[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3684 Introduced in House (IH)]







105th CONGRESS
  2d Session
                                H. R. 3684

 To amend the Internal Revenue Code of 1986, the Social Security Act, 
  the Wagner-Peyser Act, and the Federal-State Extended Unemployment 
    Compensation Act of 1970 to improve the method by which Federal 
unemployment taxes are collected; to improve the method by which funds 
   are provided from Federal unemployment tax revenue for employment 
            security administration, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 1, 1998

   Mr. Shaw (for himself, Mr. Collins, Mr. Sununu, and Mr. Portman) 
 introduced the following bill; which was referred to the Committee on 
 Ways and Means, and in addition to the Committee on Education and the 
 Workforce, for a period to be subsequently determined by the Speaker, 
 in each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986, the Social Security Act, 
  the Wagner-Peyser Act, and the Federal-State Extended Unemployment 
    Compensation Act of 1970 to improve the method by which Federal 
unemployment taxes are collected; to improve the method by which funds 
   are provided from Federal unemployment tax revenue for employment 
            security administration, 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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Employment 
Security Financing Act of 1998''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
        TITLE I--AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986

Sec. 101. Repeal of surtax.
Sec. 102. Conforming amendments to section 3304(a).
Sec. 103. Additional requirements for approval of State laws.
Sec. 104. Conforming amendments to section 3304(c).
Sec. 105. State unemployment fund defined.
Sec. 106. Definition of State ESAA.
Sec. 107. Collection of FUTA tax by State agencies.
Sec. 108. Payment of FUTA tax to State agencies.
Sec. 109. Repealer.
               TITLE II--UNEMPLOYMENT TRUST FUND ACCOUNTS

Sec. 201. Establishment of unemployment accounts.
Sec. 202. Repeal of subsections (a) and (b) of section 901 of the 
                            Social Security Act.
Sec. 203. Expenditures for administration.
Sec. 204. Transfer of amounts attributable to reduced credits.
Sec. 205. Establishment of revolving fund.
Sec. 206. Treatment of excess ESAA amounts.
Sec. 207. Treatment of excess FUA amounts.
Sec. 208. Repeal of reporting requirement.
Sec. 209. Termination of Extended Unemployment Compensation Account.
Sec. 210. Treatment of amounts elected by ineligible States.
Sec. 211. Use of Reed Act funds.
Sec. 212. Provisions relating to establishment of Unemployment Trust 
                            Fund.
Sec. 213. Separate book accounts.
Sec. 214. Payments to State agencies and Railroad Retirement Board.
Sec. 215. Repeal of EUCA account and transfers.
Sec. 216. Repeal of interfund borrowing authority.
   TITLE III--GRANTS TO STATES FOR EMPLOYMENT SECURITY ADMINISTRATION

Sec. 301. Repeal of sections 301 and 302 of the Social Security Act.
Sec. 302. State requirements.
Sec. 303. Interpretation of methods of administration requirement.
        TITLE IV--EXTENDED UNEMPLOYMENT COMPENSATION ACT OF 1998

Sec. 401. Extended Unemployment Compensation Act of 1998.
              TITLE V--FEDERAL EMPLOYMENT SECURITY SERVICE

Sec. 501. Amendment to statement of purposes.
Sec. 502. Purpose of Employment Security Service.
Sec. 503. Transfer of real property.
Sec. 504. Repeal of Federal appropriations authority.
Sec. 505. Use of public employment service funds.
Sec. 506. Repeal of Federal use of funds requirements.
Sec. 507. Repeal of Federal planning and fiscal requirements.
 TITLE VI--ADVANCES TO STATE UNEMPLOYMENT COMPENSATION BENEFIT ACCOUNTS

Sec. 601. Transfers from the Federal Unemployment Account.
Sec. 602. Use of transferred funds.
Sec. 603. Determination of interest rate.
Sec. 604. Revolving loan fund.
                    TITLE VII--CONFORMING AMENDMENTS

Sec. 701. Conforming amendment to definitional provision.
Sec. 702. Balanced budget amendments.
Sec. 703. Repeal of Federal unemployment tax amendment.

        TITLE I--AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986

SEC. 101. REPEAL OF SURTAX.

    Section 3301 of the Internal Revenue Code of 1986 is amended to 
read as follows:

``SEC. 3301. RATE OF TAX.

    ``There is hereby imposed on every employer (as defined in section 
3306(a)) for each calendar year an excise tax, with respect to having 
individuals in his employ, equal to--
            ``(1) 6.2 percent in the case of calendar years 1988 
        through 2003; or
            ``(2) 6.0 percent in the case of calendar year 2004 and 
        each calendar year thereafter;
of the total wages (as defined in section 3306(b)) paid by him during 
the calendar year with respect to employment (as defined in section 
3306(c)). Effective for calendar year 2000 and each calendar year 
thereafter, the tax, including accounts receivable from prior years, 
shall be collected by the State agencies responsible for administration 
of the State unemployment compensation law as agents for the Secretary 
of the Treasury. Amounts collected for years prior to calendar year 
2003 by each State agency responsible for administration of the State 
unemployment compensation law shall be immediately deposited in the 
Employment Security Administration Account established pursuant to 
section 904 of the Social Security Act. Amounts collected for calendar 
year 2003 and years thereafter shall be immediately deposited in the 
State's Employment Security Administration Account established pursuant 
to section 904 of the Social Security Act. Amounts collected after 
January 1, 2000, by the Internal Revenue Service shall be immediately 
deposited in the Employment Security Transition Account within the 
Unemployment Trust Fund established pursuant to section 904 of the 
Social Security Act.''

SEC. 102. CONFORMING AMENDMENTS TO SECTION 3304(A).

    (a) Limitation on Use of Funds.--Paragraph (4) of section 3304(a) 
of the Internal Revenue Code of 1986 is amended to read as follows:
            ``(4) all money withdrawn from the unemployment 
        compensation benefit account of the unemployment fund of the 
        State shall be used solely in the payment of unemployment 
        compensation, exclusive of expenses of administration, and for 
        refunds of sums erroneously paid into such fund and refunds 
        paid in accordance with the provisions of section 3305(b); 
        except that--
                    ``(A) an amount equal to the amount of employee 
                payments into the unemployment fund of a State may be 
                used in the payment of cash benefits to individuals 
                with respect to their disability, exclusive of expenses 
                of administration;
                    ``(B) the amounts specified by section 903(c)(2) of 
                the Social Security Act may, subject to the conditions 
                prescribed in such section, be used for expenses 
                incurred by the State for administration of its 
                unemployment compensation law and public employment 
                offices;
                    ``(C) nothing in this paragraph shall be construed 
                to prohibit deducting an amount from unemployment 
                compensation otherwise payable to an individual and 
                using the amount so deducted to apply for health 
                insurance, or the withholding of Federal, State, or 
                local individual income tax, if the individual elected 
                to have such deduction made and such deduction was made 
under a program approved by the Secretary of Labor;
                    ``(D) amounts may be deducted from unemployment 
                benefits and used to repay overpayments as provided in 
                section 303(g) of the Social Security Act;
                    ``(E) amounts may be withdrawn for the payment of 
                short-time compensation under a plan approved by the 
                Secretary of Labor;
                    ``(F) amounts may be withdrawn for the payment of 
                allowances under a self-employment assistance program 
                (as defined in section 3306(t));''.
    (b) Extended Compensation.--Paragraph (11) of section 3304(a) of 
the Internal Revenue Code of 1986 is amended to read as follows:
            ``(11) extended compensation shall be payable as provided 
        by State law conforming to the Extended Unemployment 
        Compensation Act of 1998;''.
    (c) Effective Date.--This section shall become effective on 
November 1, 1999.

SEC. 103. ADDITIONAL REQUIREMENTS FOR APPROVAL OF STATE LAWS.

