State "Reed Act" Funds Are Not A Viable Or Desirable Substitute For Federal Unemployment Benefits
Publication Date: March 2004
Author(s): Isaac Shapiro
Special Collection: John D. and Catherine T. MacArthur Foundation
Keywords: Economic projections; Unemployment rate; Income diversity; Job displacement
A main argument being used against reviving the federal Temporary Extended Unemployment Compensation (TEUC) program is that states could fund additional benefits using the money federal legislation transferred into their unemployment trust funds in March 2002. Of the $8 billion that was then transferred to states (under a mechanism known as the Reed Act), according to the Labor Department $4.2 billion (some have been mistakenly using a higher figure) remained in state accounts at the end of February, with this figure expected to drop to $3.7 billion or less by the end of March.
This analysis finds that the use of Reed Act funds as a substitute for resuming the TEUC program is neither a viable nor a desirable alternative.