HB-4239, As Passed House, February 26, 2009

SUBSTITUTE FOR

HOUSE BILL NO. 4239

A bill to amend 1936 (Ex Sess) PA 1, entitled

"Michigan employment security act,"

by amending sections 11 and 19a (MCL 421.11 and 421.19a), section

11 as amended by 2005 PA 182 and section 19a as amended by 1983 PA

247.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 11. (a) In the administration of this act, the commission

shall cooperate with the appropriate agency of the United States

under the social security act. The commission shall make reports,

in a form and containing information as the appropriate agency of

the United States may require, and shall comply with the provisions

that the appropriate agency of the United States prescribes to

assure the correctness and verification of the reports. The

commission, subject to this act, shall comply with the regulations

prescribed by the appropriate agency of the United States relating

to the receipt or expenditure of the sums that are allotted and

paid to this state for the purpose of assisting in the

administration of this act. As used in this section, "social

security act" means the social security act, chapter 531, 49 Stat.

620.

(b)(1) Information obtained from any employing unit or

individual pursuant to the administration of this act , and

determinations as to the benefit rights of any individual ~~shall be~~

~~held~~ are confidential and shall not be disclosed or open to public

inspection other than to public employees and public officials in

the performance of their official duties under this act and to

agents or contractors of those public officials, including those

described in subdivision (viii), in any manner ~~revealing~~ that reveals

the individual's or the employing unit's identity or any

identifying particular about any individual or any past or present

employing unit or that could foreseeably be combined with other

publicly available information to reveal identifying particulars.

However, all of the following apply:

(i) Information in the commission's possession that might

affect a claim for worker's disability compensation under the

worker's disability compensation act of 1969, 1969 PA 317, MCL

418.101 to 418.941, shall be available to interested parties as

defined in R 421.201 of the Michigan administrative code,

regardless of whether the commission is a party to an action or

proceeding arising under that act.

(ii) Any information in the commission's possession that may

affect a claim for benefits or a charge to an employer's experience

House Bill No. 4239 (H-1) as amended February 26, 2009

account shall be available to interested parties as defined in R

421.201 of the Michigan administrative code, and to their agents,

if their agents provide the unemployment insurance agency with a

written authorization of representation from the party represented.

A written authorization of representation is not required in any of

the following circumstances:

(A) If the request is made by an attorney who is retained [by an

interested party and files an appearance for purposes related to a claim

for unemployment benefits.

]

(B) If the request is made by an elected official performing

constituent services and the elected official presents reasonable

evidence that the identified individual authorized the disclosure.

as an agent for an interested party and the third party presents a

release from an interested party for the information. The release

shall be signed by an interested party; specify the information to

be released and all individuals who may receive the information;

and state the specific purpose for which the information is sought,

that files of the state may be accessed to obtain the information,

and that the information sought will only be used for the purpose

indicated. The purpose specified in the release shall be limited to

that of providing a service or benefit to the individual signing

the release or carrying out administration or evaluation of a

public program to which the release pertains.

(iii) Except as provided in this act, the information and

determinations shall not be used in any action or proceeding before

any court or administrative tribunal unless the commission is a

party to or a complainant in the action or proceeding, or unless

used for the prosecution of fraud, civil proceeding, or other legal

proceeding in the programs indicated in subdivision (2).

(iv) Any report or statement, written or verbal, made by any

person to the commission, any member of the commission, or to any

person engaged in administering this act is a privileged

communication, and a person, firm, or corporation shall not be held

liable for slander or libel on account of a report or statement.

The records and reports in the custody of the commission shall be

available for examination by the employer or employee affected.

(v) Subject to restrictions that the commission prescribes by

rule, information in the commission's possession may be made

available to any agency of this or state, any other state, or any

federal agency , charged with the administration of an unemployment

compensation law or the maintenance of a system of public

employment offices; the bureau of internal revenue of the United

States department of the treasury; the bureau of the census of the

economics and statistics administration of the United States

department of commerce; or the social security administration of

the United States department of health and human services.