    (a) In General.--Section 3304(a) of the Internal Revenue Code of 
1986 is amended by striking ``and'' at the end of paragraph (18), by 
striking the period at the end of paragraph (19) and inserting a 
semicolon, and by adding after paragraph (19) the following new 
paragraphs:
            ``(20) funds provided to such State under title IX of the 
        Social Security Act for public employment services shall be 
        used--
                    ``(A) for determining whether individuals claiming 
                unemployment compensation under State laws conforming 
                to section 3304 are available to accept suitable work 
                and have not refused suitable work as prescribed by the 
                State unemployment compensation law;
                    ``(B) for job search and placement services to 
                individuals claiming unemployment compensation benefits 
                and other job seekers including counseling, testing, 
                occupational and labor market information, assessment, 
                and referral to employers; and
                    ``(C) for appropriate recruitment services and 
                special technical services for employers;
            ``(21) the State agency responsible for administration of 
        the State unemployment compensation law shall submit annual 
        reports to the governor of the State providing information on 
        services and outcomes. Such reports shall include information 
        with respect to--
                    ``(A) the proportion of the individuals claiming 
                compensation provided employment services in accord 
                with titles III and IX of the Social Security Act;
                    ``(B) the proportion of employers provided 
                employment services in accord with titles III and IX of 
                the Social Security Act;
                    ``(C) information regarding referrals and 
                placements provided in accord with titles III and IX of 
                the Social Security Act; and
                    ``(D) information on other services such as 
                counseling and testing provided in accord with titles 
                III and IX of the Social Security Act; and
            ``(22) the State agency responsible for administration of 
        the State unemployment compensation law shall, effective for 
        calendar year 2000 and each calendar year thereafter, collect 
        the Federal unemployment tax imposed pursuant to section 3301 
        as the agent of the Secretary of the Treasury.''
    (b) Effective Date.--This section shall take effect January 1, 
2000.

SEC. 104. CONFORMING AMENDMENTS TO SECTION 3304(C).

    Subsection (c) of section 3304 of the Internal Revenue Code of 1986 
is amended as follows:
    ``(c) Certification.--On October 31 of each taxable year, the 
Secretary of Labor shall certify to the Secretary of the Treasury each 
State whose law he has previously approved, except that he 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 (a) or has with respect to the 12-month period ending on 
such October 31 failed to comply substantially with any such provision 
in such subsection. No finding of a failure to comply substantially 
with any provision in paragraph (5) of subsection (a) shall be based on 
an application or interpretation of State law--
            ``(1) until all administrative review provided for under 
        the laws of the State has been exhausted,
            ``(2) with respect to which the time for judicial review 
        provided by the laws of the State has not expired, or
            ``(3) with respect to which any judicial review is pending.
On October 31 of any taxable year, 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 failed to 
amend its law so that it contains each of the provisions required by 
law to be included therein (including provisions relating to the 
Extended Unemployment Compensation Act of 1998, as required under 
subsection (a)(11)), or has, with respect to the twelve-month period 
ending on such October 31, failed to comply substantially with any such 
provision.''

SEC. 105. STATE UNEMPLOYMENT FUND DEFINED.

    Subsection (f) of section 3306 of the Internal Revenue Code of 1986 
is amended, effective October 1, 1999, to read as follows:
    ``(f) For purposes of this chapter, the term `unemployment fund' 
means a special fund, established under a State law and administered by 
a State agency, for the payment of compensation. Any sums standing to 
the unemployment benefit accounts of the State agency in the 
Unemployment Trust Fund established by section 904 of the Social 
Security Act shall be deemed to be a part of the unemployment fund of 
the State, and no sums paid out of the Unemployment Trust Fund to such 
State agency shall cease to be a part of the unemployment fund of the 
State until expended by such State agency. An unemployment fund shall 
be deemed to be maintained during a taxable year only if throughout 
such year, or such portion of the year as the unemployment fund was in 
existence, no part of the moneys of such fund was expended for any 
purpose other than the payment of compensation and for refunds of sums 
erroneously paid into such fund and refunds paid in accordance with the 
provisions of section 3305(b); except that--
            ``(1) an amount equal to the amount of employee payments 
        into the unemployment compensation benefit account within the 
        fund of a State may be used in the payment of cash benefits 
        drawn from the unemployment compensation benefit account of the 
        State within the unemployment trust fund to individuals with 
        respect to their disability, exclusive of expenses of 
        administration;
            ``(2) the amounts specified by section 903(c)(2) of the 
        Social Security Act may, subject to the conditions prescribed 
        in such section, be used for expenses incurred by the State for 
        administration of its unemployment compensation law, and public 
        employment services;
            ``(3) nothing in this subsection shall be construed to 
        prohibit deducting any amount from unemployment compensation 
        otherwise payable to an individual and using the amount so 
        deducted to pay for health insurance, or the withholding of 
        Federal, State, or local individual income tax, if the 
        individual elected to have such deduction made and such 
        deduction was made under a program approved by the Secretary of 
        Labor;
            ``(4) amounts may be deducted from unemployment benefits 
        drawn from the State's unemployment compensation benefit 
        account within the unemployment trust fund and used to repay 
        overpayments as provided in section 303(g) of the Social 
        Security Act;
            ``(5) amounts may be withdrawn from the State's 
        unemployment compensation benefit account within the 
        unemployment trust fund for the payment of short-time 
        compensation under a plan approved by the Secretary of Labor; 
        and
            ``(6) amounts may be withdrawn from the State's 
        unemployment compensation benefit account within the 
        unemployment trust fund for the payment of allowances under a 
        self-employment assistance program (as defined in subsection 
        (t)).''

SEC. 106. DEFINITION OF STATE ESAA.

    Section 3306 of the Internal Revenue Code of 1986 is amended, 
effective October 1, 1999, by adding at the end the following new 
subsection:
    ``(u) State Employment Security Administration Account.--For 
purposes of this chapter, the term `State Employment Security 
Administration Account' means a special account within the Unemployment 
Trust Fund established pursuant to section 904 of the Social Security 
Act for the purpose of providing administrative funds to pay the cost 
of services performed by the State agency in accord with section 3304 
of this subtitle and titles III and IX of the Social Security Act. No 
sums paid out of the account to the State agency shall cease to be a 
part of the Unemployment Trust Fund until expended by such State 
agency.''

SEC. 107. COLLECTION OF FUTA TAX BY STATE AGENCIES.

    Subsection (a) of section 3501 of the Internal Revenue Code of 1986 
is amended, effective October 1, 1999, to read as follows:
    ``(a) General Rule.--(1) The taxes imposed by this subtitle shall 
be collected by the Secretary and shall be paid into the Treasury of 
the United States as internal-revenue collections, except that 
effective for calendar year 2000 and calendar years thereafter the tax 
imposed by section 3301 shall be collected by the State agencies 
responsible for administration of the State unemployment law as agents 
for the Secretary. Amounts collected by each State agency shall be paid 
into the treasury to the credit of the State employment security 
administration account of the State as prescribed in section 3301 of 
this Act and titles III and IX of the Social Security Act. Amounts 
collected by the Internal Revenue Service after January 1, 2000, with 
respect to the tax imposed by section 3301 shall be paid into the 
Treasury to the credit of the employment security transition account 
within the unemployment trust fund established pursuant to section 904 
of the Social Security Act.
    ``(2) The Secretary is authorized to enter into agreements with the 
State agencies administering State unemployment compensation laws to 
assist with the administration of the Federal Unemployment Tax Act (26 
U.S.C. 3301 et seq.).''

SEC. 108. PAYMENT OF FUTA TAX TO STATE AGENCIES.

    The last sentence of section 6157(a) of the Internal Revenue Code 
of 1986 is amended, effective October 1, 1999, to read as follows:
``The tax for any calendar quarter or other period shall be computed as 
provided in subsection (b) and the tax as so computed shall, except as 
otherwise provided in subsection (c), be paid, effective for calendar 
year 2000 and calendar years thereafter, to the State agency 
responsible for administration of the State unemployment compensation 
law as the agent of the Secretary. Such taxes shall be paid 
quarterly.''

SEC. 109. REPEALER.

    Paragraph (2) of section 6201(b) of the Internal Revenue Code of 
1986 is repealed.

               TITLE II--UNEMPLOYMENT TRUST FUND ACCOUNTS

SEC. 201. ESTABLISHMENT OF UNEMPLOYMENT ACCOUNTS.

