THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

INTRODUCED BY GORDNER, PILEGGI, GREENLEAF, ERICKSON, VANCE, RAFFERTY AND MENSCH, OCTOBER 24, 2011

AMENDMENTS TO HOUSE AMENDMENTS, IN SENATE, JUNE 4, 2012   

AN ACT

Amending the act of December 5, 1936 (2nd Sp.Sess., 1937

<--

P.L.2897, No.1), entitled "An act establishing a system of

unemployment compensation to be administered by the

Department of Labor and Industry and its existing and newly

created agencies with personnel (with certain exceptions)

selected on a civil service basis; requiring employers to

keep records and make reports, and certain employers to pay

contributions based on payrolls to provide moneys for the

payment of compensation to certain unemployed persons;

providing procedure and administrative details for the

determination, payment and collection of such contributions

and the payment of such compensation; providing for

cooperation with the Federal Government and its agencies;

creating certain special funds in the custody of the State

Treasurer; and prescribing penalties," further providing for 

definitions, for determination of contribution rate, for

additional contribution for interest, for trigger

determination, for collection of contribution and interest

and injunctions, for compensation rate, for Unemployment

Compensation Fund, for Interest Fund, for State Treasurer as

custodian, for recovery and recoupment of compensation; and

providing for unemployment compensation bonds and for

unemployment compensation amnesty program.

Amending the act of December 5, 1936 (2nd Sp.Sess., 1937

<--

P.L.2897, No.1), entitled "An act establishing a system of

unemployment compensation to be administered by the

Department of Labor and Industry and its existing and newly

created agencies with personnel (with certain exceptions)

selected on a civil service basis; requiring employers to

keep records and make reports, and certain employers to pay

contributions based on payrolls to provide moneys for the

payment of compensation to certain unemployed persons;

providing procedure and administrative details for the

determination, payment and collection of such contributions

and the payment of such compensation; providing for

cooperation with the Federal Government and its agencies;

creating certain special funds in the custody of the State

Treasurer; and prescribing penalties," further providing for

definitions, for determination of contribution rate and

experience rating and for contributions by employees;

providing for additional contribution for debt service;

further providing for trigger determination, for trigger rate

redeterminations, for reports by employers and assessments,

for contributions to be liens and entry and enforcement

thereof, for collection of contributions and interest and

injunctions, for dishonored checks, for qualifications

required to secure compensation, for rate and amount of

compensation and for Unemployment Compensation Fund;

providing for Debt Service Fund and for Reemployment Fund;

further providing for State Treasurer as custodian and for

recovery and recoupment of compensation; providing for

unemployment compensation bonds and for unemployment

compensation amnesty program; and making a related repeal.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 4(f) of the act of December 5, 1936 (2nd

<--

Sp.Sess., 1937 P.L.2897, No.1), known as the Unemployment

Compensation Law, amended May 23, 1949 (P.L.1738, No.530), is

amended to read:

Section 4.  Definitions.--The following words and phrases, as

used in this act, shall have the following meanings, unless the

context clearly requires otherwise.

* * *

(f)  "Compensation" means:

(1)  money payments payable to individuals with respect to

their unemployment as provided in this act; and

(2)  to the extent permitted by law, that part of the

principal owed on bonds issued under Article XIV of this act

which is attributable to repayment of the principal of advances

under Title XII of the Social Security Act (42 U.S.C. § 1321 et

seq.), exclusive of any interest or administrative costs

associated with the bonds.

* * *

Section 1.1.  Section 301.1(e) of the act, amended July 21,

1983 (P.L.68, No.30), is amended to read:

Section 301.1.  Determination of Contribution Rate;

Experience Rating.--

* * *

(e)  The State Adjustment Factor for the calendar year

beginning January 1, 1984, shall be one and five-tenths per

centum (1.5%) and thereafter shall be computed as of the

computation date for such year to a tenth of a per centum,

rounding all fractional parts of a tenth of a per centum to the

nearest tenth of a per centum, but in no event less than zero

nor in excess of one and five-tenths per centum (1.5%),

according to the following formula:

Bdr - Dcr

-----------------------  X 100 = State Adjustment Factor

Wt

in which factor "Bdr" equals the aggregate of (1) all benefits

paid but not charged to employers' accounts, plus, (2) all

benefits paid and charged to inactive and terminated employers'

accounts, plus, (3) all benefits paid and charged to accounts of

active employers for the preceding year to the extent such

benefits exceed the combined amount of contributions payable by

such employers on the basis of the Benefit Ratio Factor and the

Reserve Ratio Factor. Factor "Dcr" equals the aggregate of (1)

interest credited to the Unemployment Compensation Fund, plus,

(2) amounts transferred from the Special Administration Fund and

the [Interest] Debt Service Fund to the Unemployment

Compensation Fund, plus, (3) refunds of benefits unlawfully

paid, plus, (4) amounts credited to the Unemployment

Compensation Fund by the Federal Government other than by loan,

except that any amount credited to this Commonwealth's account

under section 903 of the Federal Social Security Act which has

been appropriated for expenses of administration shall be

excluded from the amount in the Unemployment Compensation Fund

in the computation of the "Dcr" factor. Factor "Wt" equals all

wages subject to the law up to the limitation described in

section 4(x)(1) paid by all employers. Each item in each factor

shall be computed with respect to the twelve-month period ending

on the computation date: Provided, That should the computed

State Adjustment Factor for calendar year 1984, and any year

thereafter exceed one and five-tenths per centum (1.5%), such

excess over one and five-tenths per centum (1.5%) shall be added

to the computed State Adjustment Factor for the following year

or years.

