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State "Reed Act" Funds Are Not A Viable Or Desirable Substitute For Federal Unemployment Benefits

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Publication Date: March 2004

Publisher(s): Center on Budget and Policy Priorities (Washington, D.C.)

Author(s): Isaac Shapiro

Funder(s): Center on Budget and Policy Priorities (Washington, D.C.)

Funder(s): Center on Budget and Policy Priorities (Washington, D.C.)

Special Collection: John D. and Catherine T. MacArthur Foundation

Topic: Labor (Employment and labor supply)

Keywords: Economic projections; Unemployment rate; Income diversity; Job displacement

Type: Report


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)[1] 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.