U.S. DEPARTMENT OF LABOR
Employment and Training Administration
Washington, D. C. 20210

CLASSIFICATION

UI

CORRESPONDENCE SYMBOL

TEURA

ISSUE DATE

April 13, 1994

RESCISSIONS

 

EXPIRATION DATE

 

DIRECTIVE

:

UIS INFORMATION BULLETIN NO. 09-94

 

TO

:

ALL REGIONAL ADMINISTRATORS

 

FROM

:

MARY ANN WYRSCH
Director
Unemployment Insurance Service

 

SUBJECT

:

Administrative Financing Initiative (AFI) Update

Background. Since early calendar year (CY) 1992, the Unemployment Insurance Service (UIS) has been designing and developing an administrative financing proposal as required by Public Law 102-164, which was enacted in November 1991. The law required that a report be provided to the Congress by December 31, 1994 and allowed for a one-year review period before the Department could implement the proposal.

The building blocks of the proposal include the development of national unit costs (NUCs) for the benefit and tax functions. It took most of CY 1993 to obtain the necessary cost information from the States in order to calculate these NUCs. With the numbers provided by the States, UIS calculated AFI allocations for several years. This analysis provided the first indication of how the proposed system might allocate resources since, until then, the work had been done primarily at the theoretical level.

On December 7 and 8, 1993, UIS presented the entire theoretical construct of the proposal, details of the methodology, and sample allocations using the new approach for the first time to the AFI work group at the Interstate Conference of Employment Security Agencies (ICESA). Since then, the sample allocations and methodology have been circulated among all the States.

Current Status. As a result of the feedback from the ICESA work group at the December meeting, UIS changed the original AFI methodology in the following ways:

Outlook. The general reception that the Regions and States have given AFI to date indicates that further work needs to be done to address concerns that have been raised. To resolve these problems, UIS is conducting further analysis on the following issues:

Revised Schedule. The project plan provided for UIS to publish in April 1994 a Federal Register notice (FRN) which would describe the process and sample allocations and solicit comments from stakeholders, and then to submit by December 31, 1994 a final report to Congress; however, in view of the above considerations, UIS has decided, with ICESA concurrence, that a one-year delay in the report would be prudent.

Therefore, the revised AFI schedule is as follows:

Completion Date Item
May 1994 Issue UIS Information Bulletin whichdescribes AFI in simple terms.
May 1994 Issue a comprehensive reference paper for individuals seeking more detailed information.
May - Sept. 1994 Discuss AFI with States and receive feedback. Analyze possible modifications.
Sept. - Oct. 1994 Finalize modifications to AFI.
Nov. - Jan. 1995 Develop and publish FRN for comment.
Jan. - Nov. 1995 Make changes to AFI based on comments to FRN.
Dec. 1995 Submit final report to Congress.

Comments. We welcome any comments, constructive criticism, oralternative approaches to the methodology or any of its components. We will address these concerns and provide additional feedback during the year throughfuture UIS Information Bulletins.

Please address any questions or comments to Bob DesLong-champs at (202)219-4620 or Tim Felegie at (202)219-4359.