1999 Legislation
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HOUSE BILL NO. 41 – Reed Act moneys, use, limitations

HOUSE BILL NO. 41

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Daily Data Tracking History



H0041........................................................by MR. SPEAKER
                  Requested by Idaho Department of Labor
REED ACT MONEYS - Amends existing law to enact federal limitations for the
legal use of Reed Act moneys by the Department of Labor in administering
Idaho's unemployment insurance programs; and to make correct statutory
citations in the unemployment insurance law.

01/11    House intro - 1st rdg - to printing
01/11    Rpt prt - to Com/HuRes
01/26    Rpt out - rec d/p - to 2nd rdg
01/27    2nd rdg - to 3rd rdg
02/01    3rd rdg - PASSED - 67-0-2
      AYES -- Alltus, Barraclough, Barrett, Bell, Black, Boe, Bruneel,
      Callister, Campbell, Chase, Clark, Crow, Cuddy, Deal, Denney,
      Ellsworth, Field(13), Field(20), Gagner, Geddes, Gould, Hadley,
      Hammond, Hansen(23), Hansen(29), Henbest, Hornbeck, Jaquet, Jones,
      Judd, Kellogg, Kempton, Kendell, Kjellander, Kunz, Lake, Limbaugh,
      Linford, Loertscher, Mader, Marley, McKague, Meyer, Montgomery,
      Mortensen, Moyle, Pischner, Pomeroy, Reynolds, Ridinger, Ringo,
      Robison, Schaefer, Sellman, Smith, Stevenson, Stoicheff, Stone,
      Taylor, Tilman, Tippets, Watson, Wheeler, Williams, Wood, Zimmermann,
      Mr Speaker
      NAYS -- None
      Absent and excused -- Sali, Trail
    Dist. 19, Seat A, Vacant
    Floor Sponsor - Marley
    Title apvd - to Senate
02/02    Senate intro - 1st rdg - to Com/HuRes
03/05    Rpt out - rec d/p - to 2nd rdg
03/08    2nd rdg - to 3rd rdg
03/10    3rd rdg - PASSED - 31-0-4
      AYES--Andreason, Boatright, Branch, Bunderson, Cameron, Crow,
      Danielson, Darrington, Davis, Deide, Dunklin, Frasure, Geddes,
      Hawkins, Ingram, Ipsen, Keough, King, Lee, McLaughlin, Richardson,
      Riggs, Risch, Sandy, Schroeder, Sorensen, Stegner, Stennett, Thorne,
      Wheeler, Whitworth
      NAYS--None
      Absent and excused--Burtenshaw, Noh, Parry, Twiggs
    Floor Sponsor - McLaughlin
    Title apvd - to House
03/11    To enrol
03/12    Rpt enrol - Sp signed
03/15    Pres signed
03/16    To Governor
03/18    Governor signed
         Session Law Chapter 101
         Effective: 07/01/99

Bill Text


H0041

                                                                        
 ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
Fifty-fifth Legislature                 First Regular Session - 1999
                                                                        

                             IN THE HOUSE OF REPRESENTATIVES

                                    HOUSE BILL NO. 41

                                      BY MR. SPEAKER
                            Requested by: Department of Labor

 1                                        AN ACT
 2    RELATING TO THE EMPLOYMENT SECURITY LAW; AMENDING SECTION 72-1346, IDAHO CODE,
 3        TO PROVIDE THAT REED ACT MONEYS CREDITED WITH RESPECT  TO  FEDERAL  FISCAL
 4        YEARS  1999,  2000 AND 2001 SHALL BE USED SOLELY FOR THE ADMINISTRATION OF
 5        THE UNEMPLOYMENT INSURANCE PROGRAM AND ARE NOT SUBJECT  TO  APPROPRIATION;
 6        AMENDING  SECTION  72-1350,  IDAHO CODE, TO PROVIDE TAXABLE WAGE RATES FOR
 7        DEFICIT EMPLOYERS IN RATE CLASS 3 UNDER SCHEDULES VIII AND IX; AND  AMEND-
 8        ING SECTION 72-1369, IDAHO CODE, TO PROVIDE CORRECT STATUTORY CITATIONS.