* * *

Section 2.  Section 301.6 of the act, amended July 1, 1985,

(P.L.96, No.30), is amended to read:

Section 301.6.  Additional Contribution for Interest.--(a)

Notwithstanding any other provision of this act, all employers

required to pay contributions under section 301 or 301.1 other

than those employers covered by paragraphs (3) and (4) of

subsection (a) of section 301 shall have their rate of

contribution increased by the rate of the Interest Factor in

effect for the applicable calendar year.

(b)  All taxes collected under this section shall be

considered to be separate and apart from any contributions

required to be deposited in the Unemployment Compensation Fund.

All taxes collected under this section shall be deposited in the

[Interest] Debt Service Fund established by section 601.2 of

this act. Such taxes will not be credited to the employer's

reserve account.

(c)  [The Interest Factor calculated on wages with regard to

the limitations specified in section 4(x)(1) shall be equal to

twenty-five hundredths of one per centum (0.25%) for calendar

year 1984, five-tenths of one per centum (0.5%) for calendar

year 1985, and three-tenths of one per centum (0.3%) for

calendar year 1986. Thereafter the] The Interest Factor shall be

a variable rate [not to exceed one per centum (1.0%)] to be

determined annually by the department [at a rate necessary to

pay the interest on outstanding interest-bearing advances under

Title XII of the Social Security Act for the following calendar

year.] with approval by the Office of the Budget. The rate of

the Interest Factor for a calendar year shall be the rate

necessary to do the following in that year:

(1)  Pay the bond obligations and bond administrative

expenses under Article XIV of this act which are due in that

year.

(2)  Replenish amounts which have been drawn from bond

reserves under Article XIV of this act.

(3)  Provide an amount necessary in the department's and

Office of the Budget's judgment to fund adequate debt service

reserves to enhance investor acceptance of bonds under Article

XIV of this act.

(4)  Fund redemptions and purchases of outstanding bonds

under Article XIV of this act which will occur in that year.

(5)  Pay the interest on interest-bearing advances under

Title XII of the Social Security Act (42 U.S.C. § 1321 et seq.)

which is due in that year.

(6)  Repay outstanding advances under Title XII of the Social

Security Act.

(d)  Contributions paid by or on behalf of an employer under

this act, other than employe contributions under section 301.4,

shall be allocated first to the employer's liability under this

section. This subsection shall apply to contributions for any

calendar quarter that ends at a time when bonds issued under

Article XIV of this act are outstanding.

(e)  If additional contributions collected under this section

for a calendar year exceed the amount necessary for the purposes

enumerated in subsection (c) for that year, the department may

use such excess contributions for the purposes enumerated in

subsection (c) for the following year, thereby reducing the

amount of additional contributions which would be required for

the following year.

(f)  No Interest Factor shall be required for [the year

following any year in which the amount of such interest-bearing

advances has been reduced to zero, provided that an interest tax

shall be required and shall be reimposed by the department for

the calendar year following any year in which an interest-

bearing advance remains outstanding on October 1 and there are

not sufficient funds in the Interest Fund to pay the interest

due in that] any year for which funding is not required for any

of the purposes enumerated under subsection (c).

Section 2.1.  Section 301.7 of the act, added October 19,

1988 (P.L.818, No.109), is amended to read:

Section 301.7.  Trigger Determination.--(a)  On July 1 of

every year, the secretary shall calculate the trigger percentage

to be used in setting surcharge and contribution rates for the

contributions required under sections 301.2, 301.4 and 301.5 and

in setting the benefit reduction required under section 404(e)

(4) for the following calendar year. The secretary shall:

(1)  determine the balance in the Unemployment Compensation

Trust Fund;

(2)  determine the average of the benefit costs for the three

immediately preceding fiscal years; and

(3)  calculate the percentage that the Unemployment

Compensation Trust Fund represents of the average of the benefit

costs.

For purposes of this subsection, the balance in the Unemployment

Compensation Trust Fund shall be determined by adding the

principal amount of outstanding bonds under Article XIV of this

act and the amount of outstanding advances under Title XII of

the Social Security Act (42 U.S.C. § 1321 et seq.) and by

subtracting that sum from the amount that otherwise would be the

balance in the Unemployment Compensation Trust Fund.

(b)  Surcharge and contribution rates shall be announced by

the secretary on July 1 of every year in accordance with the

following schedule:

(1)  When the trigger percentage is one hundred fifty per

centum (150%) or higher, the rate of the surcharge assessed

under section 301.5 shall be a negative one and one-half per

centum (-1.5%).

(2)  When the trigger percentage is at least one hundred

twenty-five per centum (125%), but less than one hundred fifty

per centum (150%), there shall be no surcharge or contribution

under section 301.2, 301.4 or 301.5.

(3)  When the trigger percentage is at least one hundred ten

per centum (110%), but less than one hundred twenty-five per

centum (125%):

(i)  the rate of the surcharge assessed under section 301.5

shall be four per centum (4%); and

(ii)  the rate of contributions assessed under section 301.4

shall be five-hundredths of one per centum (0.05%).

