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

CLASSIFICATION

UI

CORRESPONDENCE SYMBOL

TEUPR

ISSUE DATE

October 20, 1998

RESCISSIONS

None

EXPIRATION DATE

Oct. 31, 1999

DIRECTIVE

:

UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 04-99

 

TO

:

ALL STATE EMPLOYMENT SECURITY AGENCIES

 

FROM

:

GRACE A. KILBANE
Director
Unemployment Insurance Service

 

SUBJECT

:

Proposed Minimum Performance Standards for UI PERFORMS Tier I Measures

 

  1. Purpose. To disseminate proposed criteria representing minimum performance for UI PERFORMS Tier I measures and to solicit comment on the proposed criteria.

  2. References. Unemployment Insurance Program Letter (UIPL) No. 19-98 (March 30, 1998) and UIPL No. 34-98 (July 23, 1998).

  3. Background. When the State-Federal Performance Enhancement Work Group (PEWG) established the outlines of the UI PERFORMS system for promoting continuous improvement in UI operational performance, it identified 10 key measures for which uniform national criteria would be set. It called these "Tier I" measures. The criteria for these measures were to be interpreted as minimum levels which States would always be expected to meet or exceed, similar to the criteria which implement the current Secretary's Standards for first payment and lower authority appeals promptness.

    The PEWG's successor, the Performance Enhancement Group (PEG), ratified the meaning of the performance criteria and established three workgroups -- Appeals, Benefits, and Tax -- to develop recommendations for the criteria. Each group included Federal staff from the National and Regional Offices, and at least two State representatives. The PEG developed guidelines for the workgroups to follow in developing their recommendations. The PEG also deferred setting a criterion for cashiering timeliness until that measure can be applied more uniformly.

    PEG materials related to the establishment of performance criteria were provided in UIPL No. 19-98. UIPL No. 34-98 described the process for establishing the performance criteria. The workgroup members are identified in Attachment A, and PEG members are identified in Attachment B.

    The workgroups' reports were presented to the PEG at its meeting in Washington, DC, on September 28-30, 1998. The PEG reviewed the workgroups' recommendations, both in terms of the individual Tier I measures and in light of their cumulative burden, and recommended appropriate adjustments.

  4. Performance Criteria Principles.

    1. PEWG Guidance. The PEWG originally addressed the subject of developing performance criteria at its meetings in April and October 1994 and recommended the following principles:

      • Criteria should be set for only a few elements.

      • Measures would have agreed-on validity.

      • Validity would include the attribute that the measures would have the same meaning in all States so that inter-State comparisons are valid.

      • The criteria would be interpreted as performance floors, similar to the criteria for the current Secretary's Standards, which the criteria will replace.

        States would be expected to meet or exceed the criteria, unless attaining the established levels was not "administratively feasible" for the period measured.

        Through their annual State Quality Service Plans (SQSP), States would be encouraged to establish their own targets above these minimum levels.

      • Regarding the levels selected:

        The implications for customer service should be considered.

        They should be no lower than existing criteria for Secretary's Standards or Desired Levels of Achievement, if set for measures which remain the same as Quality Appraisal measures.

        Face validity is important. The measures should balance levels necessary to sustain quality customer service with the administrative feasibility of attaining and exceeding those levels.

        Levels should take into account recession impacts on performance.

      • In the application of these standards:

        Missing a criterion will require corrective action; a State that does not want to undertake a Corrective Action Plan will have to demonstrate that either (a) the measurement of its performance was incorrect and he criterion was really attained, or (b) attaining the criterion at the time was not administratively feasible.

        Persistent performance below the established criterion would be required before the Department of Labor would initiate stronger action. The Department of Labor would have to ensure that the State was not treated differently than other States and that the Department's judgments were as free as possible of subjective considerations. The Department of Labor must conclude that the performance deficiencies reflected systemic, not random or temporary (such as recessionary), causes.