(vi) Information obtained in connection with the administration

of the employment service may be made available to persons or

agencies for purposes appropriate to the operation of a public

employment service. Subject to restrictions that the commission

prescribes by rule, the commission may also make that information

available to agencies of other states that are responsible for the

administration of public assistance to unemployed workers, and to

the departments of this state. Information so released shall be

used only for purposes not inconsistent with the purposes of this

act.

(vii) Upon request, the commission shall furnish to any agency

of the United States charged with the administration of public

works or assistance through public employment, and may furnish to

any state agency similarly charged, the name, address, ordinary

occupation, and employment status of each recipient of benefits and

the recipient's rights to further benefits under this act.

(viii) Subject to restrictions the commission prescribes, by

rule or otherwise, the commission may also make information that it

obtains available for use in connection with research projects of a

public service nature to ~~colleges, universities, and public~~

~~agencies of this state for use in connection with research projects~~

~~of a public service nature~~ a college, university, or agency of this

state that is acting as a contractor or agent of a public official

and conducting research that assists the public official in

carrying out the duties of the office. A person associated with

those institutions or agencies shall not disclose the information

in any manner that would reveal the identity of any individual or

employing unit from or concerning whom the information was obtained

by the commission. The unemployment insurance agency shall enter

into a written, enforceable agreement with the public official that

holds the official responsible for ensuring that the agent or

contractor maintains the confidentiality of the information. If the

agreement is violated, the agreement shall be terminated and the

public official may be subject to penalties equivalent to those

that apply under section 54(f) to a person associated with a

college, university, or public agency who discloses confidential

information.

(ix) The commission may request the comptroller of the currency

of the United States to cause an examination of the correctness of

any return or report of any national banking association rendered

under this act, and may, in connection with the request, transmit

the report or return to the comptroller of the currency of the

United States as provided in section 3305(c) of the internal

revenue code of 1986, 26 USC ~~3305~~ 3305(c).

(2) The commission shall disclose to qualified requesting

agencies, upon request, with respect to an identified individual,

information in its records pertaining to the individual's name;

social security number; gross wages paid during each quarter; the

name, address, and federal and state employer identification number

of the individual's employer; any other wage information; whether

an individual is receiving, has received, or has applied for

unemployment benefits; the amount of unemployment benefits the

individual is receiving or is entitled to receive; the individual's

current or most recent home address; whether the individual has

refused an offer of work and if so a description of the job offered

including the terms, conditions, and rate of pay; and any other

information which the qualified requesting agency considers useful

in verifying eligibility for, and the amount of, benefits. For

purposes of this subdivision, "qualified requesting agency" means

any state or local child support enforcement agency responsible for

enforcing child support obligations under a plan approved under

part d of title IV of the social security act, 42 USC 651 to 669b;

the United States department of health and human services for

purposes of establishing or verifying eligibility or benefit

amounts under titles II and XVI of the social security act, 42 USC

401 to 434 and 42 USC 1381 to 1383f; the United States department

of agriculture for the purposes of determining eligibility for, and

amount of, benefits under the food stamp program established under

the food stamp act of 1977, 7 USC 2011 to 2036; and any other state

or local agency of this or any other state responsible for

administering the following programs:

(i) The aid to families with dependent children program under

part a of title IV of the social security act, 42 USC 601 to 619.

(ii) The medicaid program under title XIX of the social

security act, 42 USC 1396 to 1396v.

(iii) The unemployment compensation program under section 3304

of the internal revenue code of ~~1954~~ 1986, 26 USC 3304.

(iv) The food stamp program under the food stamp act of 1977, 7

USC 2011 to 2036.

(v) Any state program under a plan approved under title I, X,

XIV, or XVI of the social security act, 42 USC 301 to 306, 42 USC

1201 to 1206, 42 USC 1351 to 1355, and 42 USC 1381 to 1383f.