    (a) In General.--Title IX of the Social Security Act is amended by 
adding at the end the following new section:

          ``state employment security administration accounts

    ``Sec. 911. There are hereby established in the Unemployment Trust 
Fund, the following accounts:
            ``(1) A State Employment Security Administration Account 
        for each State.
                    ``(A) There is hereby appropriated to the 
                unemployment trust fund for credit to the employment 
                security administration account for each State--
                            ``(i) for the fiscal year ending September 
                        30, 2004, and for each fiscal year thereafter, 
                        an amount equal to one hundred percent of the 
                        Federal unemployment tax, including interest, 
                        penalties and additions to the tax, received 
                        from collection of the tax and covered into the 
                        State's account; and
                            ``(ii) any amounts transferred to the 
                        account pursuant to this section and sections 
                        902 and 903.
                    ``(B) Two percent of the amount collected and 
                deposited into each State employment security 
                administration account pursuant to subsection 
                (a)(1)(A)(i) shall be transferred by the Treasury of 
                the United States beginning the end of the month 
                following January 1, 2003, and each month thereafter to 
                the supplemental employment security administration 
                account established pursuant to this section and 
                section 904.
                    ``(C) Two percent of the amount collected and 
                deposited into each State employment security 
                administration account pursuant to subsection 
                (a)(1)(A)(i) shall be transferred by the treasury 
                beginning the end of the month following January 1, 
                2003, and each month thereafter to the Secretary of 
                Labor employment security administration account 
                established pursuant to this section and section 904.
            ``(2)(A) A Supplemental Employment Security Administration 
        Account for the administration of employment security programs 
        in accord with titles III and IX of this Act and section 3304 
of the Internal Revenue Code of 1986 by States whose average civilian 
labor force populations number less than 1,000,000.
            ``(B) There is hereby appropriated to the unemployment 
        trust fund for credit to the supplemental employment security 
        administration account, for the fiscal year ending September 
        30, 2004, and for each fiscal year thereafter--
                    ``(i) an amount equal to 100 percent of the amount 
                transferred pursuant to subsection (a)(1)(B); and
                    ``(ii) amounts transferred to the account pursuant 
                to section 901(f)(3)(C) and (D) and sections 902 and 
                903.
            ``(3)(A) The Secretary of Labor Employment Security 
        Administration Account for the Secretary of Labor in carrying 
        out administrative duties as prescribed in titles III and IX of 
        this Act, and chapter 23 of the Internal Revenue Code of 1986.
            ``(B) There is hereby appropriated to the Unemployment 
        Trust Fund for credit to the Secretary of Labor Employment 
        Security Administration Account, for the fiscal year ending 
        September 30, 2004, and for each fiscal year thereafter an 
        amount equal to 100 percent of the amount transferred pursuant 
        to subsection (a)(1)(C).

                 ``use of special administrative funds

    ``Sec. 912. There are hereby authorized to be made available for 
expenditure out of the employment security administration accounts 
maintained by the Treasury for each State for fiscal years 2000 through 
2003 such amounts, not to exceed $245,000,000 for each year, as are 
requested by the States from their respective State employment security 
administration accounts, subject to appropriation by the legislative 
body of each State to be used for--
            ``(1) determining whether individuals claiming unemployment 
        compensation under State laws conforming to section 3304 are 
        available to accept suitable work and have not refused suitable 
        work as prescribed by the State unemployment law;
            ``(2) job search and placement services to individuals 
        claiming unemployment compensation benefits and other job 
        seekers including counseling, testing, occupational and labor 
        market information, assessment, and referral to employers;
            ``(3) appropriate recruitment services and special 
        technical services for employers; and
            ``(4) collection of the Federal Unemployment Tax imposed 
        pursuant to section 3301 et seq. of the Internal Revenue Code.
Such amounts shall be available for State appropriation in addition to 
amounts otherwise appropriated by Congress.''.
    (b) Conforming Amendment.--The table of contents at the beginning 
of title IX of the Social Security Act is amended by adding at the end 
the following new item:

``Sec. 911. State employment security administration accounts.''.
    (c) Effective Date.--This section shall take effect October 1, 
1999.

SEC. 202. REPEAL OF SUBSECTIONS (A) AND (B) OF SECTION 901 OF THE 
              SOCIAL SECURITY ACT.

    Subsections (a) and (b) of section 901 of the Social Security Act 
are repealed, effective October 1, 2003.

SEC. 203. EXPENDITURES FOR ADMINISTRATION.

    Subsection (c) of section 901 of the Social Security Act is 
amended, effective October 1, 1999, to read as follows:

                     ``Administrative Expenditures

    ``(c)(1) There are hereby authorized to be made available for 
expenditure out of the employment security administration accounts 
maintained by the treasury for the States, effective for the Federal 
fiscal year beginning October 1, 2003, and each fiscal year thereafter, 
such amounts as are requested by the States from their respective State 
employment security administration accounts, subject to appropriation 
by the legislative body of each State (not in excess of one hundred 
forty percent of the amount appropriated to the State agency from 
Federal employment security funds for the 12-month period ending 
September 30 of the previous year), for the purpose of--
            ``(A) assisting the State in the administration of its 
        unemployment compensation laws as provided in title III of the 
        Social Security Act (including administration pursuant to 
        agreements under any Federal unemployment compensation law),
            ``(B) providing public employment services in accordance 
        with section 7 of the Wagner-Peyser Act,
            ``(C) carrying into effect section 4103 of title 38, United 
        States Code,
            ``(D) collection of amounts due under the provisions of the 
        Federal Unemployment Tax Act (26 U.S.C. 3301 et seq.), and
            ``(E) administration of statistical programs essential for 
        development of estimates of the gross domestic product and 
        other national statistical series, including those related to 
        employment and unemployment.
Amounts requested by the State but not appropriated by the State 
legislative body for the fiscal year for which such amounts are 
requested shall be transferred to the State's unemployment compensation 
benefit account as of the beginning of the following Federal fiscal 
year.
    ``(2) There are hereby authorized to be made available for 
expenditure by States whose average civilian labor force populations 
number less than one million, amounts out of the supplemental 
employment security administration account, $5,000,000 for each of 
fiscal years 2000 through 2003--
            ``(A) for determining whether individuals claiming 
        unemployment compensation under State laws conforming to 
        section 3304 of the Internal Revenue Code of 1986 (26 U.S.C. 
        3304) are available to accept suitable work and have not 
        refused suitable work as prescribed by the State unemployment 
        compensation law;
            ``(B) for job search and placement services to individuals 
        claiming unemployment compensation benefits and other job 
        seekers including counseling, testing, occupational and labor 
        market information, assessment, and referral to employers; and
            ``(C) for appropriate recruitment services and special 
        technical services for employers.
Such amounts shall be available for State appropriation in addition to 
amounts otherwise appropriated by Congress.
    ``(3) There are hereby authorized to be made available for 
expenditure by States whose average civilian labor force populations 
number less than one million, amounts out of the supplemental 
employment security administration account for the fiscal year ending 
September 30, 2004, and for each year thereafter. Such amounts shall be 
allocated to the States by the Council of States with Lesser 
Populations, subject to appropriation by the legislative body of each 
State for the purpose of--
            ``(A) administration of the State's unemployment 
        compensation laws;
            ``(B) providing public employment services in accord with 
        section 7 of the Wagner-Peyser Act;
            ``(C) administration of section 4103 of title 38, United 
        States Code;
            ``(D) collection of amounts due under the Federal 
        Unemployment Tax Act (26 U.S.C. 3301 et seq.); and
            ``(E) administration of statistical programs essential for 
        development of estimates of the gross domestic product and 
        other national statistical series, including those related to 
        employment and unemployment.
    ``(4)(A) The Council of States with Lesser Populations is hereby 
established for the purpose of determining the methodology by which 
amounts available from the Supplemental Employment Security 
Administration Account are to be allocated. The council shall be 
composed of one representative appointed by the governor of each State 
with an average civilian labor force which numbers less than one 
million for the calendar year ending prior to the Federal fiscal year 
for which allocations are to be made. The council shall be 
reconstituted each year prior to the beginning of the ensuing Federal 
fiscal year.
    ``(B) The council shall determine amounts to be allocated to the 
States, except that no State's allocation for any fiscal year, when 
added to the amount available pursuant to section 901(b)(1) of this 
title, shall be less than the amount appropriated to such State from 
the employment security administration account for fiscal year 1995.
    ``(C) The council shall notify the Secretary of the Treasury prior 
to each fiscal year of the amounts to be allocated to each State. If 
the council fails to determine amounts to be allocated for a fiscal 
year, such amounts shall be carried over and maintained in the 
Supplemental Employment Security Administration Account and may be 
allocated by the council for following Federal fiscal years.
    ``(D) Amounts allocated by the council, but not appropriated by the 
State legislative body for the fiscal year for which allocation was 
made, shall be transferred to the State Employment Security 
Administration Accounts of all States as of the beginning of the 
following Federal fiscal year. Each State's share of the funds to be 
transferred shall bear the same ratio to the total amount to be so 
transferred as the amount of wages subject to tax under section 3301 of 
the Internal Revenue Code of 1986 during the preceding calendar year 
which are determined by the Secretary of Labor to be attributable to 
the State, bears to the total amount of wages subject to such tax 
during such year.
    ``(5)(A) There are hereby authorized to be made available for 
expenditure out of the Secretary of Labor Employment Security 
Administration Account for the fiscal year ending September 30, 2004, 
and for each fiscal year thereafter such amounts (not in excess of one 
hundred forty percent of the amount appropriated by Congress for the 
Department of Labor from the Employment Security Administration Account 
for the prior year) as Congress may deem appropriate for the necessary 
expenses of the Department of Labor for the performance of its 
functions under--
            ``(i) this title and titles III and XII of the Social 
        Security Act,
            ``(ii) the Federal Unemployment Tax Act (26 U.S.C. 3301 et 
        seq.),
            ``(iii) chapter 41 (except section 4103) of title 38, 
        United States Code,
            ``(iv) Federal unemployment compensation laws effective as 
        of October 1, 1998,
            ``(v) administration of statistical programs essential for 
        development of estimates of the gross domestic product and 
        other national statistical series, including those related to 
        employment and unemployment,
            ``(vi) establishment and maintenance of the employment 
        security system in accordance with the Wagner-Peyser Act, and
            ``(vii) payments of the Federal share of annual 
        amortization costs of the unfunded liability for the State 
        employment security agencies with independent retirement plans 
        as determined by the Secretary of Labor.
    ``(B) Amounts appropriated under this paragraph, if not obligated 
within the fiscal year for which appropriation was made, shall be 
transferred to the State employment security administration accounts. 
Each State's share shall be determined as provided for distribution of 
funds from the employment security transition account pursuant to 
subsection (e)(3)(D).
    ``(C) The term `necessary expenses', as used in this paragraph, 
shall include the expense of reimbursing a State for salaries and other 
expenses of employees of such State temporarily assigned or detailed to 
duty with the Department of Labor and of paying such employees for 
travel expenses, transportation of household goods, and per diem in 
lieu of subsistence while away from their regular duty stations in the 
State, at rates authorized by law for civilian employees of the Federal 
Government.
    ``(6) The Secretary of the Treasury is directed, for the fiscal 
year ending September 30, 2004, and each fiscal year thereafter, to pay 
from the Secretary of Labor Employment Security Administration Account 
into the treasury as miscellaneous receipts the amount determined by 
the Secretary of Labor to be allocated to the treasury department to 
cover costs of the Department of the Treasury for the performance of 
its functions under--
            ``(A) this title and titles III and XII of this chapter, 
        including the expenses of banks for servicing unemployment 
        benefit payment and clearing accounts which are offset by the 
        maintenance of balances of treasury funds with such banks,
            ``(B) the Federal Unemployment Tax Act (26 U.S.C. 3301 et 
        seq.), and
            ``(C) any Federal unemployment compensation law with 
        respect to which responsibility for administration is vested in 
        the Secretary of Labor.''