    2. PEG Guidance. More recently, the PEG addressed the subject of benchmarks at its first two meetings and set down the following guidelines for performance criteria:

      • The criteria should be minimum or floor values which every State is expected to meet or exceed.

      • They should reflect levels which are administratively feasible.

      • The levels chosen should reflect good customer service.

      • They should reflect actual State experience using three years of data, if available.

      • Where there is a current and/or similar criterion, a replacement should not be set lower unless there is a justification.

      • The criteria should be set on validated data, if available.

      • They should have "face validity" to the public.

      One objective of the criteria is to facilitate continuous improvement for the system as a whole, specifically by encouraging States to perform at levels above the minimum and by helping to raise the performance of States not meeting the criteria. The proposed criteria include the notion that minimum performance levels need to be set at levels which are both administratively feasible and high enough to convince the public that UI is serious about conducting a quality program.

  5. Periodic Review and Affirmation or Revision. The PEWG and PEG stressed that the system is committed to reviewing measures and performance criteria periodically, so setting criteria is not a one-time event. The first set of UI PERFORMS criteria will be reviewed five years from the date of issuance, with the exception of the criteria for nonmonetary determinations timeliness, nonmonetary determinations quality, and new status determinations accuracy, which will be reviewed after two years. Additional performance data will have been collected for the measures, and States will have had their first opportunity to validate the data prior to the reviews. Subsequent reviews will occur at approximately five-year intervals.

  6. Effective Date. Except as noted below, these criteria will be used to assess SESA performance effective with the fiscal year (FY) 2000 planning cycle. Because the FY 2000 planning cycle will use performance data which in part predate the issuance of this directive, States whose performance for one or more of the Tier I measures does not meet or exceed the criteria will be required to submit "transition plans", in lieu of corrective action plans, identifying the steps the State will take to achieve the minimum performance criteria. Performance assessment in subsequent SQSP cycles is described in section 9.

  7. Summary of Minimum Performance Criteria.

    Measure

    Criteria

    Effective FY 2000

    Criteria

    Effective FY 2002

    First Payment Timeliness

    1. 87% within 14/21 days.

    2. 93% within 35 days.

    1. 90% within 14/21 days.

    2. 95% within 35 days.

    Nonmonetary Determinations Timeliness  

    1. 80% of separation determinations within 21 days.

    2. 80% of nonseparation determinations within 14 days.

    Nonmonetary Determinations Quality   75% of all determinations with passing scores (> 80 points) -- all programs, separation and nonseparation combined.
    Lower Authority Appeals Timeliness 1. 60% of decisions within 30 days.

    2. 80% of decisions within 45 days.

    3. 95% of decisions within 75 days.

    1. 60% of decisions within 30 days.

    2. 85% of decisions within 45 days.

    3. 95% of decisions within 75 days.

    Higher Authority Appeals Timeliness 1. 50% of decisions within 45 days.

    2. 80% of decisions within 75 days.

    3. 95% of decisions within 120 days.

    No change.
    Lower Authority Appeals Quality 80% of all benefit appeals with combined scores equal to at least 85% of potential points. No change.
    Timeliness of New Status Determinations 1. 60% of determinations made within 90 days of quarterly ending date (QED).

    2. 80% of determinations made within 180 days of QED.

    No change.
    New Status Determinations Accuracy   No more than six cases from an acceptance sample of 60 cases can fail the evaluation.
    Timeliness of Transfer from Clearing Account to Trust Fund Maximum of two days to transfer funds from the State clearing account to the UI trust fund. Maintenance of an annual ratio*< 1.75.

    * Ratio of the monthly average daily available balance (line 10, ETA 8414 report) to the average daily transfer to the trust fund (line 3, ETA 8405 report, divided by the number of days in the month).

     

  8. Tier I Measures: Definitions and Criteria.

    First Payment Timeliness

    Definition Criteria
    Number of days elapsed from week-ending date of the first compensable week in benefit year to date payment is mailed, made in person, or offset or intercept is applied. Universe of first full and partial payments from ETA 9050 report. One aggregate measure including intrastate and interstate for State UI, UCFE, and UCX.

