State Action for the Unemployed

State Action for the Unemployed

On Thursday, the official unemployment rate climbed to 8.1% nationwide as employers shed an additional 651,00 workers last month.  Add in sharp rises in the number of involuntary part-time and long-time discouraged workers, and the unemployment rate rose to 14.8%.

While long-term job growth is the goal of the recovery package, states need to, and some are already stepping up to, address the immediate needs of the unemployed.  There are a range of additional resources outlined in PSN's Implementing the Recovery Plan: A Resource Guide for State Legislators and Advocates, but this Dispatch emphasizes key programs states can take advantage of to help their unemployed workers.

Table of Contents

- Modernizing Unemployment Insurance
- Health Care for the Unemployed
- Layoff Prevention and Retraining
- Expanding Safety Net Programs
- Conclusion

Modernizing Unemployment Insurance

The most obvious action states can take for the unemployed is to ensure that their unemployment insurance systems cover as many people who have lost their jobs as possible, tapping all available federal funding resources.  Along with the additional funds automatically going to unemployed workers under the recovery plan, there are several steps states can take to modernize their programs, allowing them to qualify for additional federal funds.  The National Employment Law Project (NELP) has just released a Concise Guide to Assistance for Jobless Workers, which helps states identify and implement modernization initiatives to qualify for additional funds:

  • States can qualify for some of the $7 billion in additional federal funds being made available nationally, as long as they have extended coverage to additional workers specified by the recovery bill.
  • Five states (ME, NJ, NM, NY and WA) already meet these standards and will receive their full portion of the $7 billion.  Other states will receive some or all of their share depending on what provisions they adopt.  
  • Fourteen other states have adopted what's called an "alternative base period" which entitles them to one-third of their portion of the federal incentive payments.
  • To qualify for their full portion of unemployment insurance (UI) incentive funds, states must adopt the alternative base period plus two of the four following modernizations: (1) eligibility for part time workers; (2) covering individuals forced to leave work for compelling family reasons; (3) providing 26 weeks of additional UI benefits for individuals in approved training programs; and (4) paying dependents' allowances of $15 a week for each dependent.

Helping the Long-Term Unemployed:  States have a new option to help workers who have exhausted Emergency Unemployment Compensation (EUC).  States that adopt what's known as a Total Unemployment Rate (TUR) trigger at a rate of 6.0 percent can provide their workers with an additional 13 weeks of Extended Benefits (EB), which are now 100% federally financed.  And for states where unemployment exceeds 8 percent, workers will get 7 additional weeks of EB, or a total of 20 additional weeks of benefits.  

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Health Care for the Unemployed

For the unemployed, often the first crisis they face is losing the health care coverage they had as employees.  With funding help from the federal government, states can act to help preserve health care for the unemployed.

Subsidies to Maintain Former Health Care Benefits: COBRA is the federal law that allows laid-off workers to maintain their employer-based health coverage.  However, workers must pay the entire premium, which can be prohibitive, particularly in this economy.  To shore-up COBRA as a real option for workers and their families, the federal stimulus provides $25 billion in subsidies to help the unemployed afford the COBRA premiums.

The federal government will pay 65% of COBRA premiums for 9 months after a job is involuntarily terminated for the period from September 1, 2008, to December 31, 2009.  Additionally, to be eligible for the subsidy, individuals must earn less than $145,000 and families must earn less $290,000.  However, COBRA is only automatically available to workers who were employed in a firm with 20 or more employees.  To make the program available to employees of smaller firms, states must enact their own mini-COBRA, or "continuation of coverage", laws applying to firms with fewer than 20 employees and offering the coverage for a period of at least 9 months.  A new Families USA report provides state-by-state recommendations for immediate action that legislators should take to ensure that unemployed workers in their state are eligible for the full COBRA subsidy. 

Additionally, RWJF's State Coverage Initiatives program offers a terrific rundown of what states can do to ensure laid-off workers access to the COBRA subsidies, including supplementing the federal subsidy for low-income workers to decrease the amount they must pay.

Medicaid: With rising long-term unemployment, Medicaid is an ever-important safety net for workers and their families who lose their jobs and their health care benefits.  As Families USA explains in a great FAQ, to be eligible for the $87 billion in Medicaid recovery funds, states must at least maintain income eligibility levels that were in place as of July 1, 2008 and cannot institute additional barriers to enrolling, nor may they withdraw Medicaid benfits for currently eligible populations.  States have until July 1 of this year to roll back any changes that would make them non-compliant with these provisions.  The new FMAP calculation includes an across-the-board 6.2% increase and a "hold-harmless" clause delaying or canceling previously scheduled decreases in a state's federal match.  Finally, states with higher unemployment rates will receive additional FMAP increases.