(vi) Any program administered under the social welfare act,

1939 PA 280, MCL 400.1 to 400.119b.

The information shall be disclosed only if the qualified

requesting agency has executed an agreement with the commission to

obtain the information and if the information is requested for the

purpose of determining the eligibility of applicants for benefits,

or the type and amount of benefits for which applicants are

eligible, under any of the programs listed above or under title II

and XVI of the social security act, 42 USC 401 to 434 and 42 USC

1381 to 1383f; for establishing and collecting child support

obligations from, and locating individuals owing such obligations

~~which~~ that are being enforced ~~pursuant to~~ under a plan described in

section 454 of the social security act, 42 USC 654; or for

investigating or prosecuting alleged fraud under any of these

programs.

The commission shall cooperate with the department of human

services in establishing the computer data matching system

authorized in section 83 of the social welfare act, 1939 PA 280,

MCL 400.83, to transmit the information requested on at least a

quarterly basis. The information shall not be released unless the

qualified requesting agency agrees to reimburse the commission for

the costs incurred in furnishing the information.

In addition to the requirements of this section, except as

later provided in this subdivision, all other requirements with

respect to confidentiality of information obtained in the

administration of this act ~~shall~~ apply to the use of the

information by the officers and employees of the qualified

requesting agencies, and the sanctions imposed under this act for

improper disclosure of the information ~~shall be applicable~~ apply to

those officers and employees. A qualified requesting agency may

redisclose information only to the individual who is the subject of

the information, an attorney or other duly authorized agent

representing the individual if the information is needed in

connection with a claim for benefits against the requesting agency,

or any criminal or civil prosecuting authority acting for or on

behalf of the requesting agency.

The commission is authorized to enter into an agreement with

any qualified requesting agency for the purposes described in this

subdivision. The agreement or agreements ~~must~~ shall comply with all

federal laws and regulations applicable to such agreements.

(3) The commission shall enable the United States department

of health and human services to obtain prompt access to any wage

and unemployment benefit claims information, including any

information that ~~might~~ may be useful in locating an absent parent

or an absent parent's employer, for purposes of section 453 of the

social security act, 42 USC 653, in carrying out the child support

enforcement program under title IV of ~~that~~ the social security act,

42 USC 601 to 679b. Access to the information shall not be provided

unless the requesting agency agrees to reimburse the commission for

the costs incurred in furnishing the information.

(4) Upon request accompanied by presentation of a consent to

the release of information signed by an individual, the commission

shall disclose to the United States department of housing and urban

development and any state or local public housing agency

responsible for verifying an applicant's or participant's

eligibility for, or level of benefits in, any housing assistance

program administered by the United States department of housing and

urban development, the name, address, wage information, whether an

individual is receiving, has received, or has ~~made application~~

applied for unemployment benefits, and the amount of unemployment

benefits the individual is receiving or is entitled to receive

under this act. This information shall be used only to determine an

individual's eligibility for benefits or the amount of benefits to

which an individual is entitled under a housing assistance program

of the United States department of housing and urban development.

The information shall not be released unless the requesting agency

agrees to reimburse the commission for the costs incurred in

furnishing the information. For purposes of this ~~subsection~~

subdivision, "public housing agency" means an agency described in

section 3(b)(6) of the United States housing act of 1937, 42 USC

~~1437a~~ 1437a(b)(6).

(5) The commission may make available to the department of

treasury information collected for the income and eligibility

verification system begun on October 1, 1988 for the purpose of

~~detection of~~ detecting potential tax fraud in other areas.

(6) A recipient of confidential information under this act

shall use the disclosed information only for purposes authorized by

law and consistent with an agreement entered into with the

unemployment insurance agency. The recipient shall not redisclose

the information to any other individual or entity without the

written permission of the unemployment insurance agency.

with the appropriate agencies of other states or the federal

government whereby potential rights to benefits accumulated under

the unemployment compensation laws of other states or of the

federal government, or both, may constitute the basis for the

payment of benefits through a single appropriate agency under plans

that the commission finds will be fair and reasonable to all

affected interests and will not result in substantial loss to the

unemployment compensation fund.

