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States begin to opt-out of American Rescue Plan unemployment assistance

By June 2, 2021July 13th, 2021No Comments

(Special Note: This is a developing story. Details may have changed by the time you read this as states clarify their intentions.)

Numerous states have announced plans to terminate various pandemic-era unemployment programs introduced by the federal government to support unemployed workers and employers throughout the COVID-19 crisis, forgoing a cumulative $4.7 billion in government assistance.

The programs, introduced in March 2020 via the Coronavirus Aid, Relief, and Economic Security (CARES) act, were extended until September under the American Rescue Plan Act (ARPA) of 2021. However, provisions in the ARPA allow states to opt out of individual supplemental programs prior to their September expiration date.

Multiple Republican-led states are choosing to terminate some or all federal unemployment programs months before their September expiration date, citing labor shortages in their respective states.

“Every small business owner and the workers that are currently working, they need more people,” Georgia Gov. Brian Kemp said Thursday. “It is hurting our productivity not only in Georgia, but across the country.”

President Joe Biden confirmed in May that “some employers are having trouble filling jobs.” But when asked if supplemental unemployment benefits were keeping workers from returning to work said, “no, nothing measurable.”

By the end of June, the number of states opting out of the COVID-related unemployment benefits had risen to 26. Lawsuits have already decreased that number by one as state courts determine if their governors have the power to refuse federal funds.

What are the ARPA programs?

The ARPA includes various supplemental unemployment programs that states can choose to keep or terminate.

Federal Pandemic Unemployment Compensation (FPUC): The FPUC program provides an additional $300/week in unemployment benefits to unemployed workers.

Pandemic Unemployment Assistance (PUA): The PUA program provides unemployment benefits to workers not covered under regular unemployment insurance (UI), including independent contractors, self-employed people, and those working part-time.

Pandemic Emergency Unemployment Compensation (PEUC): The PEUC program provides up to 53 weeks of additional unemployment benefits to individuals who previously collected state or federal unemployment compensation but exhausted those benefits.

Mixed Earners Unemployment Compensation (MEUC): The MEUC program pertains to mixed workers — workers who have both traditional W-2 and self-employment income. It provides an additional $100 per week payment to eligible individuals.

Emergency Unemployment Relief for Governmental Entities and Nonprofits: Under the CARES act, the federal government committed to pay 50% of the unemployment costs incurred by employers that chose to make reimbursing payments in lieu of paying unemployment taxes.

In March 2021, the ARPA increased the compensation to 75% effective April 4, 2021.

How can states opt out?

Under the existing CARES Act Agreement, each state is required to operate the supplemental unemployment programs outlined above. However, the ARPA allows states to terminate specific programs, or the entire agreement itself, by providing 30 days written notice. Some state laws can also limit what a state or a governor can do, or not do, with federal funds.

Doug Holmes, President of UWC Strategy, a national organization serving as the voice of business in unemployment and workers’ compensation policy and legislation, says, “State leaders should understand that they have the option to withdraw from individual unemployment programs without terminating the entire scope of aid.”

“They should understand that they have the option of canceling individual pieces,” Holmes said. “For example, if they believe the $300 supplemental income is the driving issue, then that’s something they should be focused on, instead of eliminating everything that may have been part of the federal legislation.”

State Actions on ARPA Benefits

As of June 28, 26 states have announced plans to withdraw from some or all federal unemployment programs. (Some of those decisions have been challenged and reversed in state courts.)

Alabama: Will terminate the PUA program for gig workers and PEUC for the long-term unemployed on June 19, as well as resume its work-search requirements for UI recipients.

Alaska: Will terminate federal supplemental unemployment benefit programs on June 12.

Arizona: Will terminate federal supplemental unemployment benefit programs on July 10.

A one-time $2,000 bonus will be available to eligible people earning less than $52,000 a year who return to work by September 6, and a $1,000 to those who return part-time, after they complete at least 10 weeks of work.

Arizona will also provide three months of childcare assistance for unemployed workers who return to work and are eligible for the bonus.

Arkansas: Will terminate federal supplemental unemployment benefit programs on June 26. It has been confirmed that the 75% relief for reimbursing employers is being discontinued.

Florida: Will terminate federal supplemental unemployment benefit programs on June 26. The state will still participate in the 75% relief of charges for reimbursers.

Georgia: Will terminate federal supplemental unemployment benefit programs on June 26.

Idaho: Will terminate federal supplemental unemployment benefit programs on June 19.

Indiana: Decided to terminated federal supplemental unemployment benefit programs on June 19, but a state court has put that move on hold.

Iowa: Will terminate federal supplemental unemployment benefit programs on June 12.

Louisiana: Will terminate federal supplemental unemployment benefit programs on July 31.

Maryland: Will terminate federal supplemental unemployment benefit programs on July 9. (The decision is being challenged in court.)

Mississippi: Will terminate federal supplemental unemployment benefit programs on June 12.

Missouri: Will terminate federal supplemental unemployment benefit programs on June 12. It has been confirmed that the 75% relief for reimbursing employers is being discontinued.

Montana: Will terminate federal supplemental unemployment benefit programs on June 27. Montana will offer a $1,200 return-to-work bonus using federal funds. It has been confirmed that the 75% relief for reimbursing employers is being discontinued.

Nebraska: Will terminate federal supplemental unemployment benefit programs on June 19. The state will still participate in the 75% relief of charges for reimbursers.

New Hampshire: Will terminate federal supplemental unemployment benefit programs on June 19.

North Dakota: Will terminate federal supplemental unemployment benefit programs on June 19.

Ohio: Will terminate federal supplemental unemployment benefit programs on June 26. The state will still participate in the 75% relief of charges for reimbursers.

Oklahoma: Will terminate federal supplemental unemployment benefit programs on June 26.

South Carolina: Will terminate federal supplemental unemployment benefit programs on June 30. It has been confirmed that the 75% relief for reimbursing employers is being discontinued.

South Dakota: Will terminate federal supplemental unemployment benefit programs on June 26.

Tennessee: Will terminate federal supplemental unemployment benefit programs on July 3.

Texas: Will terminate federal supplemental unemployment benefit programs on June 26. It has been confirmed that the 75% relief for reimbursing employers is being discontinued. (The decision is currently being challenged in court.)

Utah: Will terminate federal supplemental unemployment benefit programs on June 26.

West Virginia: Will terminate federal supplemental unemployment benefit programs on June 19.

Wyoming: Will terminate the $300 federal unemployment benefit, the PUA program for gig workers and PEUC for the long-term unemployed.


About the author

Lia Tabackman is a freelance journalist, copywriter, and social media strategist based in Richmond, Virginia. Her writing has appeared in the Washington Post, CBS 6 News, the Los Angeles Times, and Arlington Magazine, among others.

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