    1. 87% within 14/21 days.

    2. 93% within 35 days.

    In conjunction with implementation of the consolidated UI PERFORMS regulation:

    1. 90% within 14/21 days.

    2. 95% within 35 days.

     

    The PEG balanced the positive impact of new technologies, such as telephone certification, on first payment time lapse, against countervailing factors such as alternative base year legislation. The consensus was to use the existing Secretary's Standards criteria (87 percent timely for 14/21 days and 93 percent timely for 35 days) for intrastate UI first payments and apply them to a combined first payment measure (intrastate UI + interstate UI + UCFE + UCX). Based on calendar year (CY) 1997 data, which are available for 51 of the 53 agencies, 49 States meet the proposed criteria, and the performance of two States is within five percentage points of the proposed criteria.

    In concert with the incorporation of the regulation defining the current criteria (20 CFR 640) into the single UI PERFORMS regulation, the percentages will be raised to 90 percent within 14/21 days and 95 percent within 35 days. It is anticipated that the revised criteria will be effective with the FY 2002 SQSP. Current data suggest that most States could reasonably be expected to meet the higher standards.

    In addition, the PEG agreed that it is necessary to maintain a monitoring mechanism for the first payment promptness of the individual programs included in the aggregate Tier I measure -- UI intrastate, UI interstate, UCFE, and UCX -- by including separate measures for each program in Tier II. Data collected in the ETA 9050 report will be used to monitor 14/21-day and 35-day first payment promptness for these programs. A complete list of Tier II measures is provided in Attachment A.

    Nonmonetary Determinations Timeliness

    Definition Criteria
    Number of days elapsed from date of detection of any issue potentially affecting the claimant's benefit rights to date of the determination. Measure includes intrastate and interstate for State UI, UCFE, and UCX (ETA 9052 report).

    1. 80% of separation determinations within 21 days.

    2. 80% of nonseparation determinations within 14 days.

    (Implementation postponed until FY 2002 SQSP.)

     

    The PEG took into consideration the significant changes in the way nonmonetary timeliness data are collected. Time lapse is measured from date of detection to date of determination; universe data, not sample data, are reported; and separations include issues arising from both new and additional initial claims. The PEG agreed that in order to assure an acceptable level of customer service, the criteria should be set at levels no lower than 80 percent of separation determinations made within 21 days of the detection date and 80 percent of nonseparation determinations made within 14 days from the date of detection.

    Because the majority of States are performing below the proposed minimum criteria, the PEG postponed their implementation until the FY 2002 SQSP. Until the implementation of these criteria, States may be required to develop or revise transition plans to raise performance, but will not be subject to any sanctions initiated by the Department of Labor.

    The Department of Labor, in consultation and cooperation with the States, will analyze the nonmonetary timeliness data in order to identify the causes of performance that is below the minimum levels. The results of this analysis and State performance datacollected in the ETA 9052 report will be used to review the minimum performance criteria after two years.

    Although States have adopted new technologies and procedures that have significantly reduced differences in the adjudicatory processes for intrastate and interstate claims, the PEG agreed that measures for both intrastate and interstate separation determinations (21 days), and intrastate and interstate nonseparation determinations (14 days) should be established under Tier II to monitor performance for these components of the aggregate Tier I measure.

    Nonmonetary Determination Quality

    Definition Criteria
    Application of Quality Performance Instrument to quarterly samples of nonmonetary determinations selected from the universe of determinations reported on ETA 9052 (time lapse) report; quality scores reported on ETA 9056 report

    75% of all determinations with passing scores (> 80 points) -- all programs, separation and nonseparation combined.

    (Implementation postponed until FY 2002 SQSP.)