(d)(1) The commission ~~is authorized to~~ may enter into

reciprocal agreements with the appropriate agencies of other states

or of the federal government adjusting the collection and payment

of contributions by employers with respect to employment not

localized within this state.

(2) The commission ~~is authorized to~~ may enter into reciprocal

agreements with agencies of other states administering unemployment

compensation, whereby contributions paid by an employer to any

other state may be received by the other state as an agent acting

for and on behalf of this state to the same extent as if the

contributions had been paid directly to this state if the payment

is remitted to this state. Contributions so received by another

state shall be ~~deemed~~ considered contributions, required and paid

under this act as of the date the contributions were received by

the other state. The commission may collect contributions in a like

manner for agencies of other states administering unemployment

compensation and remit the contributions to the agencies under the

terms of the reciprocal agreements.

(e) The commission may make the state's records relating to

the administration of this act available and may furnish to the

railroad retirement board or any other state or federal agency

administering an unemployment compensation law, at the expense of

that board, state, or agency, copies of the records as the railroad

retirement board ~~deems~~ considers necessary for its purpose.

(f) The commission may cooperate with or enter into agreements

with any agency of another state or of the United States charged

with the administration of any unemployment insurance or public

employment service law.

The commission may ~~make investigations~~ investigate, secure,

and transmit information, make available services and facilities,

and exercise other powers provided in this act with respect to the

administration of this act as it ~~deems~~ considers necessary or

appropriate to facilitate the administration of any unemployment

compensation or public employment service law, and may accept and

utilize information, services, and facilities made available to

this state by the agency charged with the administration of any

other unemployment compensation or public employment service law.

On request of an agency that administers an employment

security law of another state or foreign government and that has

found, in accordance with that law, that a claimant is liable to

repay benefits received under that law, the commission may collect

the amount of the benefits from the claimant to be refunded to the

agency.

In any case in which under this subsection a claimant is

liable to repay any amount to the agency of another state or

foreign government, the amount may be collected by civil action in

the name of the commission acting as agent for the agency. Court

costs shall be paid or guaranteed by the agency of that state.

To the extent permissible under the laws and constitution of

the United States, the commission ~~is authorized to~~ may enter into

or cooperate in arrangements whereby facilities and services

provided under this act and facilities and services provided under

the unemployment compensation law of ~~the Dominion of~~ Canada may be

utilized for the taking of claims and the payment of benefits under

the unemployment compensation law of this state or under a similar

law of ~~the Dominion of~~ Canada.

Any employer who is not a resident of this state and who

exercises the privilege of having 1 or more individuals perform

service for him or her within this state, and any resident employer

who exercises that privilege and thereafter leaves this state, is

considered to have appointed the secretary of state as his or her

agent and attorney for the acceptance of process in any civil

action under this act. In instituting the action, the commission

shall cause process or notice to be filed with the secretary of

state, and the service shall be sufficient and shall be of the same

force and validity as if served upon the nonresident or absent

employer personally within this state. The commission immediately

shall send notice of the service of process or notice, together

with a copy thereof, by ~~registered~~ certified mail, return receipt

requested, to the employer at his or her last known address. The

return receipt, the commission's affidavit of compliance with this

section, and a copy of the notice of service shall be attached to

the original of the process filed in the court in which the civil

action is pending.

The courts of this state shall recognize and enforce

liabilities, as provided in this act, for unemployment compensation

contributions, penalties, and interest imposed by other states

~~which~~ that extend a like comity to this state.