(4)  When the trigger percentage is at least ninety-five per

centum (95%), but less than one hundred ten per centum (110%):

(i)  the rate of the surcharge assessed under section 301.5

shall be eight per centum (8%); and

(ii)  the rate of contributions assessed under section 301.4

shall be one-tenth of one per centum (0.1%).

(5)  When the trigger percentage is at least seventy-five per

centum (75%), but less than ninety-five per centum (95%):

(i)  the rate of the surcharge assessed under section 301.5

shall be eight per centum (8%);

(ii)  the rate of contributions assessed under section 301.4

shall be fifteen-hundredths of one per centum (0.15%); and

(iii)  the rate of additional contributions assessed under

section 301.2 shall be twenty-five hundredths of one per centum

(0.25%).

(6)  When the trigger percentage is at least fifty per centum

(50%), but less than seventy-five per centum (75%):

(i)  the rate of the surcharge assessed under section 301.5

shall be eight per centum (8%);

(ii)  the rate of contributions assessed under section 301.4

shall be two-tenths of one per centum (0.2%); and

(iii)  the rate of additional contribution assessed under

section 301.2 shall be five-tenths of one per centum (0.5%).

(7)  When the trigger percentage is less than fifty per

centum (50%):

(i)  the rate of the surcharge assessed under section 301.5

shall be eight per centum (8%);

(ii)  the rate of additional contribution assessed under

section 301.2 shall be seventy-five hundredths of one per centum

(0.75%); and

(iii)  the rate of contributions assessed under section 301.4

shall be two-tenths of one per centum (0.2%).

(c)  Whenever the trigger percentage determined under

subsection (a) is less than fifty per centum (50%), the

secretary shall announce a reduction in the weekly benefit rate

under section 404(e)(4).

(d)  Whenever the trigger percentage is less than twenty-five

per centum (25%), any balance remaining in the Unemployment

Compensation Trigger Reserve Account shall be transferred to the

Unemployment Compensation Trust Fund.

Section 3.  Section 309 of the act is amended by adding a

subsection to read:

Section 309.  Collection of Contributions and Interest;

Injunctions.--* * *

(c)  In addition to the methods of collection authorized in

this section and other sections of this act, the department may

collect contributions, interest, penalties and other liabilities

due under this act under the Internal Revenue Code of 1986 (26

U.S.C. § 6402 (Public Law 97-35)) and by any other means

available under Federal or State law.

Section 3.1.  Section 404(e)(2) of the act, amended June 17,

2011, (P.L.16, No.6), is amended to read:

Section 404.  Rate and Amount of Compensation.--Compensation

shall be paid to each eligible employe in accordance with the

following provisions of this section except that compensation

payable with respect to weeks ending in benefit years which

begin prior to the first day of January 1989 shall be paid on

the basis of the provisions of this section in effect at the

beginning of such benefit years.

* * *

(e)  * * *

(2)  (i)  The Table Specified for the Determination of Rate

and Amount of Benefits shall be extended or contracted annually,

automatically by regulations promulgated by the secretary in

accordance with the following procedure: for calendar year one

thousand nine hundred seventy-two and for all subsequent

calendar years, to a point where the maximum weekly benefit rate

shall equal sixty-six and two-thirds per centum of the average

weekly wage for the thirty-six-month period ending June 30

preceding each calendar year. If the maximum weekly benefit rate

is not a multiple of one dollar ($1), it shall be rounded to the

next lower multiple of one dollar ($1): Provided, however, That

effective with benefit years beginning the first Sunday at least

thirty days after the effective date of this amendatory act, the

per centum stated in this paragraph for establishing the maximum

weekly benefit rate shall be sixty-two and two-thirds per centum

for the remainder of calendar year one thousand nine hundred

seventy-four, sixty-four and two-thirds per centum for the

calendar year one thousand nine hundred seventy-five, and sixty-

six and two-thirds per centum for the calendar year one thousand

nine hundred seventy-six and for all subsequent calendar years.

The Table Specified for the Determination of Rate and Amount

of Benefits as so extended or contracted shall be effective only

for those claimants whose benefit years begin on or after the

first day of January of such calendar year.

(ii)  For the purpose of determining the maximum weekly

benefit rate, the Pennsylvania average weekly wage in covered

employment shall be computed on the basis of the average annual 

total wages reported (irrespective of the limit on the amount of

wages subject to contributions) for the thirty-six-month period

ending June 30 (determined by dividing the total wages reported

for the thirty-six-month period by three) and this amount shall

be divided by the average monthly number of covered workers

(determined by dividing the total covered employment reported

for the same thirty-six-month period by thirty-six) to determine

the average annual wage. The average annual wage thus obtained

shall be divided by fifty-two and the average weekly wage thus

determined rounded to the nearest cent.

(iii)  Notwithstanding the provisions of subclause (i), for

the calendar year 2012, the maximum weekly benefit rate shall be

frozen at the rate calculated for calendar year 2011.

Thereafter, the maximum weekly benefit rate established:

(A)  For calendar year 2013, shall be no greater than a one

per centum (1%) increase above the calendar year 2012 rate.

(B)  For calendar year 2014, shall be no greater than a one

and one-tenth per centum (1.1%) increase above the calendar year

2013 rate.