     

      In setting minimum performance levels for this measure, the PEG took into consideration the changes in the way in which nonmonetary adjudication quality data are collected: quarterly samples, versus annual samples, are selected from universes that include all adjudications, not only determinations for which a week was claimed. The PEG decided that in order to assure an acceptable minimum level of customer service and take into account the administrative feasibility of meeting the criterion (face validity), the criterion should be set no lower than 75 percent of the separation and nonseparation determinations receiving a score of more than 80 points, based on the weighted aggregate scores from four quarterly samples.

      However, because the majority of States are performing below the proposed minimum criterion, the PEG postponed its implementation until the FY 2002 SQSP. Until the implementation of this criterion, States may be required to develop or revise transition plans to raise performance, but will not be subject to any sanctions initiated by the Department of Labor.

      The Department of Labor, in consultation and cooperation with the States, will analyze the nonmonetary quality data in order to identify the causes of performance that is below the minimum levels. The results of this analysis and State performance data collected in the ETA 9056 report will be used to review the minimum performance criterion after two years.

    Lower Authority Appeals Timeliness

    Definition Criteria

    Number of days from date of request for hearing to date of decision (ETA 9054 report); includes State UI, UCFE, and UCX, intrastate and interstate.

    1. 60% of decisions within 30 days.

    2. 80% of decisions within 45 days; increase to 85% of decisions within 45 days in conjunction with implementation of the consolidated UI PERFORMS regulation.

    3. 95% of decisions within 75 days.

     

    The PEG decided that the first criterion of 60 percent in 30 days is adequate and should remain the same. The current Secretary's Standard criterion of 80 percent of the decisions within 45 days will remain the minimum criterion for the FY 2000 and FY 2001 planning cycles. In concert with the incorporation of the regulation defining the current criteria (20 CFR 650) into the single UI PERFORMS regulation, the criterion will be raised to 85 percent, effective with the FY 2002 SQSP. This will help ensure that a greater percentage of the cases are disposed of as efficiently as possible, that cases are not allowed to accumulate for long periods of time, and that parties to an appeal receive a hearing and decision in a reasonable amount of time.

    The PEG established a third criterion of 95 percent within 75 days to reduce the time taken to address cases that have not been decided within 45 days.

    Higher Authority Appeals Timeliness

    Definition Criteria
    Number of days from date of request for hearing to date of decision (ETA 9054 report); includes State UI, UCFE, and UCX, intrastate and interstate.

    1. 50% of decisions within 45 days.

    2. 80% of decisions within 75 days.

    3. 95% of decisions within 120 days.

     

    To encourage improved performance, the PEG increased the 45-day timeliness criterion from 40 percent to 50 percent. Forty percent does not reflect an adequate level of customer service, and most States far exceed the 40 percent level. Based on CY 1997 data, only a few States would not meet a 50 percent standard.

    The 75-day timeliness standard remains the same at 80 percent, and a third criterion of 95 percent in 120 days is established. The third criterion is important because there should remain some incentive for States to decide cases over 75 days, and there should be some accountability for older cases. Simply because a case is over the 75-day limit, it should not receive less consideration than a newer case. The absence of a third level can create an incentive for a State to take care of its new cases, thereby improving its overall reported performance, rather than attending to older cases.

    Lower Authority Appeals Quality

    Definition Criteria
    Quality of lower authority benefit appeals based on application of standard review instrument to quarterly samples of appeals (ETA 9057 report). 80% of all benefit appeals with combined scores equal to at least 85% of potential points.

    The PEG agreed to change the criterion from 80 percent of cases scoring 80 percent or more of the potential evaluation points to 80 percent of cases scoring 85 percent or more of the potential evaluation points.

    This criterion is intended to make sure that both States and individual Hearing Officers provide a quality product. A quality product is one where, in the view of the State's customers and the various review bodies, the customer is receiving a considered, due-process product, both when attending the hearing and when reading the decision. This standard reflects the goals of UI PERFORMS by raising the individual Hearing Officer's scores, while maintaining a high level of performance for the State.

    Timeliness of New Status Determinations

    Definition Criteria
    Number of days from last day of the quarter (Quarterly Ending Date--QED) in which liability occurred to date of determination (ETA 581 report).