The attorney general may commence action in the appropriate

court of any other state or any other jurisdiction of the United

States by and in the name of the commission to collect unemployment

compensation contributions, penalties, and interest finally

determined, redetermined, or decided under this act to be legally

due this state. The officials of other states ~~which~~ that extend a

like comity to this state may sue in the courts of this state for

the collection of unemployment compensation contributions,

penalties, and interest, the liability for which has been similarly

established under the laws of the other state or jurisdiction. A

certificate by the secretary of another state under the great seal

of that state attesting the authority of the official or officials

to collect unemployment compensation contributions, penalties, and

interest is conclusive evidence of that authority.

The attorney general may commence action in this state as

agent for or on behalf of any other state to enforce judgments and

established liabilities for unemployment compensation taxes or

contributions, penalties, and interest due the other state if the

other state extends a like comity to this state.

(g) The commission may also enter into reciprocal agreements

with the appropriate and authorized agencies of other states or of

the federal government whereby remuneration and services , that

determine entitlement to benefits under the unemployment

compensation law of another state or of the federal government ,

are considered wages and employment for the purposes of sections 27

and 46, if the other state agency or agency of the federal

government has agreed to reimburse the fund for that portion of

benefits paid under this act upon the basis of the remuneration and

services as the commission finds will be fair and reasonable as to

all affected interests. A reciprocal agreement may provide that

wages and employment , that determine entitlement to benefits under

this act , are considered wages or services on the basis of which

unemployment compensation under the law of another state or of the

federal government is payable; may provide that services performed

by an individual for a single employing unit for which services are

customarily performed by the individual in more than 1 state are

considered services performed entirely within any 1 of the states

in which any part of the individual's service is performed, in

which the individual has his or her residence, or in which the

employing unit maintains a place of business, if there is in effect

as to those services, an election approved by the agency charged

with the administration of the state's unemployment compensation

law, ~~pursuant to~~ under which all the services performed by the

individual for the employing unit are considered to be performed

entirely within the state; and may provide that the commission will

reimburse other state or federal agencies charged with the

administration of unemployment compensation laws with such

reasonable portion of benefits, paid under the law of any other

state or of the federal government upon the basis of employment and

wages, as the commission finds will be fair and reasonable as to

all affected interests. Reimbursements payable under this

subsection are considered benefits for the purpose of limiting

duration of benefits and for the purposes of sections 20(a) and 26,

and the payments shall be charged to the contributing employer's

experience account for the purposes of sections 17, 18, 19, and 20,

or the reimbursing employer's account under section 13c, 13g, 13i,

or 13l, as applicable. Benefits paid under a combined wage plan

shall be allocated and charged to each employer involved in the

quarter in which the paying state requires reimbursement. Benefits

charged to this state shall be allocated to each employer of this

state who has employed the claimant during the base period of the

paying state in the same ratio that the wages earned by the

claimant during the base period of the paying state in the employ

of the employer bears to the total amount of wages earned by the

claimant in the base period of the paying state in the employ of

all employers of the state. The commission is authorized to make to

other state or federal agencies and receive from other state or

federal agencies reimbursements from or to the fund, in accordance

with arrangements made ~~pursuant to~~ under this section.

(h) The commission may enter into any agreement necessary to

cooperate with any agency of the United States charged with the

administration of any program for the payment of primary or

supplemental benefits to individuals recently discharged from the

military services of the United States, and to assist in the

establishing of eligibility and in the payments of benefits under

those programs, and for those purposes may accept and administer

funds made available by the federal government and may accept and

exercise any delegated function under those programs. The

commission shall not enter into any agreement providing for, or

exercise any function connected with, the disbursement of the

state's unemployment trust fund for purposes not authorized by this

act.

(i) The commission may enter into agreements with the

appropriate agency of the United States under which, in accordance

with the laws of the United States, the commission, as agent of the

United States or from funds provided by the United States, provides

for the payment of unemployment compensation or unemployment

allowances of any kind, including the payment of any benefits and

allowances that are made available for manpower development,

training, retraining, readjustment, and relocation. The commission

may receive and disburse funds from the United States or any

appropriate agency of the United States in accordance with any such

agreements.

