text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Unemployment Insurance Modernization 
  Act''.
  
  SEC. 2. SPECIAL TRANSFERS TO STATE ACCOUNTS IN THE UNEMPLOYMENT TRUST 
                FUND.
  
      (a) In General.--Section 903 of the Social Security Act (42 U.S.C. 
  1103) is amended by adding at the end the following:
  
           ``Special Transfers in Fiscal Years 2008 Through 2012
  
      ``(f)(1)(A) In addition to any other amounts, the Secretary of 
  Labor shall provide for the making of unemployment compensation 
  modernization incentive payments (in this subsection referred to as 
  `incentive payments') to the accounts of the States in the Unemployment 
  Trust Fund, by transfer from amounts reserved for that purpose in the 
  Federal unemployment account, in accordance with succeeding provisions 
  of this subsection.
      ``(B) Subject to paragraph (5), the maximum incentive payment 
  allowable under this subsection with respect to any State shall, as 
  determined by the Secretary of Labor, be equal to the amount obtained 
  by multiplying $7,000,000,000 times the same ratio as is applicable 
  under subsection (a)(2)(B) for purposes of determining such State's 
  share of any funds to be transferred under subsection (a) as of October 
  1, 2007.
      ``(C) Of the maximum incentive payment determined under 
  subparagraph (B) with respect to a State--
              ``(i) one-third shall be transferred upon a certification 
          under paragraph (4)(B) that the State law of such State meets 
          the requirements of paragraph (2); and
              ``(ii) the remainder shall be transferred upon a 
          certification under paragraph (4)(B) that the State law of such 
          State meets the requirements of paragraph (3).
      ``(2) The State law of a State meets the requirements of this 
  paragraph if such State law--
              ``(A) uses a base period that includes the most recently 
          completed calendar quarter before the start of the benefit year 
          for purposes of determining eligibility for unemployment 
          compensation; or
              ``(B) provides that, in the case of an individual who would 
          not otherwise be eligible for unemployment compensation under 
          the State law because of the use of a base period that does not 
          include the most recently completed calendar quarter before the 
          start of the benefit year, eligibility shall be determined 
          using a base period that includes such calendar quarter.
      ``(3) The State law of a State meets the requirements of this 
  paragraph if such law includes provisions to carry out at least 2 of 
  the following subparagraphs:
              ``(A) An individual shall not be denied compensation under 
          any State law provisions relating to availability for work, 
          active search for work, or refusal to accept work, solely 
          because such individual is seeking only part-time (and not 
          full-time) work, except that such law may provide for the 
          provisions carrying out this subparagraph to require up to, but 
          not to exceed, a majority of weeks of work of such individual's 
          base period to consist of part-time employment.
              ``(B) An individual shall not be disqualified from 
          compensation for separating from work for compelling family 
          reasons, which, for purposes of this subparagraph, shall 
          include at least the following:
                      ``(i) A separation from employment in which 
                  domestic violence causes the individual reasonably to 
                  believe that such separation is necessary for the 
                  safety of the individual or the individual's family, as 
                  verified by such reasonable and confidential 
                  documentation that may be required by the State.
                      ``(ii) A separation from employment resulting from 
                  the illness or disability of a member of the 
                  individual's immediate family.
                      ``(iii) A separation from employment resulting from 
                  the individual's need to accompany a spouse--
                              ``(I) to a place from which it is 
                          impractical for such individual to commute; and
                              ``(II) due to a change in location of the 
                          spouse's employment.
              ``(C) Weekly unemployment compensation is payable under 
          this subparagraph to any individual who is unemployed (as 
          determined under the State unemployment compensation law), has 
          exhausted all rights to regular and (if applicable) extended 
          unemployment compensation under the State law, and is enrolled 
          and making satisfactory progress in a State-approved training 
          program or in a job training program authorized under the 
          Workforce Investment Act of 1998. Such program shall prepare 
          individuals who have been separated from a declining 
          occupation, or who have been involuntarily and indefinitely 
          separated from employment as a result of a permanent reduction 
          of operations at the individual's place of employment, for 
          entry into a high-demand occupation. In addition, such program 
          may prepare other unemployed individuals deemed eligible by the 
          State. The amount of unemployment compensation payable under 
          this subparagraph to an individual for a week of unemployment 
          shall be equal to the individual's average weekly benefit 
          amount (including dependents' allowances) for the most recent 
          benefit year, and the total amount of unemployment compensation 
          payable under this subparagraph to any individual shall be 
          equal to at least 26 times the individual's average weekly 
          benefit amount (including dependents' allowances) for the most 
          recent benefit year.
              ``(D) The maximum amount of compensation--
                      ``(i) payable to the individual during a benefit 
                  year is equal to at least 26 times the individual's 
                  weekly benefit amount; or
                      ``(ii) the individual receives during a benefit 
                  year exceeds half of the individual's total wages 
                  during the base period.
          A State shall not be considered to satisfy clause (i) if it 
          reduced the maximum weekly benefit amount of compensation 
          payable to an individual during a benefit year below the amount 
          that was in effect as of the date of enactment of this 
