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

CLASSIFICATION

 

CORRESPONDENCE SYMBOL

TEUQ

ISSUE DATE

June 24, 1994

RESCISSIONS

None

EXPIRATION DATE

 

DIRECTIVE

:

UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 32-94

 

TO

:

ALL STATE EMPLOYMENT SECURITY AGENCIES

 

FROM

:

MARY ANN WYRSCH
Director
Unemployment Insurance

 

SUBJECT

:

Full Implementation of Unemployment Insurance Revenue Quality Control

  1. Purpose. To announce the schedule for full implementation of the Revenue Quality Control (RQC) program, which includes revised tax measurement criteria using data from revised form ETA 581, Contribution Operations report, and replacement of the Quality Appraisal (QA) measures now used to assess State Unemployment Insurance (UI) tax operations.

  2. Reference. UIPL NO. 16-94 (March 15, 1994), UIPL NO. 3-93 (November 9, 1992)

  3. Background. The RQC is a continuation of the quality control system initiated under a Federal regulation published in 20 CFR Part 602, effective October 5, 1987. Under the Regulation, the Federal-State UI system is required to have a quality control program to assess the timeliness and accuracy of the States' administration of their UI programs. As a result, the Benefit Quality Control program was started in 1988 to assess the quality of paying UI benefits. To evaluate the quality of UI tax operations, the RQC program was added. The RQC was designed and developed with extensive input of State UI tax experts working in the National Office on temporary Intergovernmental Personnel Act (IPA) assignments, a panel of State experts on tax policy and administration, and State and Regional staff involved in the RQC pre-test and pilot test.

    Following training provided to State RQC program reviewers and ADP staff, 52 States began voluntary implementation of RQC in mid and late 1993. The voluntary implementation phase was an effective test of RQC applications under varying State rules and procedures, generating a number of improvements and modifications in RQC operating procedures. A series of clarifications, questions and answers has been released to States and Regions via UI Program Letter 16-94.

    To avoid duplicating QA tax performance measures, the Office of Management and Budget (OMB) conditioned approval for mandatory Federal collection of RQC data on the elimination of QA-RQC overlap. The following implementation plan is designed to address OMB stipulations.

  4. Phased Implementation of RQC. The RQC workgroup is preparing for a phased-in implementation of RQC in 1995 and 1996, under existing statutory authority. Mandatory implementation of RQC Computed Measures will coincide with distribution to the States of a revised form ETA 581 and instructions. The revised instructions contain clarifications to definitions and previous instructions, and the addition of new reporting items in the areas of Report Delinquency, Status Determination, Total Wages Audited and Accounts Receivable. These changes are in the OMB clearance process, and are expected to be approved in the fall of 1994. Immediately afterward, the revised form and instructions will be released to all State Employment Security Agencies (SESAs) via a change to ET Handbook No. 401, 2nd Edition.

    The following steps are designed to coordinate RQC, QA, and ETA 581 reporting for full implementation of RQC. The phased implementation plan has three main components:

    Step 1. Initiate RQC's Computed Measures with the revised form ETA 581 reporting requirements. Reporting on the revised form is expected to become effective at the start of Calendar Year 1995 (CY 95), with data for the quarter ending March 31, 1995 due in the National Office on May 20, 1995.

    Step 2. Suspend Quality Appraisal tax reviews after the November 1994 - January 1995 reviews are completed. Data from final QA tax reviews will be published in the 1995 QA Report.

    Step 3. The balance of RQC (Systems Reviews, Acceptance Sampling and Methods Surveys) will be mandatory effective January 1, 1996, under the Secretary's existing statutory authority to require reports and operations data from the States.

  5. Transition of QA Measures to RQC. The following is a brief summary of current QA requirements and the measurements RQC will perform in their place.

    1. Promptness: QA produces promptness measures for cashiering, status determinations, collections and reports delinquency. The first three are from samples, the fourth from ETA 581 (universe) data.

      The RQC promptness measures will use ETA 581 data for three of the same measures. The RQC's cashiering measure--timeliness of deposit into the clearing account and the accuracy of posting the employer account--uses an expanded version of the current QA sampling approach. The RQC program has more detailed status timeliness measures, and two new report delinquency measures.

    2. Performance/Accuracy: QA measures audit performance through a small sample, and uses ETA 581 data to measure audit penetration.

      The RQC includes a comprehensive systems review of the audit function to ensure compliance with all Employment Security Manual requirements (performance). Also encompassed are measures for audit penetration, wage change, and wages audited.

      In addition to evaluating field audit operations, RQC will measure accuracy and completeness in: status determinations, cashiering, report delinquency, collections, and accounts maintenance (contribution processing, debits and billings, credits and refunds, benefit charging, and experience rating).

    The full transition from QA to RQC (and the rest of the UIS oversight system) will be influenced by the State-Federal Performance Enhancement group's final recommendation on the most effective way to improve UIS performance. The group's final recommendations are due late in CY 94.

  6. Action Required. The SESA Administrators are requested to prepare for the phased-in implementation of mandatory RQC, as follows:

    (1.) Notify appropriate staff that the phase-in implementation of RQC will begin with Computed Measures in January 1995.

    1. The SESA data definitions should be compared with RQC definitions, and the various data elements should be tested to ensure that the required Computed Measures data can be collected and reported properly for the first quarter of CY 95.

    2. Notify staff associated with ETA 581 activity, including ADP staff, of the need to implement the revised ETA 581 reporting requirements for the report quarter ending March 31, 1995. The first revised report will be due on May 20, 1995.

    (2.) Advise appropriate staff that the remainder of the RQC program (Systems Reviews, Method Surveys and Acceptance Sampling) will be implemented effective January 1, 1996. Staff will need to ensure that sampling universes are created, tested and operable so that a complete RQC review can begin in January 1996. Results and findings of the 1996 RQC tax reviews are scheduled for compilation in early CY 97.

  7. Inquiries. Direct inquiries to your Regional Office.