 9    Be It Enacted by the Legislature of the State of Idaho:

10        SECTION  1.  That  Section 72-1346, Idaho Code, be, and the same is hereby
11    amended to read as follows:

12        72-1346.  EMPLOYMENT SECURITY FUND. (1) Establishment and  Control.  There
13    is  established in the state treasury, separate and apart from all other funds
14    of this state, an "Employment  Security  Fund,"  which  shall  be  perpetually
15    appropriated  to the director to be administered pursuant to the provisions of
16    this chapter and the social security act. This fund shall consist of all  con-
17    tributions  collected  pursuant to this chapter, payments in lieu of contribu-
18    tions, interest earned upon any moneys in the fund, any property or securities
19    acquired through the use of moneys belonging to the fund, all earnings of such
20    property or securities, moneys temporarily deposited in the clearing  account,
21    and all other moneys received for the fund from any other source.
22        (2)  Accounts and Deposits. The state controller shall maintain within the
23    fund three (3) separate accounts: (i) a clearing account, (ii) an unemployment
24    trust fund account, and (iii) a benefit account. Upon receipt by the director,
25    all  moneys payable to the fund shall be promptly forwarded to the state trea-
26    surer for immediate deposit in the  clearing  account.  After  clearance,  all
27    moneys  in the clearing account shall, except as otherwise provided, be depos-
28    ited promptly with the secretary of the treasury of the United States  to  the
29    credit  of this state's account in the unemployment trust fund established and
30    maintained pursuant to section 904 of  the  social  security  act  (42  U.S.C.
31    1104),  any  provisions  of law in this state to the contrary notwithstanding.
32    The benefit account shall consist of all moneys requisitioned for the  payment
33    of  benefits  from  this state's account in the unemployment trust fund in the
34    treasury of the United States. Moneys in the clearing and benefit accounts may
35    be deposited by the state treasurer under the direction of the director in any
36    depository bank in which general funds of the state may be deposited,  but  no
37    public  deposit  insurance  charge  or  premium shall be paid out of the fund.
38    Moneys in the clearing and benefit accounts shall not be commingled with other
39    state funds and shall be maintained in separate accounts on the books  of  the
40    depository  bank.  Such  moneys shall be secured by the depository bank in the
41    same manner as required by the general public depository law of this state and
42    collateral pledged for this purpose shall be kept separate and  distinct  from
43    collateral  pledged  to  secure  other funds of the state. The state treasurer


                                      2

 1    shall be liable on his official bond  for  the  faithful  performance  of  his
 2    duties in connection with the employment security fund.
 3        (3)  Withdrawals.  Moneys  requisitioned by the director through the trea-
 4    surer from this state's account in the unemployment trust fund shall  be  used
 5    exclusively  for  the  payment of benefits and for refunds pursuant to section
 6    72-1357, Idaho Code, except that Reed act  moneys  credited  to  this  state's
 7    account  pursuant  to section 903 of the social security act (42 U.S.C. 1103),
 8    shall be used exclusively as provided in subsection (4) of this  section.  The
 9    director  through  the treasurer shall requisition from the unemployment trust
10    fund such amounts, not exceeding the amounts standing to this state's  account
11    therein,  as  he deems necessary for the payment of benefits and refunds for a
12    reasonable period. Upon receipt, such moneys shall be deposited in the benefit
13    account. Expenditures of moneys in the benefit and clearing accounts shall not
14    require the approval of the board of examiners or be subject to any provisions
15    of law requiring specific appropriations or  other  formal  release  by  state
16    officers  of money in their custody. The residual daily balance in the benefit
17    account may be invested in accordance with the cash management improvement act
18    of 1990, and earnings on those investments may be  used  to  pay  the  related
19    banking  costs  of  maintaining the benefit account. Any earnings in excess of
20    the related banking costs shall be returned to the state's account in the fed-
21    eral unemployment trust fund annually. All warrants issued for the payment  of
22    benefits  and refunds shall bear the signature of the director. Upon agreement
23    between the director and state controller, amounts in the benefit account  may
24    be  transferred to a revolving account established and maintained in a deposi-
25    tory bank from which the director may issue checks for the payment of benefits
26    and refunds. Moneys so transferred shall be  deposited  subject  to  the  same
27    requirements  as  provided  with respect to moneys in the clearing and benefit
28    accounts in subsection (2) of this section. Any  balance  of  moneys  requisi-
29    tioned  from  the unemployment trust fund which remains unclaimed or unpaid in
30    the benefit account or revolving account after the expiration  of  the  period
31    for  which  such  sums  were requisitioned, may be utilized for the payment of
32    benefits and refunds during succeeding periods, or, in the discretion  of  the
33    director,  shall  be  redeposited  with  the  secretary of the treasury of the
34    United States to the credit of this state's account in the unemployment  trust
35    fund.
36        (4)  Reed  act moneys. Reed act moneys credited to this state's account in
37    the unemployment trust fund by the secretary of the  treasury  of  the  United
38    States  pursuant  to  section 903 of the social security act (42 U.S.C. 1103),
39    may be requisitioned and used for the payment of benefits and for the  payment
40    of  expenses  incurred for the administration of this chapter. Moneys may only
41    be requisitioned and used for the payment of expenses incurred for the  admin-
42    istration of this chapter if the expenses are incurred and the money is requi-
43    sitioned  after  the  enactment of a specific appropriation by the legislature
44    which specifies the purposes for which such money is appropriated, the amounts
45    appropriated therefor, and provides that:
46        (a)  Such money may not be obligated after the close of the two  (2)  year
47        period  which began on the date of the enactment of the appropriation law;
48        and
49        (b)  The amount which may be obligated at any  time  may  not  exceed  the
50        amount by which the aggregate of the amounts transferred to the account of
51        this  state  pursuant to section 903 of the social security act (42 U.S.C.
52        1103), exceeds the aggregate of the amounts used by this state and charged
53        against the amounts transferred to the account of this state. For the pur-
54        poses of this subsection, amounts obligated  for  administrative  purposes
55        pursuant  to  an  appropriation  shall  be  chargeable against transferred