SEC. 204. TRANSFER OF AMOUNTS ATTRIBUTABLE TO REDUCED CREDITS.

    Subsection (d) of section 901 of the Social Security Act is 
amended, effective October 1, 1999, to read as follows:

            ``Additional Tax Attributable to Reduced Credits

    ``(d)(1) The Secretary of the Treasury is directed to transfer from 
the employment security administration account of each State subject to 
the reduced credits provision of section 3302(c)(3) of the Internal 
Revenue Code of 1986--
            ``(A) to the Federal Unemployment Account, an amount equal 
        to the amount by which--
                    ``(i) 100 percent of the additional tax received 
                under the Federal Unemployment Tax Act (26 U.S.C. 3301 
                et seq.) with respect to the State by reason of the 
                reduced credits provisions of section 3302(c)(3) of 
                such Act (26 U.S.C. 3302(c)(3)) and covered into the 
                treasury for the repayment of advances made to the 
                State under section 1321 of this title, exceeds
                    ``(ii) the amount transferred to the account of 
                such State pursuant to subparagraph (B) of this 
                paragraph. Any amount transferred pursuant to this 
                subparagraph shall be credited against, and shall 
                operate to reduce, that balance of advances, made under 
                section 1321 of this title to the State, with respect 
                to which employers paid such additional tax; and
            ``(B) to the unemployment compensation benefit account (in 
        the unemployment trust fund) of the State with respect to which 
        employers paid such additional tax, an amount equal to the 
        amount by which such additional tax received and covered into 
        the treasury exceeds that balance of advances, made under 
        section 1321 of this title to the State, with respect to which 
        employers paid such additional tax.
    ``(2) Transfers under this subsection shall be as of the beginning 
of the month succeeding the month in which the moneys were credited to 
the employment security administration account of the State.''

SEC. 205. ESTABLISHMENT OF REVOLVING FUND.

    Subsection (e) of section 901 of the Social Security Act is 
amended, effective October 1, 1999, to read as follows:

                            ``Revolving Fund

    ``(e)(1) There is hereby established in the treasury a revolving 
fund within the Federal Unemployment Account established pursuant to 
section 904 of the Social Security Act which shall be available to make 
the advances authorized by this subsection. There are hereby authorized 
to be appropriated, without fiscal year limitation, to such revolving 
fund such amounts as may be necessary for the purposes of this section.
    ``(2) The Secretary of the Treasury is directed to advance at the 
request of a State from the revolving fund to the State Employment 
Security Administration Account maintained for the State such amounts 
as may be requested for the purposes set forth in titles III and IX of 
the Social Security Act and section 3304 of the Internal Revenue Code 
of 1986.
    ``(3) Advances to the State Employment Security Administration 
Account of a State made under this subsection shall bear interest until 
repaid at a rate equal to the average rate of interest (computed as of 
the end of the calendar month next preceding the date of such advance) 
borne by all interest-bearing obligations of the United States then 
forming a part of the public debt; except that where such average rate 
is not a multiple of one-eighth of 1 percent, the rate of interest 
shall be the multiple of one-eighth of 1 percent next lower than such 
average rate.
    ``(4) Advances to the State Employment Security Administration 
Account of a State made under this subsection, plus interest accrued 
thereon, shall be repaid by the State, and may be repaid at the request 
of a State by the transfer, from the State Employment Security 
Administration Account of such State to the revolving fund. Any amount 
transferred as a repayment under this paragraph shall be credited 
against, and shall operate to reduce, any balance of advances (plus 
accrued interest) repayable under this subsection.''

SEC. 206. TREATMENT OF EXCESS ESAA AMOUNTS.

    Section 901 of the Social Security Act is amended by adding at the 
end the following new subsection:

                   ``Treatment of Excess ESAA Amounts

    ``(f)(1) The Secretary of the Treasury shall determine as of the 
close of the fiscal year ending September 30, 2001, and each fiscal 
year thereafter, the excess and the net balance of amounts in the State 
Employment Security Administration Account maintained for each State.
    ``(2) The excess in the State Employment Security Administration 
Account for each State as of the close of any fiscal year is the amount 
by which the net balance in such account as of such time (after the 
application of sections 902 and 903 of this title and paragraph (3)(B) 
of this subsection) exceeds the net balance in the State Employment 
Security Administration Account for such State as of the close of the 
previous fiscal year.
    ``(3)(A) The excess in the State Employment Security Administration 
Account of each State determined as provided in paragraph (2) as of the 
close of any fiscal year ending after September 30, 2005, not to exceed 
one hundred forty percent of the net balance at the close of the 
previous fiscal year, shall be retained (as of the beginning of the 
succeeding fiscal year) in the State Employment Security Administration 
Account for the State.
    ``(B) The amount of the excess determined not to be retained as 
provided in paragraph (3)(A) as of the close of any fiscal year ending 
after September 30, 2005, shall be transferred (as of the beginning of 
the succeeding fiscal year) to the unemployment compensation benefit 
account of the State in the unemployment trust fund.
    ``(C)(i) At the close of each of fiscal years 1999 through 2002, 
there shall be transferred to the Supplemental Employment Security 
Administration Account, out of the Employment Security Administration 
Account, $5,000,000--
            ``(I) for determining whether individuals claiming 
        unemployment compensation under State laws conforming to 
        section 3304 of the Internal Revenue Code of 1986 are available 
        to accept suitable work and have not refused suitable work as 
        prescribed by the State unemployment compensation law;
            ``(II) for job search and placement services to individuals 
        claiming unemployment compensation benefits and other job 
        seekers including counseling, testing, occupational and labor 
        market information, assessment, and referral to employers;
            ``(III) for appropriate recruitment services and special 
        technical services for employers; and
            ``(IV) for collection of the Federal unemployment tax 
        imposed pursuant to section 3301.
    ``(ii) At the close of each of fiscal years 1999 through 2002, 
there shall be transferred to the State Employment Security 
Administration Accounts, out of the Employment Security Administration 
Account, $245,000,000--
            ``(I) for determining whether individuals claiming 
        unemployment compensation under State laws conforming to 
        section 3304 of the Internal Revenue Code of 1986 (26 U.S.C. 
        3304) are available to accept suitable work and have not 
        refused suitable work as prescribed by the State unemployment 
        compensation law;
            ``(II) for job search and placement services to individuals 
        claiming unemployment compensation benefits and other job 
        seekers including counseling, testing, occupational and labor 
        market information, assessment, and referral to employers;
            ``(III) for appropriate recruitment services and special 
        technical services for employers; and
            ``(IV) for FUTA collection.
    ``(iii) Each State's share of the funds to be transferred to the 
State Employment Security Administration Accounts shall bear the same 
ratio to the total amount to be transferred to such accounts as the 
amount of wages subject to tax under section 3301 et seq. of the 
Internal Revenue Code of 1986 during the preceding calendar year which 
are determined by the Secretary of Labor to be attributable to the 
State, bears to the total amount of wages subject to such tax during 
such year.
    ``(D) As of the close of the fiscal year ending September 30, 2003, 
96 percent of the amount in the employment security administration 
account shall be transferred as of October 1, 2003, to the State 
Employment Security Administration Accounts of the States, 2 percent 
shall be transferred as of October 1, 2003, to the Supplemental 
Employment Security Administration Account, and two percent shall be 
transferred as of October 1, 2003, to the Secretary of Labor Employment 
Security Administration Account. Each State's share of the funds to be 
transferred to the State Employment Security Administration Accounts 
shall bear the same ratio to the total amount to be transferred to such 
accounts as the amount of wages subject to tax under section 3301 et 
seq. of the Internal Revenue Code of 1986 during the preceding calendar 
year which are determined by the Secretary of Labor to be attributable 
to the State, bears to the total amount of wages subject to such tax 
during such year. Such amounts shall be available for the purposes set 
forth in subsection (b)(1).
    ``(E) As of October 31, 1999, and the end of each month thereafter, 
96 percent of the amount in the Employment Security Transition Account 
shall be transferred to the State Employment Security Administration 
Accounts of the States, 2 percent shall be transferred to the 
Supplemental Employment Security Administration Account, and two 
percent shall be transferred to the Secretary of Labor Employment 
Security Administration Account. Each State's share of the funds to be 
transferred to the State Employment Security Administration Accounts 
shall bear the same ratio to the total amount to be transferred to such 
accounts as the amount of wages subject to tax under section 3301 et 
seq. of the Internal Revenue Code of 1986 during the preceding calendar 
year which are determined by the Secretary of Labor to be attributable 
to the State, bears to the total amount of wages subject to such tax 
during such year.
    ``(4) For the purposes of this section, the net balance in the 
employment security administration account and the State Employment 
Security Administration Account maintained for each State as of any 
time is the amount in such account as of such time reduced by the sum 
of the balance of advances (plus interest accrued thereon) then 
repayable to the revolving fund established by subsection (d) of this 
section. The net balance in the State Employment Security 
Administration Account maintained for each State as of the beginning of 
any fiscal year shall be determined after the disposition of the excess 
in such account as of the close of the preceding fiscal year.''

SEC. 207. TREATMENT OF EXCESS FUA AMOUNTS.

    Effective September 30, 2003, section 902 of the Social Security 
Act is amended by striking subsections (a) and (b) and inserting the 
following:

   ``Treatment of Excess Amounts in the Federal Unemployment Account

    ``(a) The amount, if any, by which the amount in the Federal 
Unemployment Account as of the close of the fiscal year ending 
September 30, 2003, and any fiscal year thereafter exceeds the amount 
(determined by the Secretary of Labor) equal to 0.25 percent of the 
total wages subject (determined without limitation on amount) to 
contributions under all State unemployment compensation laws for the 
calendar year ending during the fiscal year for which the excess is 
determined shall be transferred to the State Employment Security 
Administration Account of each State as of the beginning of the 
following fiscal year.

                       ``State Allocation Formula

    ``(b) Each State's share of the funds to be transferred under 
paragraph (a) of this section shall bear the same ratio to the total 
amount to be so transferred as the amount of wages subject to tax under 
section 3301 of the Internal Revenue Code of 1986 during the preceding 
calendar year which are determined by the Secretary of Labor to be 
attributable to the State, bears to the total amount of wages subject 
to such tax during such year.''

SEC. 208. REPEAL OF REPORTING REQUIREMENT.

    Subsection (c) of section 902 of the Social Security Act is 
repealed.

SEC. 209. TERMINATION OF EXTENDED UNEMPLOYMENT COMPENSATION ACCOUNT.

    Subsection (a) of section 903 of the Social Security Act is 
amended, effective September 30, 2003, to read as follows:

      ``Termination of Extended Unemployment Compensation Account

    ``(a)(1) As of the close of the fiscal year ending September 30, 
2003, the excess in the Extended Unemployment Compensation Account 
shall be transferred to the State Employment Security Administration 
Accounts of the States and the remaining balance in the Extended 
Unemployment Compensation Account shall be transferred to the 
Unemployment Compensation Benefit Accounts of the States in the 
unemployment trust fund, except as provided in subsection (b) of this 
section.
    ``(2) Each State's share of the excess to be distributed to State 
Employment Security Administration Accounts and the balance to be 
transferred to the State Employment Security Benefit Account under this 
subsection as of October 1, 2003--
            ``(A) shall be determined by the Secretary of Labor and 
        certified by such Secretary to the Secretary of the Treasury 
        before such date, and
            ``(B) shall bear the same ratio to the total amount to be 
        so transferred as--
                    ``(i) the amount of wages subject to tax under 
                section 3301 of the Internal Revenue Code of 1986 
                during the preceding calendar year which are determined 
                by the Secretary of Labor to be attributable to the 
                State, bears to
                    ``(ii) the total amount of wages subject to such 
                tax during such year.''

SEC. 210. TREATMENT OF AMOUNTS ELECTED BY INELIGIBLE STATES.

    Subsection (b) of section 903 of the Social Security Act is 
amended, effective October 1, 1999, to read as follows:

          ``Treatment of Amounts Elected by Ineligible States

    ``(b)(1) If the Secretary of Labor finds that on October 1 of any 
fiscal year--
            ``(A) a State is not eligible for certification under 
        section 303 of this title, or
            ``(B) the law of a State is not approvable under section 
        3304 of the Federal Unemployment Tax Act (26 U.S.C. 3304), then 
        the amount available for transfer to such State's unemployment 
        compensation benefit account in the unemployment trust fund 
        shall, in lieu of being so transferred, be transferred to the 
        Federal unemployment account as of the beginning of such 
        October 1. If, during the fiscal year beginning on such October 
        1, the Secretary of Labor finds and certifies to the Secretary 
        of the Treasury that such State is eligible for certification 
        under section 303 of this title, and the law of such State is 
        approvable under such section 3304, the Secretary of the 
        Treasury shall transfer such amount from the Federal 
        unemployment account to the unemployment compensation benefit 
        account of such State in the unemployment trust fund. If the 
        Secretary of Labor does not so find and certify to the 
        Secretary of the Treasury before the close of such fiscal year 
        then the amount which was available for transfer to such 
        State's unemployment compensation benefit account as of October 
        1 of such fiscal year shall (as of the close of such fiscal 
        year) become part of the Federal unemployment account.
    ``(2) The amount which, but for this paragraph, would be 
transferred to the unemployment compensation benefit account of a State 
under subsection (a) of this section or paragraph (1) of this 
subsection shall be reduced (but not below zero) by the balance of 
advances made to the State under section 1321 of this title. The sum by 
which such amount is reduced shall--
            ``(A) be transferred to or retained in (as the case may be) 
        the Federal unemployment account, and
            ``(B) be credited against, and operate to reduce--
                    ``(i) first, any balance of advances made before 
                September 13, 1960, to the State under section 1321 of 
                this title, and
                    ``(ii) second, any balance of advances made on or 
                after September 13, 1960, to the State under section 
                1321 of this title.''

SEC. 211. USE OF REED ACT FUNDS.