          subsection.
              ``(E) Dependents' allowances are provided to all 
          individuals with a dependent (as defined by State law) equal to 
          at least $15 per dependent per week, subject to any aggregate 
          limitation on such allowances which the State law may establish 
          (but which aggregate limitation on the total allowance for 
          dependents paid to an individual may not be less than the 
          lesser of $50 for each week of unemployment or 50 percent of 
          the individual's weekly benefit amount for the benefit year).
      ``(4)(A) Any State seeking an incentive payment under this 
  subsection shall submit an application therefor at such time and in 
  such manner as the Secretary of Labor shall by regulation prescribe. 
  Such application shall include information on how the State intends to 
  use incentive payments to improve or strengthen the State's 
  unemployment compensation program. The Secretary of Labor shall, within 
  90 days after receiving any such application, notify the State agency 
  of the State as to the Secretary's findings with respect to the 
  requirements of paragraph (2) or (3) (as the case may be).
      ``(B) If the Secretary of Labor finds that the State law provisions 
  (disregarding any State law provisions which are not then currently in 
  effect or which are subject to discontinuation under certain 
  conditions) meet the requirements of paragraph (2) or (3) (as the case 
  may be) and that unemployment compensation claimants have begun to 
  qualify for benefits under such requirements, the Secretary of Labor 
  shall thereupon make a certification to that effect to the Secretary of 
  the Treasury, together with a certification as to the amount of the 
  incentive payment to be transferred to the State account pursuant to 
  that finding. The Secretary of the Treasury shall make the appropriate 
  transfer within 30 days after receiving such certification.
      ``(C)(i) No certification of compliance with the requirements of 
  paragraph (2) or (3) may be made with respect to any State whose State 
  law is not otherwise eligible for certification under section 303 or 
  approvable under section 3304 of the Federal Unemployment Tax Act.
      ``(ii) No certification of compliance with the requirements of 
  paragraph (3) may be made with respect to any State whose State law is 
  not in compliance with the requirements of paragraph (2).
      ``(iii) No application under subparagraph (A) may be considered if 
  submitted before October 1, 2007, or after the latest date by which it 
  must be submitted (as specified by the Secretary of Labor in 
  regulations) to ensure that all incentive payments under this 
  subsection are made before October 1, 2012.
      ``(5)(A) If the Secretary of Labor determines, within 30 days after 
  the deadline described in paragraph (4)(C)(iii), that there are amounts 
  reserved for incentive payments under paragraph (7) for which the 
  Secretary of the Treasury has not received a certification under 
  paragraph (4)(B), from such amounts--
              ``(i) first, 10 percent of such amounts shall be made 
          available for transfer to the accounts of States under 
          subsection (g); and
              ``(ii) second, from the remainder of such amounts, 
          incentive payments that are in addition to those made under 
          paragraph (1) shall be made to States described in subparagraph 
          (E).
      ``(B)(i) The amount of additional incentive payments to a State 
  under subparagraph (A)(ii) shall be an amount equal to the sum of--
              ``(I) the amount obtained by multiplying the total amount 
          determined by the Secretary of Labor under subparagraph (A) 
          (after application of clause (i) of such subparagraph) times 
          the same ratio as is applicable under subsection (a)(2)(B) for 
          purposes of determining such State's share of any funds to be 
          transferred under subsection (a) as of October 1, 2007; and
              ``(II) an amount equal to the total amount determined by 
          the Secretary of Labor under subparagraph (A) (after 
          application of clause (i) of such subparagraph) less the total 
          amount of additional incentive payments under subclause (I) for 
          all States, divided by the total number of States receiving 
          additional incentive payments.
      ``(ii) In no case may the amount of an additional incentive payment 
  transferred to a State under this paragraph exceed an amount equal to 2 
  times the total amount of the incentive payment transferred to the 
  State under paragraph (1)(C).
      ``(C) For each State described in subparagraph (E), the Secretary 
  shall make a certification to that effect to the Secretary of the 
  Treasury, together with a certification as to the amount of the 
  additional incentive payment to be transferred to the State account 
  pursuant this paragraph. The Secretary of the Treasury shall make the 
  appropriate transfer within 30 days after receiving such certification.
      ``(D) The Secretary of Labor shall certify to the Secretary of the 
  Treasury the amount to be made available for transfer under 
  subparagraph (A)(i).
      ``(E) For purposes of subparagraph (A), a State is described in 
  this subparagraph if the Secretary of the Treasury received a 
  certification under paragraph (4)(B) that the State law of such State 
  meets the requirements of paragraphs (2) and (3).
      ``(6)(A) Except as provided in subparagraph (B), amounts 
  transferred to a State account pursuant to paragraphs (4)(B) and (5)(C) 
  may be used only in the payment of cash benefits to individuals with 
  respect to their unemployment.
      ``(B) A State may, subject to the same conditions as set forth in 
  subsection (c)(2) (excluding subparagraph (B) thereof, and deeming the 
  reference to `subsections (a) and (b)' in subparagraph (D) thereof to 
  include this subsection), use any amount transferred to the account of 
  such State under paragraphs (4)(B) and (5)(C) for the administration of 
  its unemployment compensation law and public employment offices.
      ``(7) Out of any money in the Federal unemployment account not 
  otherwise appropriated, the Secretary of the Treasury shall reserve 
  $7,000,000,000 to carry out this subsection. For purposes of section 
  902, the net balance in the Federal unemployment account as of any time 
  is the amount in such account as of such time reduced by an amount 
  equal to the total amount so reserved less the total of the incentive 
  payments transferred under this subsection (and the total amount 
  transferred under paragraph (5)(A)(i)) as of such time.
  