                                      3

 1        amounts at the exact time the obligation is entered into.
 2        (c)  Reed act moneys requisitioned for the payment of  benefits  shall  be
 3        deposited  in  the  benefit  account established in this section. Reed act
 4        moneys requisitioned for the payment of administrative  expenses  pursuant
 5        to  a specific appropriation shall be deposited in the employment security
 6        administration fund, section  72-1347,  Idaho  Code,  except  that  moneys
 7        appropriated for the purchase of lands and buildings shall be deposited in
 8        the  state  employment  security  administrative and reimbursement fund in
 9        accordance with section 72-1348, Idaho Code.  Money  so  deposited  shall,
10        until  expended,  remain  part of the employment security fund and, if not
11        expended, shall be promptly returned to this state's account in the  unem-
12        ployment trust fund.
13         (d)  Notwithstanding paragraphs (a), (b) and (c) of this subsection,
14        Reed  act  moneys credited with respect to federal fiscal years 1999, 2000
15        and 2001 shall be used solely for the administration of  the  unemployment
16        insurance program and are not subject to appropriation by the legislature.
17        

18        SECTION  2.  That  Section 72-1350, Idaho Code, be, and the same is hereby
19    amended to read as follows:

20        72-1350.  TAXABLE WAGE BASE AND TAXABLE WAGE RATES. (1)  All  remuneration
21    for  personal services as defined in section 72-1328, Idaho Code, equal to the
22    average annual wage in covered employment for the penultimate  calendar  year,
23    rounded  to  the nearest multiple of one hundred dollars ($100), or the amount
24    of taxable wage base specified in the federal unemployment tax act,  whichever
25    is higher, shall be the taxable wage base for purposes of this chapter.
26        (2)  All  covered  employers,  except those eligible and electing the cost
27    reimbursement payment method, shall be assigned taxable wage rates annually by
28    the director in accordance with the following.
29        (3)  A desired employment security fund size shall be determined for  each
30    calendar  year  by  calculating  from  the penultimate year, the ten (10) year
31    average of annual benefits paid to wages covered, multiplied by one  and  one-
32    half  (1.5).  The  resulting  ratio,  when applied to the covered wages of the
33    penultimate year, represents the desired fund size. This calculation is  here-
34    after referred to as the average cost multiple (ACM).
35        (4)  The ACM shall be the ratio at the top of taxable wage rate schedule V
36    as provided in subsection (7) of this section, and all other ratios for sched-
37    ules  I through IX are adjusted up or down from schedule V in equal increments
38    of .005.
39        (5)  The taxable wage rate schedule for each calendar year shall be deter-
40    mined by comparing the ratio of the actual balance of the employment  security
41    fund,  section  72-1346,  Idaho  Code, and the reserve fund, section 72-1347A,
42    Idaho Code, on September 30, to the wages  covered  in  the  penultimate  year
43    against the taxable wage schedule ratios as provided in subsection (4) of this
44    section.
45        (6)  The  ratios  computed for each taxable wage rate schedule as provided
46    in subsection (4) of this section  shall  be  placed  with  their  appropriate
47    schedule  at the top of the columns as provided in subsection (7) of this sec-
48    tion, and shall represent the minimum fund level  required  for  the  specific
49    schedule to be in effect.