    Subsection (c) of section 903 of the Social Security Act is 
amended, effective October 1, 1999, to read as follows:

                        ``Use of Reed Act Funds

    ``(c)(1) Except as provided in paragraph (2), amounts transferred 
to the unemployment compensation benefit account of a State pursuant to 
subsections (a) and (b) of this section shall be used only in the 
payment of cash benefits to individuals with respect to their 
unemployment, exclusive of expenses of administration.
    ``(2) A State may, pursuant to a specific appropriation made by the 
legislative body of the State, use money withdrawn from its 
unemployment compensation benefit account in the payment of expenses 
incurred by it for the administration of its unemployment compensation 
law and public employment services if and only if--
            ``(A) the purposes and amounts were specified in the law 
        making the appropriation,
            ``(B) the appropriation law did not authorize the 
        obligation of such money after the close of the two-year period 
        which began on the date of enactment of the appropriation law,
            ``(C) the money is withdrawn and the expenses are incurred 
        after such date of enactment, and
            ``(D)(i) the appropriation law limits the total amount 
        which may be obligated under such appropriation at any time to 
        an amount which does not exceed, at any such time, the amount 
        by which--
                    ``(I) the aggregate of the amounts transferred to 
                the Unemployment Compensation Benefit Account of such 
                State pursuant to subsection (a) and (b) of this 
                section, exceeds
                    ``(II) the aggregate of the amounts used by the 
                State pursuant to this subsection and charged against 
                the amounts transferred to the Unemployment 
                Compensation Benefit Account of such State, and
            ``(ii) for purposes of clause (I), amounts used by a State 
        for administration shall be chargeable against transferred 
        amounts at the exact time the obligation is entered into
            ``(E) the use of the money shall be accounted for in 
        accordance with standards established by each State. Proceeds 
        from the sale or transfer of real property and other capital 
        assets which were originally purchased with Federal funds 
        provided under titles III or IX of the Social Security Act, may 
        be used by a State agency administering State law in accord 
        with titles III and IX of the Social Security Act (42 U.S.C. 
        501; and 42 U.S.C. 1101) and section 3304 of the Internal 
        Revenue Code of 1986 (26 U.S.C. 3301 et seq.) to purchase or 
        otherwise acquire real property or other capital assets for a 
        period of two years after the date of sale or transfer. 
        Proceeds from the sale or transfer of real property remaining 
        after such two year period shall be deposited in the State's 
        Employment Security Administration Account established pursuant 
        to section 904 of the Social Security Act (42 U.S.C. 1104).
    ``(3)(A) If--
            ``(i) amounts transferred to the Unemployment Compensation 
        Benefit Account of a State pursuant to subsections (a) and (b) 
        of this section were used in payment of unemployment benefits 
        to individuals; and
            ``(ii) the Governor of such State submits a request to the 
        Secretary of Labor that such amounts be restored under this 
        paragraph, then the amounts described in clause (i) shall be 
        restored to the status of funds transferred under subsections 
        (a) and (b) of this section which have not been used by 
        eliminating any charge against amounts so transferred for the 
        use of such amounts in the payment of unemployment benefits.
    ``(B) Subparagraph (A) shall apply only to the extent that the 
amounts described in clause (i) of such subparagraph do not exceed the 
amount then in the State's Unemployment Compensation Benefit Account.
    ``(C) Subparagraph (A) shall not apply if the State has a balance 
of advances made to its Unemployment Compensation Benefit Account under 
subchapter XII of this chapter.
    ``(D) If the Secretary of Labor determines that the requirements of 
this paragraph are met with respect to any request, the Secretary shall 
notify the Governor of the State that such requirements are met with 
respect to such request and the amount restored under this paragraph. 
Such restoration shall be as of the first day of the first month 
following the month in which the notification is made.''

SEC. 212. PROVISIONS RELATING TO ESTABLISHMENT OF UNEMPLOYMENT TRUST 
              FUND.

    Subsection (a) of section 904 of the Social Security Act is 
amended, effective October 1, 1999, to read as follows:

                         ``Establishment, Etc.

    ``(a) There is hereby established in the Treasury of the United 
States a trust fund to be known as the Unemployment Trust Fund 
(hereinafter in this subchapter called the `Fund'). The Secretary of 
the Treasury is authorized and directed to receive and hold in the Fund 
all moneys deposited therein by a State agency from a State 
unemployment fund. All moneys in the form of contributions and payments 
in lieu of contributions under the State law shall be deposited into 
the State's Unemployment Compensation Benefit Account established 
pursuant to this section. All moneys collected by a State agency under 
the provisions of the Federal Unemployment Tax Act (26 U.S.C. 3301 et 
seq.) and moneys transferred or deposited under other sections of this 
title or chapter 23 of the Internal Revenue Code of 1986 shall be 
deposited into the State's Employment Security Administration Account. 
All moneys collected by the Internal Revenue Service after January 1, 
2000, under the provisions of the Federal Unemployment Tax Act (26 
U.S.C. 3301 et seq.) shall be deposited into the Employment Security 
Transition Account of the fund. Moneys collected by the railroad 
retirement board shall be deposited to the credit of the railroad 
unemployment insurance account or the railroad unemployment insurance 
administration fund.''

SEC. 213. SEPARATE BOOK ACCOUNTS.

    Subsection (e) of section 904 of the Social Security Act is 
amended, effective October 1, 1999, to read as follows:

                        ``Separate Book Accounts

    ``(e)(1) The Fund shall be invested as a single fund, but the 
Secretary of the Treasury shall maintain a separate book account for 
the Employment Security Transition Account, each State Agency 
Unemployment Compensation Benefit Account, the Employment Security 
Administration Account for each State, the Supplemental Employment 
Security Administration Account, the Secretary of Labor Employment 
Security Administration Account, the Federal Unemployment Account, the 
railroad unemployment insurance account, and the railroad unemployment 
insurance administration fund and shall credit quarterly (on March 31, 
June 30, September 30, and December 31, of each year) to each account, 
on the basis of the average daily balance of such account, a 
proportionate part of the earnings of the Fund for the quarter ending 
on such date. For the purpose of this subsection, the average daily 
balance shall be computed--
            ``(A) in the case of any State Unemployment Compensation 
        Benefit Account, by reducing (but not below zero) the amount in 
        the account by the balance of advances made to the State under 
        section 1321 of this title, and
            ``(B) in the case of the Federal Unemployment Account--
                    ``(i) by adding to the amount in the account the 
                aggregate of the reductions under paragraph (1), and
                    ``(ii) by subtracting from the sum so obtained the 
                balance of advances made under section 1323 of this 
                title to the account.
    ``(2) There is hereby established within the unemployment trust 
fund, an Employment Security Transition Account for the purpose of 
receiving moneys collected under the Federal Unemployment Tax Act (26 
U.S.C. 3301 et seq.), by the Internal Revenue Service, and transferring 
such moneys to other accounts within the unemployment trust fund as 
prescribed by title IX of the Social Security Act (42 U.S.C. 1101 et 
seq.).''

SEC. 214. PAYMENTS TO STATE AGENCIES AND RAILROAD RETIREMENT BOARD.

    Subsection (f) of section 904 of the Social Security Act is 
amended, effective October 1, 1999, to read as follows:

       ``Payments to State Agencies and Railroad Retirement Board

    ``(f) The Secretary of the Treasury is authorized and directed to 
pay out of the Fund to any State agency such amount as it may duly 
requisition. The Secretary of the Treasury is authorized and directed 
to make such payments out of the railroad unemployment insurance 
account for the payment of benefits, and out of the railroad 
unemployment insurance administration fund for the payment of 
administrative expenses, as the Railroad Retirement Board may duly 
certify, not exceeding the amount standing to the credit of such 
account or such fund, as the case may be, at the time of such 
payment.''

SEC. 215. REPEAL OF EUCA ACCOUNT AND TRANSFERS.

    Section 905 of the Social Security Act is amended, effective 
October 1, 1999, to read as follows:

          ``Terms of Transfer of EUCA Funds to State Accounts

    ``Sec. 905. Amounts, if any, in the Extended Unemployment 
Compensation Account at the close of the fiscal year ending September 
30, 2003, and every fiscal year thereafter, shall be transferred to the 
Unemployment Compensation Benefit Accounts of the States in the 
Unemployment Trust Fund as of the beginning of the following fiscal 
year. Each State's share shall be determined using the formula set 
forth in section 903(a)(2)(B).''

SEC. 216. REPEAL OF INTERFUND BORROWING AUTHORITY.

    Section 910 of the Social Security Act is repealed.

   TITLE III--GRANTS TO STATES FOR EMPLOYMENT SECURITY ADMINISTRATION

SEC. 301. REPEAL OF SECTIONS 301 AND 302 OF THE SOCIAL SECURITY ACT.

    (a) In General.--Sections 301 and 302 of the Social Security Act 
are repealed.
    (b) Conforming Amendment.--The table of contents for title III of 
the Social Security Act is amended by striking the items relating to 
sections 301 and 302.
    (c) Effective Date.--This section shall take effect October 1, 
2003.

SEC. 302. STATE REQUIREMENTS.

