THURSDAY, FEBRUARY 13, 1964. DEPARTMENT OF LABOR BUREAU OF EMPLOYMENT SECURITY WITNESSES ROBERT C. GOODWIN, ADMINISTRATOR, BUREAU OF EMPLOYMENT SECURITY WILLIAM U. NORWOOD, JR., ASSISTANT DIRECTOR FOR EMPLOYMENT SERVICE UNEMPLOYMENT COMPENSATION FOR FEDERAL EMPLOYEES AND EX-SERVICEMEN Mr. FOGARTY. We shall now discuss your request for a $30 million deficiency appropriation as contained in House Document 203 before going to the 1965 request since they will be printed in separate volumes. I understand there may be a revision to $42 million sent to us by the White House today. Mr. GOODWIN. That is our understanding, sir. Mr. FOGARTY. We shall place the justifications and your prepared statement in the record. (The matter referred to follows:) STATEMENT OF ROBERT C. GOODWIN, ADMINISTRATOR, BUREAU OF EMPLOYMENT SECURITY, ON THE 1964 SUPPLEMENTAL APPROPRIATION REQUEST FOR UNEMPLOYMENT COMPENSATION FOR FEDERAL EMPLOYEES AND EX-SERVICEMEN UNDER TITLE XV OF THE SOCIAL SECURITY ACT Mr. Chairman, this request is for an additional $42 million which we understand has been approved by the Bureau of the Budget, above the $110 million appropriated for payment of benefits under title XV of the Social Security Act during fiscal year 1964. These benefits are paid to unemployed Federal civilian employees and to ex-servicemen in accordance with the provisions of the unemployment insurance laws of the 50 States and the District of Columbia. Under the agreements between the cooperating State agencies and the Secretary of Labor for administration of these programs, the Bureau of Employment Security advances funds to cover the estimated monthly benefit costs in each State. These advances are usually made about 10 days prior to the beginning of the month. The 1963 appropriation for unemployed Federal employees and ex-servicemen was $151 million. During the first half of the current fiscal year, benefit payments under these programs were $65.8 million, almost equaling the $66.3 million paid out in the first half of fiscal year 1963. We estimate payments for the second 6 months of 1964 to be $86.2 million compared to the $86.1 million paid in the second 6 months of 1963. Benefits to ex-servicemen were $37.6 million in the July-December period just ended as compared with $41.8 million in the same period of the previous year. We estimate that they will be $50.4 million during the last half of this year compared to $54.2 million during the last half of fiscal year 1963. Unemployed civilian employees of the Federal Government were paid $28.2 million in the first half of the fiscal year, an increase of $3.7 million over the $24.5 million paid in the same period of the previous year. The increase appears to have been due to termination of temporary employees of the Departments of Agriculture and Interior, as well as a few intercity transfers of Federal offices, and layoffs at several military installations. We now estimate that the payments during the remainder of the fiscal year will continue to be slightly above the experience of the similar period last year and that they will amount to about $36 million during the second half of the year as compared with $32 million last year. Mr. Chairman, I have a table showing the number of Federal employee claimants during calendar year 1963, broken down by the Federal agencies in which 29-190-64- 4 they were last employed. It will show that the largest source of claims is the Defense Department with 45 percent of the total. The other principal sources and their percentages are: Post Office, 162 percent; Agriculture, 11 percent; Interior, 6 percent; Veterans' Administration, 4 percent; Internal Revenue Service, 31⁄2 percent; TVA, 34 percent; and Agricultural Stabilization and Conservation Service, 24 percent. If the chairman wishes, I shall submit the complete table for the record. Mr. Chairman, our best estimate now is that the present appropriation is sufficient to pay benefits through about the third week in March. Approximately 100,000 persons will be drawing benefits and will experience a delay in payments unless additional funds are provided by that time. I urge prompt action on this request in order to avoid an interruption in benefit payments such as occurred last May prior to passage of a supplemental request. At that time some 53,000 payments were delayed from 1 to 3 weeks in 33 different States. I should like to conclude by stating for the record that the congressional appropriation is the only source of funds for payment of these benefits which are required to be paid to persons entitled to them; and the funds appropriated to pay the benefits are not used for any other purpose. UNEMPLOYMENT COMPENSATION FOR FEDERAL EMPLOYEES AND EX-SERVICEMEN, BUREAU OF EMPLOYMENT SECURITY The payments of benefits under unemployment compensation for Federal employees and unemployment compensation for ex-servicemen are running considerably higher than was estimated for fiscal year 1964 at the same time that Congress made the appropriation. It is estimated that a total of $152 million will be needed in 1964 to pay unemployment compensation to Federal employees and ex-servicemen. This represents an increase of $42 million over the $110 million appropriated by Congress. The revised estimate for 1964 includes $64 million for Federal employees and $88 million for ex-servicemen. This year's appropriation, at $110 million, was 72 percent of the $152.4 million paid in fiscal year 1963. Our experience during the first 6 months, however, indicates that actual payments are running 99.2 percent of the benefit costs of the first 6 months of fiscal year 1963. In terms