                                      4


                                      5

 1        (8)  Each employer will be assigned a taxable wage rate from the effective
 2    taxable wage rate schedule for eligible, standard-rated and deficit employers,
 3    based  upon  the  employer's  experience as determined under the provisions of
 4    sections 72-1319, 72-1319A, 72-1319B and 72-1351, Idaho Code.
 5        (a)  Deficit employers who have been assigned a  taxable  wage  rate  from
 6        rate  class six will be assigned contribution rates equal to their taxable
 7        wage rate.
 8        (b)  All other eligible, standard-rated  and  deficit  employers  will  be
 9        assigned  contribution  rates equal to ninety-seven percent (97%) of their
10        taxable wage rate. Provided however, that for each calendar year a reserve
11        tax is imposed pursuant to section 72-1347A, Idaho Code, the  contribution
12        rates for employers assigned contribution rates pursuant to this paragraph
13        shall be eighty percent (80%) of their taxable wage rate.
14        (9)  Each  employer  shall  be notified of his taxable wage rate as deter-
15    mined for any calendar year pursuant to  this  section  and  section  72-1351,
16    Idaho  Code.  Such  determination shall become conclusive and binding upon the
17    employer, unless within fourteen (14) days after delivery or  mailing  of  the
18    notice  thereof  to  his last known address, the employer files an application
19    for redetermination, setting forth his reasons therefor. Reconsideration shall
20    be limited to transactions occurring subsequent to any previous  determination
21    which  has  become final. The employer shall be promptly notified of the rede-
22    termination, which shall become final unless an appeal is filed  within  four-
23    teen  (14) days after delivery or mailing of notice to his last known address.
24    Proceedings on the appeal shall be in accordance with the provisions  of  sec-
25    tion 72-1361, Idaho Code.

26        SECTION  3.  That  Section 72-1369, Idaho Code, be, and the same is hereby
27    amended to read as follows:

28        72-1369.  OVERPAYMENTS, COLLECTION AND WAIVER. (1) Any person who received
29    benefits to which he was not entitled under the provisions of this chapter  or
30    under  an unemployment insurance law of any state or of the federal government
31    shall be liable to repay the benefits and the benefits shall, for the  purpose
32    of  this  chapter,  be  considered  to  be overpayments. Overpayments shall be
33    repaid as follows:
34        (a)  Any overpayment which has not been repaid  may,  in  addition  to  or
35        alternatively  to  any other method of collection prescribed in this chap-
36        ter, including the creation of a lien  as  provided  by  section  72-1360,
37        Idaho  Code,  be  collected with interest thereon at the statutory rate by
38        civil action brought in the name of the state of Idaho. In  bringing  such
39        civil  actions for the collection of overpayments, the director shall have
40        all the rights and remedies provided by the laws of this  state,  and  any
41        person adjudged liable in such civil action for any overpayments shall pay
42        the  costs  of such action. Such civil actions may be commenced within the
43        time periods specified in this section without regard to any other statute
44        of limitations.
45        (b)  Collection of overpayments.
46             (i)   Overpayments, other than those resulting from  a  false  state-
47             ment,  misrepresentation, or failure to report a material fact by the
48             claimant, which have not been repaid or collected, may, at  the  dis-
49             cretion  of the director be deducted from any future benefits payable
50             to the claimant under the provisions of this chapter;
51             (ii)  Overpayments resulting from a false  statement,  misrepresenta-
52             tion,  or  concealment  of a material fact by the claimant which have
53             not been repaid or collected shall be deducted from any benefits pay-