    (a) Conformity Requirements.--Effective October 1, 1999, subsection 
(a) of section 303 of the Social Security Act is amended by striking 
``The Secretary'' through ``for--'' and inserting the following: ``As 
of October 31 each year, at the time of the certification prescribed 
under section 3304(c) of the Internal Revenue Code of 1986 (26 U.S.C. 
3304(c)), the Secretary of Labor shall certify whether each State's law 
includes provision for--''.
    (b) Limitation on Use of Benefit Account Funds.--Effective October 
1, 1999, paragraph (5) of section 303(a) of the Social Security Act is 
amended to read as follows:
            ``(5) Expenditure of all money withdrawn from the State's 
        Unemployment Compensation Benefit Account within the 
        unemployment fund of such State, in the payment of unemployment 
        compensation, exclusive of expenses of administration, and for 
        refunds of sums erroneously paid into such fund and refunds 
        paid in accordance with the provisions of section 3305(b) of 
        the Federal Unemployment Tax Act (26 U.S.C. 3305(b)): Provided, 
        That an amount equal to the amount of employee payments into 
        the Unemployment Compensation Benefit Account within the 
        unemployment fund of a State may be used in the payment of cash 
        benefits to individuals with respect to their disability, 
        exclusive of expenses of administration: Provided further, That 
        the amounts specified by section 1103(c)(2) of this title may, 
        subject to the conditions prescribed in such section, be used 
        for expenses incurred by the State for administration of its 
        unemployment compensation law and public employment services: 
        Provided further, That nothing in this paragraph shall be 
        construed to prohibit deducting an amount from unemployment 
        benefits and used to repay overpayments as provided in 
        subsection (g) of this section: Provided further, That amounts 
        may be withdrawn for the payment of short-time compensation 
        under a plan approved by the Secretary of Labor: Provided 
        further, That amounts may be withdrawn for the payment of 
        allowances under a self-employment assistance program (as 
        defined in section 3306(t) of the Internal Revenue Code of 1986 
        (26 U.S.C. 3306(t)); and''.
    (c) Use of Administrative Funds.--Effective October 1, 1999, 
paragraph (8) of section 303(a) of the Social Security Act is amended 
to read as follows:
            ``(8) Expenditure of all moneys received pursuant to title 
        IX of the Social Security Act solely for the proper and 
        efficient administration of such State law and services 
        specified in title IX of the Social Security Act, and section 
        3304 of the Internal Revenue Code of 1986; and''.
    (d) Proper Administration Requirement.--Effective October 1, 1999, 
paragraph (9) of section 303(a) of the Social Security Act is amended 
to read as follows:
            ``(9) The replacement, within a reasonable time, of any 
        moneys received pursuant to title IX of the Social Security 
        Act, which, because of any action or contingency, have been 
        lost or have been expended for purposes other than those 
        necessary for the proper administration of such State law and 
        the provision of services under title IX of the Social Security 
        Act, and section 3304 of the Internal Revenue Code of 1986; 
        and''.

SEC. 303. INTERPRETATION OF METHODS OF ADMINISTRATION REQUIREMENT.

    Effective October 1, 1999, subsection (a) of section 303 of the 
Social Security Act, as amended by section 302 of this Act, is amended 
by striking the period at the end of paragraph (10) and inserting ``; 
and'' and by adding at the end the following new paragraph:
            ``(11) States shall not be required to comply with 
        interpretations of the Secretary of Labor with respect to 
        methods of administration requirements under paragraph (1) of 
        this subsection, including but not limited to requirements with 
        respect to quality control, if such interpretations impose 
        additional administrative burdens on the States, unless 
        congress enacts legislation which approves such 
        interpretation.''

        TITLE IV--EXTENDED UNEMPLOYMENT COMPENSATION ACT OF 1998

SEC. 401. EXTENDED UNEMPLOYMENT COMPENSATION ACT OF 1998.

    Effective November 1, 2003, title II of the Employment Security 
Amendments of 1970 (26 U.S.C. 3304 note) is amended to read as follows:

         ``TITLE II--EXTENDED UNEMPLOYMENT COMPENSATION PROGRAM

                             ``short title

    ``Sec. 201. This title may be cited as the `Extended Unemployment 
Compensation Act of 1998'.

                        ``state law requirements

    ``Sec. 202. (a)(1) For purposes of section 3304(a)(11) of the 
Internal Revenue Code of 1986, a State law shall provide that payment 
of extended compensation shall be made, for any week of unemployment 
which begins in the individual's eligibility period as prescribed by 
State law, to individuals who have exhausted all rights to regular 
compensation and who have no rights to regular compensation with 
respect to such week under State unemployment compensation law or under 
the unemployment compensation law of Canada. For purposes of the 
preceding sentence, an individual shall have exhausted his rights to 
regular compensation--
            ``(A) when no payments of regular compensation are 
        authorized to be made because the individual has received all 
        regular compensation available to the individual, or
            ``(B) when the individual's rights to such compensation 
        have terminated by reason of the expiration of the benefit year 
        with respect to which such rights existed.
    ``(2) The State law shall provide that the State will establish, 
for each eligible individual who files an application therefor, an 
extended compensation account within the State's Unemployment 
Compensation Benefit Account with respect to such individual's benefit 
year. Individuals determined eligible for a week or weeks of extended 
compensation shall be paid for such week or weeks by the State agency 
with funds to be drawn from the State's Unemployment Compensation 
Benefit Account.
    ``(3) States with State laws certified as meeting the requirements 
of the Federal-State Extended Unemployment Compensation Act of 1970 on 
October 31, 1999, shall be deemed to meet the requirements for 
certification with respect to the Extended Unemployment Compensation 
Act of 1998 for the year ending October 31, 2000, as long as the State 
law is not amended so as to conflict with the requirements of this 
title.

                       ``extended benefit period

    ``Sec. 203. (a)(1) For the purposes of this title, in the case of 
any State, an extended benefit period--
            ``(A) shall begin with the third week after the first week 
        for which there is an `on' indicator; and
            ``(B) shall end with the third week after the first week 
        for which there is an `off' indicator.
    ``(2) For the purposes of this title, an individual's eligibility 
period under the State law shall consist of the weeks in his benefit 
year which begin in an extended benefit period and, if his benefit year 
ends within such extended benefit period, any weeks thereafter which 
begin in such extended benefit period.
    ``(b) The extended benefit period shall last for a period of 13 
consecutive weeks.

                      `` `on' and `off' indicators

    ``Sec. 204. (a) There shall be an `on' indicator if the rate of 
insured unemployment under the State law for the period consisting of 
such week and the immediately preceding 12 weeks--
            ``(1) equaled or exceeded 120 percent of the average of 
        such rates for the corresponding 13-week period ending in each 
        of the preceding two calendar years, and
            ``(2) equaled or exceeded 5 percent.
    ``(b) The `off' indicator shall be determined under State law, 
except that if an `on' indicator is triggered under subsection (a) of 
this section, it shall remain on until the rate of insured unemployment 
under the State law for the period consisting of such week and the 
immediately preceding 12 weeks fails to satisfy the requirements set 
forth in subsection (a).

           ``rate of insured unemployment; covered employment

    ``Sec. 205. (a) For the purposes of this title, the term `rate of 
insured unemployment' means the percentage arrived at by dividing--
            ``(1) the average weekly number of individuals filing 
        claims for weeks of unemployment with respect to the specified 
        13-week period, by
            ``(2) the average monthly covered employment for the 
        specified 13-week period.

                             ``definitions

    ``Sec. 206. (a) For purposes of this title--
            ``(1) The term `compensation' means cash benefits payable 
        to individuals with respect to their unemployment.
            ``(2) The term `regular compensation' means compensation 
        payable to an individual under any State unemployment 
        compensation law (including compensation payable pursuant to 
        chapter 85 of title 5, United States Code), other than extended 
        compensation.
            ``(3) The term `extended compensation' means compensation 
        (including compensation payable pursuant to chapter 85 of title 
        5, United States Code), payable for weeks of unemployment 
        beginning in an extended benefit period to an individual under 
        those provisions of the State law which satisfy the 
        requirements of this title with respect to the payment of 
        extended compensation.
            ``(4) The term `benefit year' means the benefit year as 
        defined in the applicable State law.
            ``(5) The term `base period' means the base period as 
        determined under applicable State law.
            ``(6) The term `Secretary' means the Secretary of Labor of 
        the United States.
            ``(7) The term `State' includes the District of Columbia, 
        the Virgin Islands, and the Commonwealth of Puerto Rico.
            ``(8) The term `State agency' means the agency of the State 
        which administers its State law.
            ``(9) The term `State law' means the unemployment 
        compensation law of the State, approved by the Secretary under 
        section 3304 of the Internal Revenue Code of 1986.
            ``(10) The term `week' means a week as defined in the 
        applicable State law.''