SCHIP: In addition to Medicaid, the State Children's Health Insurance Program (SCHIP) is emerging as an ever-vital program to ensure that at least the children in unemployed families have reliable and comprehensive health care coverage.  Separate from the stimulus package, the recent expansion of the state children's health insurance programs increased federal eligibility for children to 300% of the poverty level.  The new law also removes the five year waiting period that legal immigrant children and pregnant women faced in receiving access to coverage and increases funding for state outreach efforts to enroll more children. The twenty-five states including DC that already provide some form of coverage for immigrant children or pregnant women will now receive increased federal funding through higher FMAP rates for existing services if they opt to do so by notifying the Centers for Medicaid & Medicare services of a change in their plans.  Others will have to adopt administrative changes or legislation to expand coverage for legal immigrant children and pregnant mothers.  However, states can provisionally adopt Immigrant Childrens' Health Improvement Act (ICHIA) as of April 1 and then seek legislation, if necessary, later in the legislative session.

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Layoff Prevention and Retraining

In Averting Layoffs and Revitalizing the Manufacturing Economy, we highlighted a range of best practices through which states can both work to avert impending layoffs and use rapid-response to help employees get new jobs or enter retraining programs as quickly as possible.  There are a number of details and linked resources worth reviewing in the longer piece, but here are a few key approaches worth emphasizing:

  • Rapid-Response:  In his Rapid Response Training Overview, Lynn Minick of NELP outlines how states can adopt a rapid response policy to identify the causes of job losses, rapidly intervene to help laid off employees with services, and explore ways to preserve the jobs threatened.  Most rapid response programs are established under the umbrella of the federal Workforce Investment Act and involve early intervention, on-site contact with employees before layoffs, accessing training programs like Trade Adjustment Aid, and working with communities to tailor programs.
  • Using Peer Networks: John Kreuecher from Michigan's Human Resource Development Institute highlights how Peer Networks train groups of workers during layoffs to collect information from fellow workers, help connect them with community services, help them with job referrals and work with community leaders.
  • Early Warning to Prevent Layoffs:  Tom Croft of the Steel Valley Authority (SVA) outlines in Early Warning and Layoff Aversion that states need to work with networks of companies in similar industries to share business information and help them act cooperatively to rejuvenate their industries to avoid layoffs.  States can provide marketing help, energy conservation support to reduce costs, and work on buyouts to help sustain firms facing financial troubles.  
  • Industry Partnerships:  Stephen Herzenberg from the Keystone Research Center laid out an Industry Partnership Strategy drawing from Pennsylvania's experience building longer-term strategic cooperation among regional firms to coordinate training, education, and the sharing of high-performance organizational changes among firms.

Tapping Recovery Funds: States looking to implement some of these programs may be able to tap the $3.95 billion provided for the Workforce Investment Act (WIA) to fund job training and employment services.  $2.95 billion of those funds will be distributed to states using standard WIA formulas and $750 million for a new competitive grant program for worker training and placement in high growth and emerging industries.  States should also see where they can tap the expanded support for the Trade Adjustment Assistance for Communities program under the recovery program.

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Expanding Safety Net Programs

For the neediest Americans, the stimulus package increases funding for a number of safety net programs for the unemployed, especially for Americans who have fallen off the rolls.

TANF: ARRA provides $5 billion of new funding to states that experience an increase in welfare caseloads, and creates a new TANF Emergency Contingency Fund that covers 80 percent of the cost of increased assistance payments in states with caseload increases, on top of the stable block grants that states currently receive. Additionally, it provides 80 percent of additional spending on short”term non”recurring benefits and subsidized employment, so for every one dollar that a state spends, it receives a 4 dollar match from the federal government.  The Act also ensures that states don't feel the pressure to cut off residents in need during difficult budget times by removing the caseload reduction credit, extends the TANF Supplemental Grants for FY 2010, and allows states to use unspent TANF funds from previous years for any benefit or service allowable under TANF.