           ``Special Transfers in Fiscal Years 2008 Through 2012
  
      ``(g)(1) Notwithstanding any other provision of this section, the 
  total amount available for transfer to the accounts of the States 
  pursuant to subsection (a) as of the beginning of each of fiscal years 
  2008, 2009, 2010, 2011, and 2012 shall be equal to the total amount 
  which (disregarding this subsection) would otherwise be so available, 
  increased by $100,000,000 (or, in the case of fiscal year 2012, 
  $100,000,000 plus the amount made available for transfer under 
  subsection (f)(5)(A)(i)).
      ``(2) Each State's share of any additional amount made available by 
  this subsection shall be determined, certified, and computed in the 
  same manner as described in subsection (a)(2) and shall be subject to 
  the same limitations on transfers as described in subsection (b). For 
  purposes of applying subsection (b)(2), the balance of any advances 
  made to a State under section 1201 shall be credited against, and 
  operate to reduce (but not below zero)--
              ``(A) first, any additional amount which, as a result of 
          the enactment of this subsection, is to be transferred to the 
          account of such State in a fiscal year; and
              ``(B) second, any amount which (disregarding this 
          subsection) is otherwise to be transferred to the account of 
          such State pursuant to subsections (a) and (b) in such fiscal 
          year.
      ``(3) Any additional amount transferred to the account of a State 
  as a result of the enactment of this subsection--
              ``(A) may be used by the State agency of such State only in 
          the payment of expenses incurred by it for--
                      ``(i) the administration of the provisions of its 
                  State law carrying out the purposes of subsection 
                  (f)(2) or any subparagraph of subsection (f)(3);
                      ``(ii) improved outreach to individuals who might 
                  be eligible for compensation by virtue of any 
                  provisions of the State law which are described in 
                  clause (i);
                      ``(iii) the improvement of unemployment benefit and 
                  unemployment tax operations; and
                      ``(iv) staff-assisted reemployment services for 
                  unemployment insurance claimants; and
              ``(B) shall be excluded from the application of subsection 
          (c).
      ``(4) The total additional amount made available by this subsection 
  in a fiscal year shall be taken out of the amounts remaining in the 
  employment security administration account after subtracting the total 
  amount which (disregarding this subsection) is otherwise required to be 
  transferred from such account in such fiscal year pursuant to 
  subsections (a) and (b).''.
      (b) Regulations.--The Secretary of Labor may prescribe any 
  regulations necessary to carry out the amendment made by subsection 
  (a).
  
  SEC. 3. EXTENSION OF FUTA TAX.
  
      Section 3301 of the Internal Revenue Code of 1986 (relating to rate 
  of tax) is amended--
              (1) by striking ``2007'' in paragraph (1) and inserting 
          ``2012'', and
              (2) by striking ``2008'' in paragraph (2) and inserting 
          ``2013''.
target: Unemployment Insurance Modernization Act - Amends the Social Security Act to require the Secretary of Labor to make unemployment compensation modernization incentive payments in FY2008-FY2012 by certain transfers from the federal unemployment account to the accounts of the states in the Unemployment Trust Fund.
  
  Prescribes a formula for determining the maximum allowable incentive payments.
  
  Specifies requirements state law must meet for the state to qualify for such a payment.
  
  Limits the use of transferred amounts to the payment of cash unemployment benefits to individuals.
  
  Requires the Secretary of the Treasury to reserve specified funds out of the federal unemployment account for such incentive payments.
  
  Amends the Internal Revenue Code to extend through FY2013 the Federal Unemployment Tax Act (FUTA) excise tax imposed on every employer.
feat_title: A bill to provide for special transfers of funds to States to promote certain improvements in State unemployment compensation laws.