B-135956, JUL. 1, 1958

B-135956: Jul 1, 1958

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THE FISCAL ASSISTANT SECRETARY OF THE TREASURY REQUESTED OUR VIEWS CONCERNING THE BASIS ON WHICH ACCOUNTS WITHIN THE UNEMPLOYMENT TRUST FUND ARE TO BE CREDITED UNDER THE PROVISIONS OF SECTIONS 902 AND 903 OF TITLE IX OF THE SOCIAL SECURITY ACT. THE ADMINISTRATIVE EXPENDITURES HAVE BEEN APPROPRIATED FROM THE GENERAL FUND OF THE TREASURY. WHENEVER ANY AMOUNT IS TRANSFERRED TO THE UNEMPLOYMENT TRUST FUND UNDER SECTION 901 (A). THERE SHALL BE CREDITED (AS OF THE BEGINNING OF THE SUCCEEDING FISCAL YEAR) TO THE FEDERAL UNEMPLOYMENT ACCOUNT SO MUCH OF SUCH AMOUNT AS EQUALS WHICHEVER OF THE FOLLOWING IS THE LESSER: "/1) THE TOTAL AMOUNT SO TRANSFERRED. 000 EXCEEDS THE ADJUSTED BALANCE IN THE FEDERAL UNEMPLOYMENT ACCOUNT AT THE CLOSE OF THE FISCAL YEAR FOR WHICH THE TRANSFER IS MADE.

B-135956, JUL. 1, 1958

TO THE SECRETARY OF THE TREASURY:

IN LETTER DATED APRIL 23, 1958, THE FISCAL ASSISTANT SECRETARY OF THE TREASURY REQUESTED OUR VIEWS CONCERNING THE BASIS ON WHICH ACCOUNTS WITHIN THE UNEMPLOYMENT TRUST FUND ARE TO BE CREDITED UNDER THE PROVISIONS OF SECTIONS 902 AND 903 OF TITLE IX OF THE SOCIAL SECURITY ACT, AS AMENDED BY THE EMPLOYMENT SECURITY ADMINISTRATION FINANCING ACT OF 1954, 68 STAT. 668.

THE REQUEST ARISES IN VIEW OF THE SOURCE PROVIDED IN THE DEPARTMENT OF LABOR, HEALTH, EDUCATION, AND WELFARE APPROPRIATION ACT, 1958, PUBLIC LAW 85-67, APPROVED JUNE 29, 1957, 71 STAT. 210, 211, FOR SALARIES AND EXPENSES OF THE BUREAU OF EMPLOYMENT SECURITY FOR THE FISCAL YEAR 1958. THE APPROPRIATION LANGUAGE IN QUESTION PROVIDES IN PART AS FOLLOWS:

"SALARIES AND EXPENSES: FOR EXPENSES NECESSARY FOR THE GENERAL ADMINISTRATION OF THE EMPLOYMENT SERVICE AND UNEMPLOYMENT COMPENSATION PROGRAMS * * * $5,958,000, OF WHICH $5,832,400 SHALL BE DERIVED BY TRANSFER FROM THE FEDERAL UNEMPLOYMENT ACCOUNT IN THE UNEMPLOYMENT TRUST FUND * * *.'

PRIOR THERETO, AND WITHIN THE FRAMEWORK OF THE FORMULA PROVIDED BY TITLE IX OF THE SOCIAL SECURITY ACT, AS AMENDED, THE ADMINISTRATIVE EXPENDITURES HAVE BEEN APPROPRIATED FROM THE GENERAL FUND OF THE TREASURY.

THE FORMULA PRESCRIBED BY SECTION 901 OF TITLE IX PROVIDES FOR A PERMANENT, ANNUAL APPROPRIATION FROM THE GENERAL FUND OF 100 PERCENT OF THE FEDERAL UNEMPLOYMENT TAX ACT RECEIPTS TO THE UNEMPLOYMENT TRUST FUND LESS, AMONG OTHER ITEMS, DEFINED ADMINISTRATIVE EXPENDITURES.