    1. 60% of determinations made within 90 days of QED.

    2. 80% of determinations made within 180 days of QED.

    The old measure combined performance for both new and successor employers, and the desired level of achievement was 80 percent of determinations made within 180 days from the date of liability. The new 180-day measure applies to status determinations for new employers. Timeliness is measured from the ending date of the quarter in which liability was incurred and is based on universe data, as opposed to sample data. The PEG set the minimum performance criterion at 80 percent of new employer status determinations completed within 180 days of the QED.

    For the new 90-day measure, the PEG set a criterion of 60 percent of new employer status determinations completed within 90 days of the QED. This standard balances State performance against maintaining an acceptable level of customer service. In CY 1997, only four States would have failed to meet the 60 percent criterion with scores of 57.9%, 51.8%, 50.9%, and 40.5%.

    New Status Determinations Accuracy

    Definition Criteria
    Accuracy of new status determinations from an annual tax performance acceptance sample drawn from all new status determinations.

    No more than six cases from an acceptance sample of 60 cases can fail the evaluation.

    New criterion implies:

    1. At least 95% of the samples will pass if State accuracy rate is > 94.5%.

    2. At least 90% of the samples will fail if State accuracy rate is < 82.4%

    (Implementation postponed until FY 2002 SQSP.)

     

    The PEG believes the current standard, that no more than two of the 60 sample cases can fail the evaluation and still pass the acceptance sample, is too rigid. New Status Determinations Accuracy data for CY 1996 shows that 24 of the 46 States reporting data failed. In CY 1997, 22 of the 47 States reporting data failed.

    Acceptance sample results are affected to some extent by the subjectivity of the reviewer, which can vary from State to State. If there are ten evaluative areas in the case, with a review of 60 cases, there are actually 600 evaluative questions. A failure in any one of the ten evaluative areas fails the case. Under the current criterion, if more than two cases in the SESA's sample fails, the entire acceptance sample fails. States can actually have good tax measures but appear to have failing programs based on the acceptance sample results.

    One of the purposes of the performance measures is to provide information to SESA managers on the quality of the tax functions within their State so they can strive to improve processes where warranted. Setting the standard at six or fewer failed cases enables States to accomplish this goal and takes into account the subjectivity of the review from State to State.

    Because many States do not meet the current standard, the PEG postponed the implementation of the revised minimum performance levels until the FY 2002 SQSP. Until the implementation of these criteria, States may be required to develop or revise transition plans to raise performance, but will not be subject to any sanctions initiated by the Department of Labor.

    The Department of Labor, in consultation and cooperation with the States, will analyze the new status determinations accuracy data in order to identify the causes of performance that is below the minimum levels and identify ways to reduce variation in the application of the accuracy evaluation. The results of this analysis and State acceptance sample data will be used to review the minimum performance criteria after two years.

    Timeliness of Transfer from Clearing Account to Trust Fund

    Definition Criteria

    Current Measure (effective for the FY 2000 and FY 2001 SQSP):

    Average number of days funds are on deposit in the Clearing Account before transfer to Trust Fund (ETA 8414 report).

    ----------------------------

    New Measure (effective with the FY 2002 SQSP):

    Ratio of the monthly average daily available balance (line 10, ETA 8414 report) to the average daily transfer to the trust fund (line 3, ETA 8405 report, divided by the number of days in the month).

    Maintain current desired level of achievement of a maximum of two days to transfer funds from the State clearing account to the UI trust fund.

    ---------------------------------

    Maintenance of an annual ratio < 1.75.

    After 5 years, maintenance of an annual ratio < 1.0.

    The current measure -- the number of days funds are on deposit in the clearing account before transfer to the State account in the Unemployment Trust Fund (UTF) -- is over fifteen years old. Substantial changes in banking law (especially deregulation and Federal Reserve policy -- e.g. elimination of float in the banking system) and technology have combined to make the current criterion obsolete. More expeditious check clearing, the proliferation of electronic payments, and the growth of check clearinghouses independent of the Federal Reserve system all work to expedite cash flow.