If the federal enactment providing for unemployment

compensation, training allowance, or relocation payments requires

joint federal-state financing of such payments, the commission may

participate in the programs by using funds appropriated by the

legislature to the extent provided by the legislature for such

programs.

(j) The commission shall participate in any arrangement ~~which~~

that provides for the payment of compensation on the basis of

combining an individual's wages and employment covered under this

act with his or her wages and employment covered under the

unemployment compensation laws of other states, if the arrangement

is approved by the United States secretary of labor in consultation

with the state unemployment compensation agencies as reasonably

calculated to assure the prompt and full payment of compensation.

An arrangement shall include provisions for both of the following:

(i) Applying the base period of a single state law to a claim

involving the combining of an individual's wages and employment

covered under 2 or more state unemployment compensation laws.

(ii) Avoiding the duplicate use of wages and employment as a

result of the combining.

(k) In a proceeding before any court, the commission and the

state shall be represented by the attorney general of this state or

attorneys designated by the attorney general. Only the attorney

general or other attorneys designated by the attorney general shall

act as legal counsel for the commission.

Sec. 19a. (1) Except for the first 4 consecutive years of

liability, a contributing employer ~~shall be~~ is subject to a

solvency tax for a calendar year after 1982 if the employer's

experience account has a negative balance on the June 30 preceding

that calendar year, and if on the June 30 preceding that calendar

year the balance in the unemployment compensation fund is less than

the total amount of unrepaid interest bearing advances from the

federal government to the fund under section 1201 of the social

security act, 42 ~~U.S.C.~~ USC 1321, or the commission projects that

interest will be due during the calendar year on federal advances

and there will be insufficient solvency tax funds in the contingent

fund to meet the federal interest obligations when due or there are

outstanding advances from the state treasury from the previous year

and any interest thereon and there will be insufficient solvency

tax funds in the contingent fund to repay such advances and

interest. The solvency tax rate ~~shall be~~ is in addition to the

employer's contribution rate and ~~shall not be~~ is not subject to the

limiting provisions of section 19(a)(6).

(2) The solvency tax rate shall be determined for the

respective calendar years as follows:

(a) For the 1983 calendar year, the solvency tax rate shall be

0.5%.

(b) For the 1984 calendar year, the solvency tax rate shall be

1%.

calculated in the manner provided in this subdivision. By February

1, 1985, the commission shall estimate the amount of interest due

on federal loans during the 1985 calendar year, without regard to

any deferral permitted under section 1202(b)(3) or (8) of the

social security act, 42 ~~U.S.C.~~ USC 1322, the amount of funds

required for the unemployment insurance automation project for the

1985 calendar year, and the amount of deferred solvency taxes which

cannot be collected because of employer bankruptcies. The total of

these estimated amounts plus any amounts advanced from the state

treasury under subsection (3) during the 1984 calendar year and any

interest thereon shall be divided by the estimated total taxable

payroll for the 1985 calendar year of all active employers who had

negative balances in their experience accounts as of June 30, 1984.

Total taxable payroll shall be estimated by using the total taxable

payroll for ~~such~~ those employers for the 12-month period ending

June 30, 1984 and adjusting this figure for any change in the

taxable wage limit for the 1985 calendar year. The solvency tax

rate thus calculated for the 1985 calendar year shall be adjusted

to the next highest 1/10 of 1%, but shall not exceed 2%.

(d) For the 1986 calendar year, the solvency tax rate shall be

calculated in the manner provided in this subdivision. By February

1, 1986, the commission shall estimate the amount of interest due

during the 1986 calendar year on federal loans, without regard to

any deferral ~~which~~ that may be permitted under section 1202(b)(3)

or (8) of the social security act, 42 ~~U.S.C.~~ USC 1322, the amount

of funds required for the unemployment insurance automation project

for the 1986 calendar year, and the expected balance on December

31, 1986, if any, of unrepaid interest bearing federal advances.

