009. This amount is
estimated to be between $2.5 billion and $3 billion in
benefits in 2009. This bill will not cause an increase in
state costs during calendar year 2010 as a result of the
extended benefits provision (i.e., there will not be a 50/50
split of federal and state costs for extended UI benefits
during calendar year 2010 as a result of this bill). The bill
specifies that the extended benefits provision sunsets on
December 6, 2009, or on the date the federal sharable extended
compensation authorized by the federal ARRA legislation
expires, whichever is later. The relevant federal provision
expires on December 31, 2009 (Section 2005 (a) of the ARRA, as
cited in the text of AB 23 X3).
Analysis Prepared by : Manny Hernandez / INS. / (916)
319-2086
FN: 0000185