(C)  For calendar year 2015, shall be no greater than a one

and two-tenths per centum (1.2%) increase above the calendar

year 2014 rate.

(D)  For calendar year 2016, shall be no greater than a one

and three-tenths per centum (1.3%) increase above the calendar

year 2015 rate.

(E)  For calendar year 2017, shall be no greater than one and

four-tenths per centum (1.4%) increase above the calendar year

2016 rate.

(F)  For calendar year 2018, shall be no greater increase

than one and five-tenths per centum (1.5%) increase above the

calendar year 2017 rate.

The limitations instituted for calendar years 2013 through 2018

shall expire on the earlier to occur of December 31, 2018, or

the [last day of the calendar year in which the unemployment

Compensation trust fund does not have an outstanding solvency-

based debt to the United States government] December 31 as of

which the Unemployment Compensation Fund does not owe

outstanding advances to the Federal Government under Title XII

of the Social Security Act (42 U.S.C. § 1321 et seq.) and there

are no outstanding bonds under Article XIV.

(iv)  If the change implemented by the freeze in calendar

year 2012 is determined by the department, in an official notice

to the General Assembly, to result in the loss of funds under

the American Recovery and Reinvestment Act of 2009 (Public Law

111-5, 123 Stat. 115), the schedule under subclause (iii) shall

occur one year later and the expiration of the limitations set

forth in subclause (iii) shall occur one year later.

* * *

Section 3.2.  Section 601 of the act, amended December 6,

1972 (P.L.1622, No.336), and July 21, 1983 (P.L.68, No.30), is

amended to read:

Section 601.  Unemployment Compensation Fund.--(a)  There is

hereby created a special fund separate and apart from all public

moneys or funds of this Commonwealth to be known as the

Unemployment Compensation Fund. All contributions paid by

employers and employes, together with penalties and interest

thereon, received or collected by the department from employers

under the provisions of this act, except such penalties and

interest which are to be paid into the Special Administration

Fund as provided in section 601.1 and taxes collected under

section 301.6 of this act which are to be paid into the

[Interest] Debt Service Fund as provided in section 601.2, shall

be paid into the Unemployment Compensation Fund, and shall be

credited by the department to a ledger account to be known as

the Employers' Contribution Account. Interest and penalties

which are to be credited to the Special Administration Fund and

taxes collected under section 301.6 may be temporarily held in

the Employers' Contribution Account solely for clearance

purposes prior to transfer to the Special Administration Fund or

[Interest] Debt Service Fund and while so held in the Employers'

Contribution Account shall not be deemed a part of the

Unemployment Compensation Fund. All moneys from time to time

received and credited to the Employers' Contribution Account

(exclusive of refunds made under section 311 and interest and

penalties transferred as herein provided to the Special

Administration Fund and taxes transferred to the [Interest] Debt

Service Fund) shall be paid promptly by the department into the

Unemployment Compensation Fund, except as otherwise provided in

section 605 of this act. All moneys credited to this

Commonwealth's account in the Unemployment Compensation Fund

pursuant to section 903 of the Federal Social Security Act (42

U.S.C. § 1103) shall be included in the Unemployment

Compensation Fund.

(b)  As often as may be necessary, the department shall

requisition from the Unemployment Trust Fund such amounts as

shall be necessary to provide adequate funds for the payment of

compensation as provided in this act, except that moneys

credited to this Commonwealth's account pursuant to section 903

of the Federal Social Security Act as amended shall be used

exclusively as provided in section six hundred two point three.

Upon receipt of such requisitioned funds, the department shall

deposit them into the Unemployment Compensation Fund to the

credit of a ledger account, to be known as the Compensation

Account, and shall expend such moneys solely for the payment of

compensation, as provided by this act. All moneys to the credit

of the Compensation Account shall be mingled and undivided. The

department shall pay all compensation authorized by this act out

of moneys standing to the credit of the Compensation Account.

(c)  Notwithstanding any other provisions of this section,

the department shall at such time or times, when the amount of

moneys credited to the Commonwealth of Pennsylvania in the

Unemployment Compensation Fund exceed the average annual total

benefit payout for the immediate prior five (5) years, transfer

such excess to the United States Treasury to repay; and reduce

any outstanding Federal unemployment loan debt, and at such

other time or times as the secretary with the approval of the

Governor may determine, is hereby authorized to requisition from

the Unemployment Compensation Fund and pay into the United

States Treasury an amount which, in the aggregate, is equal to

the balance of any loan made to this Commonwealth under the

provisions of Title XII of the Social Security Act, as amended.

Such requisition and transfer need not be in a lump sum but may

be made according to a plan entered into between the department

and the United States Treasury and for that purpose the

authority hereinabove contained shall be deemed continuous

during the term of such agreement.

Section 4.  Section 601.2 of the act, amended July 1, 1989

(P.L.107, No.22), is amended to read:

Section 601.2.  [Interest] Debt Service Fund.--(a)  There is

hereby established a separate account in the State Treasury, to

be known as the [Interest] Debt Service Fund. All taxes

collected under section 301.6 of this act shall be paid into the

[Interest] Debt Service Fund. The moneys in this fund shall be

used in the following priority order and such funds received are

hereby appropriated for all of the following purposes:

(1)  For [transfer to the General Fund for repayment of loans

pursuant to subsection (c) or for transfer to the General Fund

pursuant to subsections (f) and (g)] payment of bond obligations

and bond administrative expenses, for replenishment of bond

reserves, for maintenance of debt service reserves in an amount

the department, with approval by the Office of the Budget,

determines necessary to enhance investor acceptance of the bonds

and for redemption or purchase of outstanding bonds under

Article XIV of this act.