SECTIONS 902 AND 903 PROVIDE:

"SEC. 902. WHENEVER ANY AMOUNT IS TRANSFERRED TO THE UNEMPLOYMENT TRUST FUND UNDER SECTION 901 (A), THERE SHALL BE CREDITED (AS OF THE BEGINNING OF THE SUCCEEDING FISCAL YEAR) TO THE FEDERAL UNEMPLOYMENT ACCOUNT SO MUCH OF SUCH AMOUNT AS EQUALS WHICHEVER OF THE FOLLOWING IS THE LESSER:

"/1) THE TOTAL AMOUNT SO TRANSFERRED; OR

"/2) THE AMOUNT BY WHICH $200,000,000 EXCEEDS THE ADJUSTED BALANCE IN THE FEDERAL UNEMPLOYMENT ACCOUNT AT THE CLOSE OF THE FISCAL YEAR FOR WHICH THE TRANSFER IS MADE.

FOR THE PURPOSES OF THE PRECEDING SENTENCE, THE TERM "ADJUSTED BALANCE" MEANS THE AMOUNT BY WHICH THE BALANCE IN THE FEDERAL UNEMPLOYMENT ACCOUNT EXCEEDS THE SUM OF THE OUTSTANDING ADVANCES UNDER SECTION 1202 (C) TO THE FEDERAL UNEMPLOYMENT ACCOUNT.

"AMOUNTS CREDITED TO STATES' ACCOUNTS

"SEC. 903. (A) SO MUCH OF ANY AMOUNT TRANSFERRED TO THE UNEMPLOYMENT ACCOUNT UNDER SECTION 902 SHALL BE CREDITED (AS OF THE BEGINNING OF THE SUCCEEDING FISCAL YEAR) TO THE ACCOUNTS OF THE STATES IN THE UNEMPLOYMENT TRUST FUND. * * *"

THE FISCAL ASSISTANT SECRETARY STATES THAT ALTHOUGH THERE IS NO EXPRESS INDICATION IN THE LAW OF SUCH INTENT, TRANSFER OF FUNDS OUT OF THE FEDERAL UNEMPLOYMENT ACCOUNT, IN ACCORDANCE WITH THE PROCEDURE PROVIDED BY PUBLIC LAW 85-67, WILL REDUCE THE ACCUMULATION OF EARNINGS IN THE ACCOUNT UNLESS CONSIDERATION IS GIVEN TO SUCH TRANSFERS WHEN FUNDS APPROPRIATED TO THE UNEMPLOYMENT TRUST FUND ARE CREDITED TO THE FEDERAL UNEMPLOYMENT ACCOUNT OR THE ACCOUNTS OF STATES UNDER PROVISIONS OF SECTIONS 902 AND 903 OF THE SOCIAL SECURITY ACT, AS AMENDED. THE RESULT WOULD BE THAT THE STATE ACCOUNTS WILL BE CREDITED UNDER SECTION 903 WITH A GREATER AMOUNT THAN THEY WOULD HAVE IF PUBLIC LAW 85-67 HAD NOT CHANGED THE METHOD OF APPROPRIATING FOR "SALARIES AND EXPENSES, BUREAU OF EMPLOYMENT SECURITY.' THIS IS BECAUSE IT APPEARS THAT FOR THE FISCAL YEAR 1958 THE APPROPRIATION TO THE UNEMPLOYMENT TRUST FUND PURSUANT TO SECTION 901 (A) OF THE ACT WILL BE GREATER THAN HERETOFORE BY THE AMOUNT OF ADMINISTRATIVE EXPENSES OF THE BUREAU OF EMPLOYMENT SECURITY. FORMERLY SUCH ADMINISTRATIVE EXPENSES WERE DEDUCTED FROM 100 PERCENT OF THE TAXES RECEIVED IN DETERMINING THE AMOUNT TO BE APPROPRIATED.

BECAUSE OF THESE CIRCUMSTANCES OUR VIEWS ARE REQUESTED AS TO WHETHER THE FEDERAL UNEMPLOYMENT ACCOUNT AS OF JULY 1, 1958, SHOULD BE INCREASED BY AN AMOUNT EQUAL TO THE TOTAL AMOUNT OF THE TRANSFERS FROM THE FEDERAL UNEMPLOYMENT ACCOUNT TO THE SALARIES AND EXPENSES ACCOUNT OF THE BUREAU OF EMPLOYMENT SECURITY DURING THE FISCAL YEAR 1958.