The total of these amounts plus any amounts advanced from the state

treasury under subsection (3) during the 1985 calendar year and any

interest thereon shall be divided by the estimated total taxable

payroll for the calendar year of all active employers who had

negative balances in their experience accounts as of June 30, 1985.

Total taxable payroll shall be estimated by using the total taxable

payroll for ~~such~~ those employers for the 12-month period ending on

June 30, 1985 and adjusting this figure for any change in the

taxable wage limit for the 1986 calendar year. The quotient shall

be adjusted to the next highest 1/10 of 1%. If this adjusted

percentage is 0.8% or less, the employer's solvency tax rate for

the 1986 calendar year shall be the adjusted percentage calculated.

If the adjusted percentage is more than 0.8%, the employer's

solvency tax rate shall be calculated in the same manner as the

account building component of the employer's contribution rate as

determined under section 19(a)(4), adjusted to generate aggregate

solvency tax revenues sufficient to pay the interest due during the

year on federal loans, to pay for the unemployment insurance

automation project, to repay the balance of interest bearing loans

by December 31, 1986, and to repay amounts advanced from the state

treasury during the 1985 calendar year and any interest thereon,

but shall not exceed the lesser of 1/4 of the percentage calculated

or 2%.

(e) For calendar years after 1986, the solvency tax rate shall

be calculated as follows:

(i) If there is no balance on December 31, 1986, of unrepaid

interest bearing federal advances, the solvency tax rate, if any,

shall be calculated in the same manner as the account building

component of the employer's contribution rate as determined under

section 19(a)(4), but shall not exceed the lesser of 1/4 of the

percentage calculated or 2%.

(ii) If there is a balance on December 31, 1986, of unrepaid

interest bearing federal advances, the solvency tax rate for the

1987 calendar year and for each calendar year thereafter shall be

calculated in the manner provided in this subparagraph until the

balance of the interest bearing federal advances on December 31,

1986 has been reduced to zero. By February 1 of the calendar year,

the commission shall calculate the sum of (a) the estimated

interest due during the calendar on federal loans, without regard

to any interest deferral which may be permitted under section 1202

of the social security act, 42 ~~U.S.C.~~ USC 1322, (b) the estimated

amount of funds required for the unemployment insurance automation

project, (c) the remaining balance on December 31 of the preceding

year of the December 31, 1986 balance of unrepaid interest bearing

federal advances, and (d) any amounts advanced from the state

treasury under subsection (3) during the preceding year and any

interest thereon. For purposes of calculating the remaining

balance, any loan repayments during the year shall first be applied

toward reducing the December 31, 1986 loan balance. The amount so

calculated shall be divided by the estimated total taxable payroll

for the calendar year of all active employers who had negative

balances in their experience accounts as of June 30 of the previous

year. Total taxable payroll shall be estimated by using the total

taxable payroll for such employers for the 12-month period ending

June 30 of the previous calendar year and adjusting this figure for

any change in the taxable wage limit for the calendar year. The

quotient shall be adjusted to the next 1/10 of 1%. If this adjusted

percentage is 0.8% or less, an employer's solvency tax rate for

that calendar year shall be the percentage calculated. If the

adjusted percentage is more than 0.8%, the employer's solvency tax

rate shall be calculated in the same manner as the account building

component of the employer's contribution rate as determined under

section 19(a)(4), adjusted to generate sufficient aggregate

solvency tax revenues to pay the interest due during the year on

federal loans, to pay for the unemployment insurance automation

project, to repay the remaining balance of the December 31, 1986

balance of unrepaid federal interest bearing loans, and to repay

advances from the state treasury and any interest due thereon, but

shall not exceed the lesser of 1/4 of the percentage calculated or

2%. For any calendar year after the first calendar year that the

remaining balance of the December 31, 1986 balance of unrepaid

interest bearing federal advances has been reduced to zero by

December 31 of that year, an employer's solvency tax rate shall be

calculated in the same manner as the account building component of

the employer's contribution rate as determined under section

19(a)(4), but shall not exceed the lesser of 1/4 of the percentage

calculated or 2%.