of money, benefit payments in the first 6 months totaled $65.8 million this year, as compared with $66.3 million last year. Under the unemployment compensation for Federal employees the average weekly benefit amount for fiscal year 1964 has increased at a lower rate than experienced in the last several fiscal years, and therefore, the estimated average weekly benefit amounts will be less than the amount contained in the fiscal year 1964 appropriation. There were 723,000 weeks compensated during the first 6 months of fiscal year 1964, and 915,000 are expected for the last 6 months, totaling 1,638,000 for the year. This estimate is 43 percent higher than the 1964 original appropriation. This increase is due primarily to a higher rate of insured unemployment and to a higher number of claims resulting from reduction in civilian employment in various Government installations. Duration per spell of unemployment has risen from 7 weeks in July to 10.4 weeks in December and it is estimated to average 9.8 weeks for the year. Benefit payments follow the claims and duration pattern. During the first 6 months the States paid $28.2 million in benefit payments and it is estimated that $35.8 million will be needed for the last 6 months, a total of $64 million for the year. Under the unemployment compensation for ex-servicemen program the average weekly benefit amount for fiscal year 1964 has increased at a lower rate than experienced in the last several fiscal years. Despite the effect of the Uniform Services Pay Act of 1963, the revised estimate of the average weekly benefit amount will be less than the original estimate for fiscal year 1964. There were 1,098,000 weeks compensated for the first 6 months of fiscal year 1964, and 1,446,000 expected for the last 6 months, totaling 2,544,000 for the year. This is 35 percent higher than the original estimate for fiscal year 1964. This increase is due primarily to the higher rate of insured unemployment. Duration has risen from 6.4 weeks in July to 6.6 weeks in December. It is expected that it will continue to rise and average 7.8 weeks for the year. As indicated above, benefit payments follow the claims and duration pattern. During the first 6 months the States paid $37.6 million in benefits and it is estimated that $50.4 million will be needed for the last 6 months, a total of $88 million for the year. A part of the total needs is related to the passage of the Uniform Services Pay Act of 1963 which increases the conversion rates in the Secretary of Labor's schedule. We anticipate that title XV benefit payments will total $152 million in fiscal year 1964, which is about the same as paid in fiscal year 1963. We, therefore, estimate the need for a supplemental appropriation of $42 million. FEDERAL EMPLOYEES-Continued MANDATORY ITEMS-Continued Increases-Continued The adjustment factor was increased Decreases: Reduction due to lower average weekly bene- The average weekly unemployment +$1,200, 000 - 1, 300, 000 To provide for a higher number of weeks compensated_ It is estimated that there will be an additional 654,000 weeks compensated over the 1,890,000 provided for in the current appropriation for a total of 2,544,000 in fiscal year 1964. To provide for a higher number of joint and supplemental claims... The adjustment factor was increased Decreases: The average weekly unemployment Total changes__ +22, 600, 000 +900, 000 -700,000 +$19, 200, 000 +22, 800, 000 +42, 000, 000 Estimate of supplemental costs for benefits under unemployment compensation for Federal employees program for fiscal year 1964 1. Assumed State insured unemployment rate (percent). 2. Number of weeks compensated for "UCFE No UI," excluding supplemental and joint claims, based on assumed State insured unemployment rate. 3. Average weekly benefit amount excluding supplemental and joint claims, based on the trend during the first 6 months of fiscal year 1964.. 4. "UCFE No UI" benefit cost excluding supplemental and joint claims (line 2 times line 3). 5. Adjustment factor for inclusion of supplemental and joint claims based on January-September 1963 experience for fiscal year 1964.. 6. "UCFE total" benefit cost including supplemental and joint claims (line 4 times line 5). 7. Minimum payment balances in States. Total.... 1 Rounded. 2 This recent experience is used for fiscal year 1964 because of the impact of the California extended duration program which suspended payment of benefit to new claimants after September 1963. Explanation of items appearing on page Benefits-9 of UCFE-UCX. Supplemental for fiscal year 1964. It had originally been assumed that weeks compensated for UCFE only would be approximately 1,144,000 and that the average weekly payment would be $38. Payments for total weeks of UCFE only would then be 1,144,000 × $38= $43,472,000 which rounded to $43,500,000. It was assumed that weeks with mixed UCFE-State UI payments would cause an additional payout of 3 percent. This would add ($43,500,000 × 0.03= $1,305,000) rounded to $1,300,000 or a grand total of— Payments Additional payout-- Total.... $43, 500, 000 1, 300, 000 44, 800, 000 Based on most recent experience it is now assumed that weeks of UCFE only will approximate 1,638,000 and the weekly payemnt will be $37.25. Total costs for UCFE only would be 1,638,000 × $37.25=$61,015,500 which we round to $61,000,000. The adjustment factor to account for payment of combined UCFE-State UI claims is now assumed to be 5 percent. The extra cost would be $61,000,000 × 0.05 $3,050,000 which is rounded to $3 million. Revised total is now Payments.. Extra cost. Total__ $61, 000, 000 3, 000, 000 64, 000, 000 |