              TITLE V--FEDERAL EMPLOYMENT SECURITY SERVICE

SEC. 501. AMENDMENT TO STATEMENT OF PURPOSES.

    Section 1 of the Wagner-Peyser Act (29 U.S.C. 49) is amended, 
effective October 1, 1999, to read as follows:
    ``Section 1. In order to assist in the coordination of public 
employment security services, the United States Employment Security 
Service shall be established and maintained within the Department of 
Labor.''

SEC. 502. PURPOSE OF EMPLOYMENT SECURITY SERVICE.

    The provisions of the Wagner-Peyser Act provided in paragraph (a) 
of section 49b of title 29 of the United States Code are amended 
effective October 1, 1999, to read as follows:
    ``(a) The United States Employment Security Service shall assist in 
coordinating public employment services throughout the country and 
assure that the requirements of titles III and IX of the Social 
Security Act (42 U.S.C. 501 et seq. and 42 U.S.C. 1101 et seq.) and 
section 3304 of the Internal Revenue Code of 1986 (26 U.S.C. 3304) are 
met.''

SEC. 503. TRANSFER OF REAL PROPERTY.

    The provisions of the Wagner-Peyser Act provided in section 49c(1) 
of title 29 of the United States Code are amended effective October 1, 
1999, as follows: ``For the purpose of assisting in the coordination of 
employment services in accordance with the terms of this chapter, the 
Secretary of Labor is authorized without payment of compensation to 
transfer and assign to the States in which it is located all property, 
including records, files, and office equipment, used by the United 
States Employment Service in its administrative and local employment 
offices in the respective States, except the records, files, and 
property used in the Veterans Service and in the Farm Placement Service 
maintained under this chapter.''

SEC. 504. REPEAL OF FEDERAL APPROPRIATIONS AUTHORITY.

    The provisions of the Wagner-Peyser Act set forth in section 49d 
and 49e of title 29 of the United States Code are repealed effective 
October 1, 2003.

SEC. 505. USE OF PUBLIC EMPLOYMENT SERVICE FUNDS.

    The provisions of the Wagner-Peyser Act set forth in subsection (a) 
of section 49f of title 29 of the United States Code are amended 
effective October 1, 2003, to read as follows:
    ``(a) Funds provided to such State under title IX of the Social 
Security Act for public employment services shall be used--
            ``(1) for determining whether individuals claiming 
        unemployment compensation under State laws conforming to 
        section 3304 of the Internal Revenue Code of 1986 (26 U.S.C. 
        3304) are available to accept suitable work and have not 
        refused suitable work as prescribed by the State unemployment 
        compensation law;
            ``(2) for job search and placement services to individuals 
        claiming unemployment compensation benefits and other job 
        seekers including counseling, testing, occupational and labor 
        market information, assessment, and referral to employers; and
            ``(3) for appropriate recruitment services and special 
        technical services for employers, and may be used for any of 
        the following activities:
                    ``(A) evaluation of programs;
                    ``(B) developing linkages between services funded 
                under this Act and related Federal or State 
                legislation, including the provision of labor exchange 
                services at education sites;
                    ``(C) providing services for workers who have 
                received notice of permanent layoff or impending 
                layoff, or workers in occupations which are 
                experiencing limited demand due to technological 
                change, impact of imports, or plant closures;
                    ``(D) developing and providing labor market and 
                occupational information;
                    ``(E) developing a management information system 
                and compiling and analyzing reports therefrom.''.

SEC. 506. REPEAL OF FEDERAL USE OF FUNDS REQUIREMENTS.

    The provisions of the Wagner-Peyser Act set forth in subsection (b) 
through (d) of section 49f of title 29 of the United States Code are 
repealed as of October 1, 2003.

SEC. 507. REPEAL OF FEDERAL PLANNING AND FISCAL REQUIREMENTS.

    The provisions of the Wagner-Peyser Act set forth in sections 49g, 
49h, 49k, 491 and 491-1 of the United States Code are repealed as of 
October 1, 2003.

 TITLE VI--ADVANCES TO STATE UNEMPLOYMENT COMPENSATION BENEFIT ACCOUNTS

SEC. 601. TRANSFERS FROM THE FEDERAL UNEMPLOYMENT ACCOUNT.

    Subsection (b) of section 1201 of the Social Security Act is 
amended, effective October 1, 1999, to read as follows:
    ``(b) The Secretary of the Treasury shall, prior to audit or 
settlement by the General Accounting Office, transfer in monthly 
installments from the Federal Unemployment Account to the Unemployment 
Compensation Benefit Account of the State in the Unemployment Trust 
Fund the amount certified under subsection (a) of this section by the 
Secretary of Labor (but not exceeding that portion of the balance in 
the Federal Unemployment Account at the time of the transfer which is 
not restricted as to use pursuant to section 903 of the Social Security 
Act). The amount of any monthly installment so transferred shall not 
exceed the amount estimated by the State to be required for the payment 
of compensation for the month with respect to which such installment is 
made.''

SEC. 602. USE OF TRANSFERRED FUNDS.

    Subsection (a) of section 1202 of the Social Security Act is 
amended, effective October 1, 1999, to read as follows:
    ``(a) The Governor of any State may at any time request that funds 
be transferred from the Unemployment Compensation Benefit Account of 
such State in the unemployment trust fund to the Federal Unemployment 
Account in repayment of part or all of that balance of advances, made 
to such State under section 1321 of this title, specified in the 
request, and the Secretary of the Treasury shall promptly transfer such 
amount in reduction of such balance.''

SEC. 603. DETERMINATION OF INTEREST RATE.

    Effective October 1, 1999, section 1202(b) of the Social Security 
Act is amended by striking paragraphs (4) and (5) and inserting the 
following:
            ``(4) The interest rate determined under this paragraph 
        with respect to any calendar year is a percentage (but not in 
        excess of 10 percent) determined by dividing--
                    ``(A) the aggregate amount credited under section 
                904 of the Social Security Act to State Unemployment 
                Compensation Benefit Accounts on the last day of the 
                last calendar quarter of the immediately preceding 
                calendar year, by
                    ``(B) the aggregate of the average daily balances 
                of the State Unemployment Compensation Benefit Accounts 
                for such quarter as determined under section 904(e) of 
                the Social Security Act.
            ``(5) Interest required to be paid under paragraph (1) 
        shall not be paid (directly or indirectly) by a State from 
        amounts in its Unemployment Compensation Benefit Account. If 
        the Secretary of Labor determines that any State action results 
        in the paying of such interest directly or indirectly (by an 
        equivalent reduction in State unemployment taxes or otherwise) 
        from such Unemployment Compensation Benefit Account, the 
        Secretary of Labor shall not certify such State's unemployment 
        compensation law under section 3304 of the Internal Revenue 
        Code of 1986. Such noncertification shall be made in accordance 
        with section 3304(c) of such Code.''

SEC. 604. REVOLVING LOAN FUND.

    Effective October 1, 1999, section 1203 of the Social Security Act 
is amended to read as follows:

               ``advances to federal unemployment account

    ``Sec. 1203. There are hereby authorized to be appropriated to the 
Federal Unemployment Account, as repayable advances, such sums as may 
be necessary to carry out the purposes of this title. Amounts 
appropriated as repayable advances for purposes of this subsection 
shall bear interest at a rate equal to the average rate of interest, 
computed as of the end of the calendar month next preceding the date of 
such advance, borne by all interest bearing obligations of the United 
States then forming part of the public debt; except that in cases in 
which such average rate is not a multiple of one-eighth of 1 percent, 
the rate of interest shall be the multiple of one-eighth of 1 percent 
next lower than such average rate.''

                    TITLE VII--CONFORMING AMENDMENTS

SEC. 701. CONFORMING AMENDMENT TO DEFINITIONAL PROVISION.

    Section 5401(b) of the Balanced Budget Act of 1997 is amended, 
effective November 1, 1999, by striking ``Federal-State Extended 
Unemployment Compensation Act of 1970 (26 U.S.C. 3304 note)'' and 
inserting ``Extended Unemployment Compensation Act of 1998''.

SEC. 702. BALANCED BUDGET AMENDMENTS.

    Sections 5402, 5403, 5404, and 5408 of the Balanced Budget Act of 
1997, Public Law 105-33, are repealed effective September 30, 2003.

SEC. 703. REPEAL OF FEDERAL UNEMPLOYMENT TAX AMENDMENT.

    Amendments enacted in section 1035 of the Taxpayer Relief Act of 
1997, Public Law 105-34, are repealed.
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