(iii) Notwithstanding subparagraph (i), if there is no interest

bearing federal loan balance on December 31, 1986, but the state

will have interest due during the 1987 calendar year on federal

advances made prior to January 1, 1987, or the state must repay in

the 1987 calendar year any advances made from the state treasury

during the 1986 calendar year, plus any interest thereon, the

employer's solvency tax rate for the 1987 calendar year shall be

calculated in the same manner as in subparagraph (ii). If there is

no federal interest bearing loan balance on December 31, 1986, and

there will be no federal or state interest due during the 1987

calendar year based on advances made prior to January 1, 1987, but

on June 30, 1986, the balance in the unemployment compensation fund

was less than the total amount of unrepaid interest bearing federal

advances, the employer's solvency tax rate for the 1987 calendar

year shall be zero.

(3) Solvency taxes shall become due and payable in the manner,

and at the times, specified for contributions in rules promulgated

by the commission. However, if the state is permitted to defer

interest payments due during a calendar year under section

1202(b)(3) or (8) of the social security act, 42 USC 1322, payment

of the solvency tax may likewise be deferred by an employer and

paid in installments in a manner prescribed by the commission. If a

deferral of interest payment is subsequently disallowed by the

United States department of labor, either prospectively or

retroactively, amounts of solvency taxes deferred under this

section shall become immediately due and payable. Further, if the

commission estimates that the solvency taxes to be collected by

September 30 of the calendar year will be insufficient to meet the

interest obligations due during that calendar year, the percentages

of amounts of solvency taxes deferred in any year shall be reduced

by the commission in an amount sufficient to meet the interest

obligations due in that calendar year. Furthermore, if the amount

of solvency taxes to be collected by the time the federal interest

obligations are due in any year are insufficient to meet the

obligations when due, the commission shall recommend to the

legislature that it appropriate an amount sufficient to meet the

interest obligations due. Any amount so appropriated and used to

pay federal interest obligations, and interest due on such state

appropriation, if any, shall be repaid to the state as soon as

possible from the solvency tax revenues in the contingent fund.

(4) Amounts obtained pursuant to this section shall be paid

into the contingent fund created under section 10 and, except for

solvency taxes transferred to the unemployment compensation fund as

provided in this subsection, shall not be credited to the

employer's experience account. Amounts collected from solvency

taxes which are transferred to the unemployment compensation fund

and used to repay federal advances to the unemployment compensation

fund shall be credited to the employers' experience accounts by

June 30 of the year following the calendar year in which the

transfer occurred. The amount to be credited to an employer's

account shall be determined by the commission, but shall reasonably

reflect each employer's pro rata share of the amount transferred.

Past due payments of the solvency tax shall be subject to the

interest, penalty, assessment, and collection provisions of section

15. Interest and penalties collected shall be paid into the

contingent fund. Adjustments and refunds of erroneously collected

solvency taxes shall be made in accordance with section 16.

Solvency tax determinations are appealable under the appeal process

provided for review and appeal of determinations under this act.

(5) If any provision of this section prevents the state from

qualifying for any federal interest relief provisions provided

under section 1202 of the social security act, 42 ~~U.S.C.~~ USC 1322,

or prevents employers in this state from qualifying for the

limitation on the reduction of federal unemployment tax act credits

as provided under section 3302(f) of the federal unemployment tax

act, 26 ~~U.S.C.~~ USC 3302(f), ~~such~~ that provision ~~shall be~~ is invalid

to the extent necessary to maintain qualification for ~~such~~ the

interest relief provisions and federal unemployment tax credits.

(6) Notwithstanding any other provision of this section, if

interest due during a calendar year on federal advances is forgiven

or postponed under federal law and is no longer due during that

calendar year, no solvency tax shall be assessed against an

employer for that calendar year and any solvency tax already

assessed and collected against an employer before the forgiveness

or postponement of the interest for that calendar year shall be