(2)  For the payment of annual interest obligations assessed

under Title XII of the Social Security Act.

(3)  [Repayment] For repayment of outstanding interest-

bearing advances received under Title XII of the Social Security

Act.

(4)  [Unemployment compensation payments under this act] For

transfer to the Unemployment Compensation Fund under subsection 

(e), for payment of compensation to individuals.

[(b)  Whenever the Governor shall ascertain that the cash

balance and current estimated receipts of the Interest Fund

shall be insufficient at any time during any State fiscal year

to meet promptly the expenses of the Commonwealth from such

fund, and the fund will have adequate funds available to meet

such expenses and other anticipated expenses prior to the

completion of the fiscal year, the State Treasurer is hereby

authorized and directed, from time to time during such State

fiscal year, to transfer from the General Fund to the Interest

Fund such sums as the Governor directs. Any sums so transferred

shall be available only for the purposes for which the fund to

which they are transferred is appropriated by law. Such

transfers shall be made hereunder upon warrant of the State

Treasurer upon requisition of the Governor.

(c)  In order to reimburse the General Fund for moneys

transferred from such fund under subsection (b), there shall be

transferred moneys to such fund from the Interest Fund in such

amounts and times as the Governor shall direct, but in no event

later than thirty (30) days after the end of such State fiscal

year. Such retransfers shall be made upon warrant of the State

Treasurer upon requisition of the Governor.

(d)  Any amount of moneys remaining in this fund at the end

of the calendar year after the interest obligations, for the

calendar year, under Title XII of the Social Security Act have

been met may be used as a voluntary repayment as prescribed by

section 1202(b)(6)(A) of the Social Security Act, to reduce the

balance of any outstanding interest-bearing advances received

under Title XII of the Social Security Act.]

(e)  [Except as may be provided in subsections (f) and (g),

any] Any amount of moneys remaining in this fund at the end of

[the] a calendar year [in which the outstanding balance of

interest-bearing advance under Title XII of the Social Security

Act is zero] shall be transferred to the Unemployment

Compensation Fund and credited to the Employers' Contribution

Account as specified in section [601.

(f)  Subsequent to the repayment of all indebtedness as

described in this section, the sum of forty-one million dollars

($41,000,000) is hereby transferred from the Interest Fund to

the General Fund. Moneys remaining in the Interest Fund after

this transfer shall be transferred to the Unemployment

Compensation Fund as provided in subsection (e).

(g)  The sum of eleven million seven hundred thousand dollars

($11,700,000) is hereby transferred from the Interest Fund to

the General Fund. Moneys remaining in the Interest Fund after

this transfer shall be transferred to the Unemployment

Compensation Fund as provided in subsection (e).] 601 if the

following requirements are met:

(1)  the balance of interest-bearing advances under Title XII

of the Social Security Act is zero at the end of that year;

(2)  no interest on advances shall be due in the following

year; and

(3)  there are no outstanding bond obligations and bond

administration expenses under Article XIV of this act and no

such obligations and expenses will be due in the following year.

Section 4.1.  Section 603 of the act, amended June 15, 2005

(P.L.8, No.5), is amended to read:

Section 603.  State Treasurer as Custodian.--The State

Treasurer shall be the custodian of the Unemployment

Compensation Fund, the Administration Fund, the Special

Administration Fund, the [Interest] Debt Service Fund and the

Job Training Fund. He shall give a bond, or bonds, with

corporate sureties, conditioned upon the faithful performance of

his duties as custodian of such funds in such amount or amounts

as shall be determined and fixed by the Executive Board of this

Commonwealth. Premiums for such bond or bonds shall be paid by

the department out of the moneys in the Administration Fund. All

moneys belonging to such funds (exclusive of moneys on deposit

in the Unemployment Trust Fund as provided in section 601) shall

be deposited by the State Treasurer in any banks or public

depositories in which general funds of the Commonwealth may be

deposited, but no public deposit insurance charge or premium

shall be paid out of moneys in the Unemployment Compensation

Fund. Any law to the contrary notwithstanding, all payments from

such funds shall be made under such systems of requisitioning

and accounting as the Governor, the State Treasurer, and

Secretary shall determine.

Section 5.  Section 804(a) of the act, amended October 19,

1988 (P.L.818, No.109), is amended to read:

Section 804.  Recovery and Recoupment of Compensation.--(a)

Any person who by reason of his fault has received any sum as

compensation under this act to which he was not entitled, shall

be liable to repay to the Unemployment Compensation Fund to the

credit of the Compensation Account a sum equal to the amount so

received by him and interest at the rate determined by the

Secretary of Revenue as provided by section 806 of the act of

April 9, 1929 (P.L.343, No.176), known as "The Fiscal Code," per

month or fraction of a month from fifteen (15) days after the

Notice of Overpayment was issued until paid. Such sum shall be

collectible (1) in the manner provided in section 308.1 or

section 309 of this act, for the collection of past due

contributions, or (2) by deduction from any future compensation

payable to the claimant under this act: Provided, That interest

assessed under this section cannot be recouped by deduction from

any future compensation payable to the claimant under this act:

Provided further, That no administrative or legal proceedings

for the collection of such sum shall be instituted after the

expiration of [six] ten years following the end of the benefit

year with respect to which such sum was paid.