    The purpose of the immediate deposit requirements (Section 3304(a)(3), FUTA and Section 303(a)(4), SSA) is to ensure that unemployment funds are deposited to the credit of the State account in the UTF as soon as possible. The UTF offers greater safety and a higher historical return than State bank accounts, while providing similar liquidity. The law is also concerned about the loss of interest to the UTF from delays in transfer.

    A better focus of State compliance with the immediate deposit requirement is the actual transfer of funds from the clearing account to the UTF rather than the amount of time funds remain in the clearing account before transfer. A time-based measure is arbitrary because checks clear at different rates between States and banks. The proposed balance ratio eliminates the arbitrary factors because it measures only available balances, that is, funds available after checks have cleared and reserve requirements have been met.

    Some consistency issues have been identified in the data reported in the ETA 8414 and ETA 8405 reports. Because the proposed ratio is based on these data, the PEG agreed that the current desired level of achievement of a maximum of two days to transfer funds from the State clearing account to the UI trust fund should be maintained for a period of two years, during which States and the Department of Labor will resolve the reporting issues.

  9. Performance Assessment.

    1. Continuous Assessment.  In a continuous improvement environment, both the Federal partner and the SESA will routinely access performance data to monitor program performance and initiate corrective action whenever it appears to be warranted. Therefore, under UI PERFORMS, the SESAs will develop Corrective Action Plans (CAPs) alone, or in collaboration with their Regional Office, whenever a serious performance issue is detected based on cumulative performance data. CAPs will also result from program reviews conducted during the year by the Federal partner.

    2. Annual Assessment.  Continuous assessment will be augmented with an annual assessment of program performance which will occur in conjunction with the SQSP process, and will form the basis for performance improvement planning for the upcoming SQSP. This assessment will utilize the most recent 12 months of performance data that are available. For data reported monthly, the reporting period will include the 12 months ending June 30 of each year; for data reported each quarter, the four quarters ending with the second calendar quarter; and for data reported annually, the calendar year ending December 31.

      Because of the lag that must be built into this process, it is possible that more current data will show that a performance problem may have already been corrected. In that case, the State and the Region will need to reference that more current information.

    3. SESA/Regional Negotiation.  Identification of the specific areas for which Program Improvement Plans will be submitted in the SQSP will be finalized through negotiations between the SESAs and the Regional Office. For mandated Tier I, program review, or program reporting performance areas, a CAP will be prepared if performance is unsatisfactory and an effective plan is not already in place. For Tier II areas of negotiated performance (or Tier I above the minimum performance level), a Continuous Improvement Plan (CIP) will be prepared to reflect that negotiation.

  10. Solicitation of Comments and Issuance.  The draft criteria, their rationale, and phase-in schedule will be published in a Federal Register Notice to provide for a 60-day public comment period. The criteria will also be discussed in workshops that will be held at the UI Directors' meeting in Coeur D'Alene, Idaho, October 20-22, 1998. The workshops will allow for not only the presentation of the proposed levels and their rationale, but also questions and discussion. After all comments have been assimilated and the criteria modified as appropriate, the new minimum performance criteria will be promulgated via a UIPL, anticipated in early calendar year 1999.

  11. Action Required. SESA Administrators are requested to provide this information to appropriate staff for review and comment. Comments on the proposed UI PERFORMS minimum performance criteria for Tier I measures should be submitted no later than November 30, 1998, to:

    Andrew Spisak
    U.S. Department of Labor
    ETA/Unemployment Insurance Service
    200 Constitution Avenue, NW
    Room S-4522
    Washington, DC 20210
    Fax: (202) 219-8506 e-mail: aspisak@doleta.gov

  12. Inquiries. Please refer inquiries to the appropriate Regional Office or to Andrew Spisak at the National office, (202) 219-5223 extension 157. Copies of the workgroup papers are available upon request to Andrew Spisak.

  13. Attachments.