Supplemental Nutrition Assistance Program (Food Stamps):  The recovery act includes $20 billion for SNAP, formerly known as the food stamp program, with $295 million for SNAP administrative costs, most of which goes to the states. The state allocation formula will be based on states' shares of SNAP households in the last 12 months (75 percent) and of SNAP increases in last 12 months (25 percent).  States are required to track the administrative expenses separately from benefits.

For example, minimum benefit amounts for one- and two-person households increase to $19 for Alaska Urban, $24 for Alaska Rural I, $30 for Alaska Rural II, and $25 for Hawaii. The USDA will notify states of each individual state's share of the federal monies at and these adjustments will become effective April 1, 2009.

States must adopt certain provisions by April 1, 2009, and are authorized to make mass changes including:

  • Maximum benefit increase: Maximum monthly benefit amounts increase by 13.6%, and one and two-person households will receive a $2 increase in monthly SNAP allotments, which will remain at the higher level.
  • Another provision of SNAP is that it suspends time limits on eligibility for jobless adults without dependents through FY 2010 unless a state chooses to offer workfare slots. There is no need for states to track able-bodied workers without dependents or ask for waivers or exemptions until October 1, 2010.

Eliminate Assets Tests on Government Benefit Programs: Currently, many families are struggling, and could benefit by states lifting asset tests and instead simply checking to see if families meet SNAP, TANF or Medicaid income requirements.  This would allow a greater number of needy families to benefit from increased federal funding.  States are free to set their own asset limits under TANF, Medicaid and SCHIP programs, and, while states cannot completely eliminate the asset limit on food stamps, under the 2002 Farm Bill, they can create "categorical eligibility" for food stamps in some areas for anyone qualifying for a program like TANF for which the state has eliminated asset limits.  States that have eliminated assets-based TANF grants like Virginia and Ohio have not experienced significant upticks in abuse of the system.

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Every month, hundreds of thousands of Americans are being added to the rolls of the unemployed.  The recovery plan has put tools in the hands of the states to address these immediate needs, while reforming unemployment, health care, training and safety net programs.


Modernizing Unemployment Insurance

NELP - Concise Guide to Assistance for Jobless Workers
NELP - Needed Reforms for Full Incentive Funding, by State - Table with reforms needed in each state to qualify for UIMA funding.
NELP - Model State Provisions to Implement the UIMA

Health Care for the Unemployed

Academy Health/ RWJF's State Coverage Initiatives - How States Can Build on New Federal Legislation that Subsidizes COBRA Coverage for Laid-off Workers

Families USA - Protecting Unemployed Workers' Health Coverage: What States Can Do 

Families USA - Frequently Asked Questions about the Temporary Extra Medicaid Funding in the Economic Recovery Package

CBPP - In Depth: the Federal Medical Assistance Percentage Provision

National Immigration Law Center - Immigrant Childrens' Health Improvement Act (ICHIA)

Families USA - Children's Health - CHIP Reauthorization

Layoff Prevention and Retraining

Progressive States Network - Averting Layoffs and Revitalizing the Manufacturing Economy: Lessons from the Great Lakes States
NELP - NELP’s 2008 Great Lakes Economic Revitalization Summit
Lynn Minick of the National Employment Law Project - Rapid Response Training Overview
John Kreucher of Michigan's Human Resource Development Institute - Peer Networks
Tom Croft of the Steel Valley Authority (SVA) - Early Warning and Layoff Aversion
Steve Herzenberg of the Keystone Research Center - Pennsylvania's Industry Partnership Strategy
CBPP -  Training and Employment Services Provisions
Workforce Alliance - ARRA Summary of Workforce and Education provisions
Workforce Alliance - Summary of ARRA Section on Trade Adjustment Assistance for Communities

Expanding Safety Net Programs

Corporation for Enterprise Development (CFED) - What States Should Do: Help Struggling Families and Change the Trajectory of Our Economy
CFED - Ranking States on Asset Limits for Public Benefit Programs and Asset Limits for Public Benefits Resource Guide
Sargent Shriver National Center on Poverty Law - Reforming State Rules on Asset Limits: How to Remove Barriers to Saving and Asset Accumulation in Public Benefit Programs
Food Research and Action Center -- Economic Recovery Act provisions and highlights
Food and Nutrition Service, USDA - Memo to states on SNAP implementation 
Center on Budget and Policy Priorities -- State by State impact of stimulus on Food Stamp funding
Progressive States Network - Helping Poor and Working Families Build Financial Assets