* * *

Section 6.  The act is amended by adding articles to read:

ARTICLE XIV

UNEMPLOYMENT COMPENSATION BONDS

Section 1401.  Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Authority."  The Pennsylvania Economic Development Financing

Authority.

"Bond."  Any type of revenue obligation, including a bond or

series of bonds, note, certificate or other instrument issued by

the authority for the benefit of the department under this

article.

"Bond administrative expenses."  Expenses incurred to

administer bonds, including fees of the authority, fees of the

bond trustee, payments to agents and attorneys and costs of

other professional services necessary to ensure compliance with

applicable Federal or State law.

"Bond obligations."  The principal of a bond and the premium

and interest payable on a bond, together with the amount owed

under a related credit agreement or the trust indenture.

"Bond trustee."  The trustee under the trust indenture

selected by the authority and the department.

"Credit agreement."  A loan agreement, a revolving credit

agreement, an agreement establishing a line of credit, a letter

of credit or another agreement that enhances the marketability,

security or creditworthiness of a bond.

"Federal advances."  Loans by the Federal government to the

Commonwealth for the payment of compensation under Title XII of

the Social Security Act (42 U.S.C. § 1321 et seq.) or a similar

Federal statute.

"Financing Law."  The act of August 23, 1967 (P.L.251,

No.102), known as the Economic Development Financing Law.

"Trust indenture."  The document, including amendments and

supplements, between the authority and the bond trustee, under

which the bonds are issued.

Section 1402.  Bond issuance.

(a)  Declaration of policy.--The General Assembly finds and

declares that funding the repayment of previous Federal

advances, including interest, through the authority, may result

in a savings to employers in this Commonwealth for the benefit

of economic activities throughout this Commonwealth.

(b)  Authority.--Notwithstanding any other law, all of the

following apply:

(1)  The department may be a project applicant under the

Financing Law and apply to the authority for the funding of

repayment of Federal advances and interest due on them.

(2)  The funding of repayment of Federal advances and

interest due on them shall constitute a project for purposes

of the Financing Law.

(3)  The authority may issue bonds under the Financing

Law, consistent with this article, to finance a project

consisting of repayment of Federal advances and interest due

on them or refunding and redeeming of prior bonds.

(4)  Participation of an industrial and commercial

development authority is not required to finance repayment of

Federal advances and interest due on them.

(c)  Debt or liability.--

(1)  Bonds issued under this article shall not be a debt

or liability of the Commonwealth and shall not create or

constitute any indebtedness, liability or obligation of the

Commonwealth.

(2)  Bond obligations and bond administrative expenses

shall be payable solely from revenues or funds pledged or

available for their repayment as authorized in this article.

This paragraph includes the proceeds of an issue of bonds.

(3)  Each bond must contain on its face a statement that:

(i)  the authority is obligated to pay the principal

of the bond or the interest on the bond only from funds

made available under this article;

(ii)  neither the Commonwealth nor a political

subdivision is obligated to pay the principal or

interest; and

(iii)  the full faith and credit of the Commonwealth

is not pledged to the payment of the principal of or the

interest on the bonds.

Section 1403.  Criteria for bond issuance.

(a)  Determination.--If the department reasonably expects

that the issuance of bonds to obtain funds to repay Federal

advances, including interest, would result in a savings to

employers in this Commonwealth, as an alternative to repayment

of the Federal advances and interest by other means, the

department, with approval by the Office of the Budget, may apply

the authority to issue bonds for its benefit under section   

1402(b).

(b)  Terms.--

(1)  The department, with approval by the Office of the

Budget, shall specify in its application to the authority:

(i)  the maximum principal amount of the bonds for

each separate bond issue; and

(ii)  the maximum term of the bond, not to exceed 20

years.

(2)  The total principal amount of bonds that the

department may request under this article for all bond issues

may not exceed $4,500,000,000.

Section 1404.  Issuance of bonds and security.

(a)  Issuance.--The authority shall consider issuance of

bonds upon application by the department. Bonds issued under

this article shall be subject to the provisions of the Financing

Law, unless otherwise specified by this article.

(b)  Agreements.--The authority and the department may enter

into a trust indenture, loan agreements, credit agreements, bond

purchase agreements and other contracts in connection with the

bonds in order to effectuate the purposes of the Financing Law

and this article.

(c)  Security.--The bond obligations and bond administrative

expenses are secured, for the benefit of the bond trustee, the

holders of the bonds and the obligees under the credit

agreements, by pledge of, security interest in and first lien on

all of the following:

(1)  Additional contributions collected under section

301.6.

(2)  Money on deposit in the Debt Service Fund. This

paragraph includes investment income on that money.

(3)  Except as set forth in paragraph (4), all money held

on deposit with the trustee relating to the bonds, as further

provided in the trust indenture. This paragraph includes bond

reserves and interest income on the money.

(4)  Paragraph (3) does not apply to money in any fund or

account related to arbitrage rebate obligations.

Section 1404.1.  Sale of bonds.