                                      6

 1             able at any time in the future, without regard to any statute of lim-
 2             itation and such overpayments not recovered within  eight  (8)  years
 3             from  the  date  of the final determination establishing liability to
 4             repay may be deemed uncollectible;
 5             (iii) A civil action, filed pursuant to  subsection  
 6             paragraph  ( 1  a )  of  this    sub
 7             section,  to collect overpayments resulting from a false state-
 8             ment, misrepresentation, or concealment of a  material  fact  by  the
 9             claimant  must  be  commenced within eight (8) years from the date of
10             the final determination establishing liability to repay;
11        (c)  Overpayments, other than those resulting from a false statement, mis-
12        representation or failure to report a material fact, not recovered  within
13        five  (5) years from the date of the final determination establishing lia-
14        bility to repay shall be deemed uncollectible, and a  civil  action  filed
15        pursuant  to    subsection      paragraph   ( 1
16         a ) of this  sub  section,  to  collect  such
17        overpayments must be commenced within the same five (5) year time period;
18        (d)  The  director  may  waive  the  requirement  to  repay an overpayment
19        described in  subsection      paragraph    (  3
20          c ) of this  sub section if the benefit pay-
21        ments were made solely as a result of department  error  or  inadvertence,
22        and  made  to  a  claimant who had no way of knowing that he was receiving
23        benefits to which he was not entitled or if such payments were made solely
24        as a result of an employer misreporting wages earned in a claimant's  base
25        period, and made to a claimant who could not reasonably have been expected
26        to recognize an error in the wages reported.
27        (e)  Any judgment obtained pursuant to this section shall, upon compliance
28        with  the  requirements of chapter 19, title 45, Idaho Code, become a lien
29        of the same type, duration, and priority as if it were created pursuant to
30        section 72-1360, Idaho Code.
31        (2)  Neither the director nor any of his agents or employees shall be lia-
32    ble for benefits paid to persons not entitled to the same under the provisions
33    of this chapter if it appears that such payments have been made in good  faith
34    and  that  ordinary  care and diligence have been used in the determination of
35    the validity of the claim or claims under which such benefits have been paid.

Statement of Purpose / Fiscal Impact


                      STATEMENT  OF  PURPOSE
RS08450
This bill contains three amendments to Idaho's Employment Security
Law. 

The amendment to Section 72-1346, Idaho Code, concerns "Reed Act" moneys.
The term "Reed Act" refers to a section of the Employment Security
Financing Act of 1954 which provides that, under certain conditions, the
U.S. Department of Labor will transfer excess funds in the federal
Employment Security Administration Account to state accounts in the
Unemployment Trust Fund. Federal law generally allows the states to use
Reed Act moneys for the payment of unemployment insurance benefits and
for the administration of the Unemployment Insurance Program and public
employment offices. Section 5403 of the federal Balanced Budget Act of
1997 provides for a special distribution of Reed Act moneys to the states
in federal Fiscal Year 1999, 2000 and 2001 and limits the use of these
funds to the administration of the Unemployment Insurance Program as
defined in federal Unemployment Insurance Program Letter No. 44-97. The
federal Act also provides that the restrictions applicable to past
distributions of Reed Act moneys are not applicable to these funds,
including the requirement that the funds be appropriated by the state
legislature. In order to use this special distribution of Reed Act
moneys, Idaho must enact the federal limitations on the use of these
funds. The amendment to Section 72-1346 will satisfy this requirement. 
      

The amendment to Section 72-1350, Idaho Code, provides taxable wage rates
for deficit employers in rate class 3 under schedules VIII and IX. These
two taxable wage rates are not in the schedules because they were
simultaneously underscored and overstruck by mistake in House Bill 426
which was enacted during the 1998 legislative session.

The amendment to Section 72-1369, Idaho Code, corrects erroneous
statutory citations. 

FISCAL  IMPACT
Without the amendment to Section 72-1346, Idaho Code, the Idaho
Department of Labor will not be able to use federal Reed Act moneys in
the amount of approximately $350,000 per year in federal Fiscal Years
1999, 2000 and 2001.

The other two amendments correct clerical errors and have no fiscal
impact.


CONTACT   
Name:          Dwight Johnson
Agency:   Department of Labor
Phone:         334-6402

Statement of Purpose/Fiscal Impact                           H 4