SECTION 901 OF TITLE IX, AS AMENDED, PROVIDES IN PERTINENT PART AS FOLLOWS:

"SEC. 901 (A) (1) THERE ARE HEREBY APPROPRIATED TO THE UNEMPLOYMENT TRUST FUND, OUT OF ANY MONEYS IN THE TREASURY NOT OTHERWISE APPROPRIATED, FOR THE FISCAL YEAR ENDING JUNE 30, 1954, AND FOR EACH FISCAL YEAR THEREAFTER, AN AMOUNT EQUAL TO THE AMOUNT BY WHICH---

"/A) 100 PERCENTUM OF THE TAX (INCLUDING INTEREST, PENALTIES, AND ADDITIONS TO THE TAX) RECEIVED DURING THE FISCAL YEAR UNDER THE FEDERAL UNEMPLOYMENT TAX ACT AND COVERED INTO THE TREASURY; EXCEEDS EXPENDITURES FOR SUCH YEAR, (II) REFUNDS OF SUCH TAX (INCLUDING INTEREST ON SUCH REFUNDS) MADE DURING SUCH FISCAL YEAR, AND (III) THE AMOUNTS APPROPRIATED BY SECTION 1202 (B) FOR SUCH FISCAL YEAR.

"/B) THE SUM OF (I) THE EMPLOYMENT SECURITY ADMINISTRATIVE FOR SUCH YEAR, (II) THE REFUNDS OF SUCH TAX (INCLUDING INTEREST ON SUCH REFUNDS) MADE DURING SUCH FISCAL YEAR, AND (III) THE AMOUNTS APPROPRIATED BY SECTION 1202 (B) FOR SUCH FISCAL YEAR.

"/2) THE AMOUNT APPROPRIATED BY PARAGRAPH (1) FOR ANY FISCAL YEAR SHALL BE TRANSFERRED FROM THE GENERAL FUND IN THE TREASURY TO THE UNEMPLOYMENT TRUST FUND AT THE CLOSE OF SUCH FISCAL YEAR. * * *"

WHILE IT IS INDICATED IN THE FISCAL ASSISTANT SECRETARY'S LETTER THAT THE EFFECT OF THE 1958 APPROPRIATION MIGHT BE VIEWED AS AUTHORITY TO INCREASE THE AMOUNTS AVAILABLE FOR DISTRIBUTION TO THE STATES FOR THE REASON THAT FORMERLY ADMINISTRATIVE EXPENSES WERE DEDUCTED FROM 100 PERCENT OF THE TAXES RECEIVED, IT SHOULD BE NOTED THAT THE ABOVE QUOTED PROVISIONS OF SECTION 901 AUTHORIZE ONLY AN APPROPRIATION OF AN AMOUNT EQUAL TO 100 PERCENTUM OF THE TAX WHICH EXCEEDS, AMONG OTHER ITEMS, EMPLOYMENT SECURITY ADMINISTRATIVE EXPENSES. A LITERAL APPLICATION OF THIS FORMULA IN THE PRESENT CASE WOULD LEAVE $5,832,400 IN THE GENERAL FUND WHICH WAS DERIVED FROM TAX RECEIPTS BUT NOT USED FOR THE PURPOSES FOR WHICH THEY WERE COLLECTED NOR REPRESENTING AN EQUIVALENT AMOUNT EXPENDED FROM GENERAL FUND RECEIPTS, AND OF COURSE AN EQUIVALENT DECREASE IN THE AMOUNTS AVAILABLE FOR DISTRIBUTION FROM THE UNEMPLOYMENT TRUST FUND. IT IS NOT BELIEVED THAT CONGRESS INTENDED TO INCREASE THE AMOUNTS TO BE DISTRIBUTED TO THE STATES, OR THAT IT INTENDED THE RESULT THAT WOULD OBTAIN BY A LITERAL APPLICATION OF THE FORMULA. THE LEGISLATIVE HISTORY OF THE APPROPRIATION ACT IN QUESTION SUPPORTS THE VIEW THAT NO CHANGE WAS CONTEMPLATED IN THE DISTRIBUTION OF THE NET FEDERAL UNEMPLOYMENT TAX ACT COLLECTIONS AS PROVIDED BY TITLE IX OF THE SOCIAL SECURITY ACT, AS AMENDED. IN THIS CONNECTION, THE FOLLOWING STATEMENT APPEARS IN SENATE REPORT NO. 416, 85TH CONGRESS, (PAGE 4) WHICH ACCOMPANIED H.R. 6287 SUBSEQUENTLY ENACTED AS P.L. 85-67:

"THE FUNDS SOUGHT FOR THIS ITEM ARE CHARGED * * * UNDER THE TERMS OF THE EMPLOYMENT SECURITY ADMINISTRATIVE FINANCING ACT OF 1954 TO THE EARMARKED THREE-TENTHS OF 1 PERCENT OF THE FEDERAL UNEMPLOYMENT TAX ACT. THESE EARMARKED FUNDS ARE AVAILABLE ONLY FOR THE ADMINISTRATIVE EXPENSES OF THE PROGRAM AND FOR PAYMENT TO THE STATES' ACCOUNTS FOR USE FOR THE PAYMENT OF UNEMPLOYMENT-INSURANCE BENEFITS OR, WHERE SPECIFICALLY APPROPRIATED BY THE STATE LEGISLATURE, FOR THE PAYMENT OF EMPLOYMENT-SECURITY ADMINISTRATIVE EXPENSES. THE ESTIMATED NET COLLECTION FROM THIS TAX IN 1958 OF $351,000,000 WILL BE DISBURSED IN ITS ENTIRETY EITHER AS ADMINISTRATIVE EXPENSES OR AS SURPLUS TO STATE ACCOUNTS REGARDLESS OF THE ACTION TAKEN ON THIS BUDGET ESTIMATE OR THAT FOR GRANTS TO STATES.'

"INASMUCH AS THESE FUNDS * * * ARE LATER OFFSET BY PAYMENT TO THE TREASURY OUT OF EARMARKED TAX COLLECTIONS IMPOSED BY THE FEDERAL UNEMPLOYMENT TAX ACT, THREE-TENTHS OF 1 PERCENT, THE COMMITTEE HAS PROVIDED THAT THE FUNDS, EXCEPT FOR $125,600, BE DERIVED BY TRANSFER FROM THE UNEMPLOYMENT TRUST FUND ON A BASIS SIMILAR TO THAT CURRENTLY MADE FOR THE RAILROAD RETIREMENT BOARD AND FOR THE BUREAU OF OLD-AGE AND SURVIVORS INSURANCE OUT OF THEIR RESPECTIVE TRUST FUNDS.'

WHILE PUBLIC LAW 85-67 PROVIDES FOR THE TRANSFER FROM THE FEDERAL UNEMPLOYMENT ACCOUNT IT SEEMS CLEAR FROM THE FOREGOING THAT THE DISTRIBUTION OF THE FEDERAL UNEMPLOYMENT TAX ACT COLLECTIONS WAS NOT TO BE CHANGED BY THE LANGUAGE IN SAID PUBLIC LAW 85-67. HENCE, ACTION NECESSARY TO EFFECT SUCH INTENT MAY BE TAKEN, NOTWITHSTANDING THE ABSENCE OF SPECIFIC MECHANICS THEREFOR. ACCORDINGLY, THE AMOUNT TO BE CREDITED TO THE FEDERAL UNEMPLOYMENT ACCOUNT AS OF JULY 1, 1958, UNDER SECTION 902 OF THE SOCIAL SECURITY ACT, AS AMENDED, SHOULD BE INCREASED BY AN AMOUNT EQUAL TO THE TOTAL AMOUNT OF THE TRANSFERS FROM THE FEDERAL UNEMPLOYMENT ACCOUNT TO THE SALARIES AND EXPENSES ACCOUNT OF THE BUREAU OF EMPLOYMENT SECURITY DURING THE FISCAL YEAR 1958.