The sale of bonds issued under this article shall be subject

to the following:

(1)  The authority shall give first consideration to

issuing the bonds by means of an open, public sale at not

less than 98% of the principal amount and accrued interest

and shall be sold by the authority to the highest and best

bidder after public advertisement on terms and conditions and

upon open competitive bidding. The manner and times of

advertising shall be prescribed by the authority.

(2)  If in the judgment of the authority, a public sale

through open competitive bidding will not produce the most

advantageous terms that derive the most benefit to employers,

employees and the Commonwealth, the authority shall adopt a

resolution setting forth in detail the reasons for this

determination. A copy of the resolution shall be transmitted

to the Governor, the chairman and minority chairman of the

Labor and Industry Committee of the Senate and the chairman

and minority chairman of the Labor and Industry Committee of

the House of Representatives. After adoption of the

resolution, the authority shall have the option to pursue a

negotiated public sale.

Section 1405.  Use of bond proceeds.

(a)  Initial deposit of proceeds.--The proceeds of bonds

issued by the authority shall be initially deposited with the

bond trustee.

(b)  Order.--Upon issuance of bonds, the bond trustee, in

accordance with directions from the department, shall apply the

proceeds of the bonds in the following order to:

(1)  pay the costs of issuance of the bonds;

(2)  fund any bond reserves under the trust indenture;

(3)  deposit in an appropriate fund under the trust

indenture money to pay capitalized interest on the bonds for

the period determined by the department, not to exceed two

years;

(4)  refund outstanding bonds, if applicable;

(5)  make any other deposit required under the trust

indenture;

(6)  repay the principal and interest of previous Federal

advances; and

(7)  deposit the balance in the Compensation Program Fund

under the trust indenture.

(c)  Application of balance.--The bond proceeds deposited

under subsection (b)(7) shall be applied, at the direction of

the department, to do the following, as directed by the

department:

(1)  Repay the principal and interest of previous Federal

advances.

(2)  Pay unemployment compensation benefits.

(3)  Pay bond administrative expenses.

(4)  Redeem or purchase outstanding bonds.

(5)  Pay bond obligations.

(d)  Investment.--Pending application for the purposes

authorized, money held or deposited by the State Treasurer in

the Debt Service Fund may be invested or reinvested as are other

funds in the custody of the State Treasurer in the manner

provided by law. All earning received from the investment or

deposit of the money shall be paid into the State Treasury to

the credit of the Debt Service Fund or the account.

Section 1406.  Payment of bond-related obligations.

(a)  Notification.--For each calendar year in which bond

obligations and bond administrative expenses will be due, the

authority shall notify the department of the amount of bond

obligations and the estimated amount of bond administrative

expenses in sufficient time, as determined by the department, to

permit the department to determine the amount of additional

contributions under section 301.6 required for that year, for

deposit into the Debt Service Fund. The authority's calculation

of the amount of bond obligations and bond administrative

expenses that will be due is subject to verification by the

department.

(b)  Transfer.--Money in the Debt Service Fund needed to pay

bond obligations and bond administrative expenses or to

replenish bond reserves shall be transferred to the authority to

ensure timely payment of bond obligations and bond

administrative expenses and timely replenishment of bond

reserves, as specified in the resolution adopted in connection

with the bond or as otherwise provided by the trust indenture.

(c)  Deficiency in Debt Service Fund.--If there is a

deficiency in the Debt Service Fund and to the extent permitted

by law, that part of the principal owed on bonds which is

attributable to repayment of the principal of advances under

Title XII of the Social Security Act (42 U.S.C. § 1321 et seq.),

exclusive of interest or administrative costs associated with

the bonds, may be paid from the Unemployment Compensation Fund.

Section 1407.  Commonwealth not to impair bond-related

obligations.

The Commonwealth pledges that it will not do any of the

following:

(1)  Limit or alter the rights and responsibilities of

the authority or the department under this article, including

the responsibility to:

(i)  pay bond obligations and bond administrative

expenses; and

(ii)  comply with any other instrument or agreement

pertaining to bonds.

(2)  Alter or limit the pledge in section 1404 of the

additional contributions and money on deposit in the Debt

Service Fund.

(3)  Impair the rights and remedies of the holders of

bonds, until all bonds and interest on the bonds, regardless

of time of issue, are discharged.

Section 1408.  No personal liability.

The members and directors of the department and the authority

and the officers and employees of the department and the

authority are not personally liable as a result of good faith

exercise of the rights and responsibilities granted under this

article.

Section 1409.  Expiration.

The authority to issue bonds other than refinancing and

refunding bonds under section 1402 and section 1404 shall expire

on December 31, 2016.

Section 1410.  Annual report required.

No later than March 1 of the year following the first full

year in which bonds have been issued under this article, and for

each year thereafter in which bond obligations existed in the

prior year, the department shall submit an annual report to the

chairman and minority chairman of the Labor and Industry

Committee of the Senate and to the chairman and minority

chairman of the Labor and Industry Committee of the House of

Representatives providing all data available on bonds issued or

existing in the prior year. The report shall include, but not be

limited to, existing and anticipated bond principal, interest

and administrative costs, revenue, repayments, refinancing,

annual savings to employers and any other relevant data, facts

and statistics that the department believes necessary in the

content of the report.

ARTICLE XV

UNEMPLOYMENT COMPENSATION

AMNESTY PROGRAM

Section 1501.  Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Amnesty period."  The period of three consecutive calendar

months designated by the department which commences no later

than 180 days after the effective date of this section.

"Employee information."  The name and Social Security number

of each employee, the amount of wages paid to each employee and

the number of credit weeks for each employee, in each calendar

quarter.

"Interest."  Monetary obligations imposed under sections 308

and 804(a).

"Penalties."  Monetary obligations imposed under sections

206(d) and 313.

"Penalty weeks."  Weeks for which an individual is

disqualified from receiving compensation under section 801(b).

"Program."  The Unemployment Compensation Amnesty Program

established pursuant to this article.

Section 1502.  Program established.

There is established an Unemployment Compensation Amnesty

Program in accordance with the provisions of this article.

Section 1503.  Applicability.

(a)  Employer liabilities.--Except as provided in subsections

(c) and (d), the program shall apply to the following

unemployment compensation employer liabilities:

(1)  Unpaid contributions due for calendar quarters

through the third quarter of 2011, for which the employer

reported the employee information or the department acquired

the employee information through an audit.

(2)  Unpaid contributions due for calendar quarters

through the third quarter of 2011, for which the employer did

not report the employee information and the department did

not acquire the employee information through an audit.

(3)  Unpaid reimbursement due on or before October 31,

2011.

(4)  Unpaid interest due on contributions paid late for

calendar quarters through the third quarter of 2011 or on

reimbursement that was due on or before October 31, 2011, and

was paid late.

(5)  Unpaid penalties due for reports filed late for

calendar quarters through the third quarter of 2011.

(b)  Claimant liabilities.--Except as provided in subsections

(c) and (d), the program shall apply to the following

unemployment compensation claimant liabilities:

(1)  A fault overpayment of compensation under section

804(a) established pursuant to a notice of determination of

overpayment issued by the department on or before March 31,

2012, to the extent repayment has not occurred.

(2)  A nonfault overpayment of compensation under section

804(b)(1) established pursuant to a notice of determination

of overpayment issued by the department on or before March

31, 2012, to the extent repayment has not occurred.

(3)  Compensation paid to a claimant for calendar weeks

through the week ending March 31, 2012, for which the

department has not issued a notice of determination of

overpayment, but the claimant acknowledges that the

compensation was overpaid under circumstances to which

section 804(a) applies.

(4)  Unpaid interest due on an overpayment of

compensation under section 804(a) that was repaid on or

before March 31, 2012.

(c)  Mandatory exclusion.--The following unemployment

compensation liabilities are excluded from the program:

(1)  An overpayment of compensation established pursuant

to a notice of determination of overpayment that has not

become final.

(2)  An employer liability for which a petition for

reassessment under section 304(b) or an application for

review and redetermination of contribution rate under section

301(e)(2) is pending.

(d)  Optional exclusion.--The department may exclude the

following unemployment compensation liabilities from the

program:

(1)  A liability for which a praecipe for a writ of

execution was filed prior to receipt of the amnesty form.

(2)  A liability that was referred for judicial

proceedings or for which a judicial proceeding was commenced

prior to receipt of the amnesty form.

(3)  A liability that is required to be paid under an

order of a Federal or state court.

Section 1504.  Procedure for participation.

To participate in the program, an employer or a claimant

shall do the following:

(1)  During the amnesty period, the employer or claimant

shall file an amnesty form with the department containing all

information required by the department, including a statement

by the employer or claimant acknowledging the provisions of

section 1506(f). The form shall be filed in a manner

specified in, and the filing date of the form shall be

determined by guidelines established by the department.

(2)  If an employer is seeking amnesty with regard to a

liability described in section 1503(a)(2), the employer shall

report the employee information by filing quarterly reports

as required by regulations promulgated by the department for

all calendar quarters for which the employer did not

previously file reports and by filing amended quarterly

reports for all calendar quarters for which the employer did

not file complete reports. The quarterly reports shall

accompany the amnesty form.

(3)  The employer or claimant shall pay the amount or

amounts required by section 1505. Payment shall accompany the

amnesty form.

Section 1505.  Required payment and terms of amnesty.

(a)  Payment.--An employer or claimant shall pay the amount

or amounts specified in this section that correspond to the

liability or liabilities for which amnesty is sought. The

department shall grant amnesty as provided in this section and

section 1506.

(a.1)  Unpaid contributions.--If an employer is seeking

amnesty with regard to unpaid contributions described in section

1503(a)(1) or (2):

(1)  The employer shall pay all of the unpaid

contributions and lien filing costs, if applicable, and one-

half of the interest and penalties due.

(2)  The department shall waive the remaining interest

and penalties due corresponding to the contributions.

(b)  Unpaid reimbursement.--If an employer is seeking amnesty

with regard to unpaid reimbursement described in section 1503(a)

(3):

(1)  The employer shall pay all of the unpaid

reimbursement and lien filing costs, if applicable, and one-

half of the interest due.

(2)  The department shall waive the remaining interest

due corresponding to the reimbursement.

(c)  Unpaid interest.--If an employer is seeking amnesty with

regard to unpaid interest described in section 1503(a)(4):

(1)  The employer shall pay all of the lien filing costs,

if applicable, and one-half of the unpaid interest due.

(2)  The department shall waive the remaining unpaid

interest due.