Subject: Crimes and Punishment; Employment Security; Labor and Industrial Relations Department

Bill Summary: This proposal changes the law relating to the disclosure of confidential unemployment information.

ESTIMATED NET EFFECT ON GENERAL REVENUE FUND
FUND AFFECTED	FY 2009	FY 2010	FY 2011


Total Estimated Net Effect on General Revenue Fund	$0	$0	$0

ESTIMATED NET EFFECT ON OTHER STATE FUNDS
FUND AFFECTED	FY 2009	FY 2010	FY 2011


Total Estimated Net Effect on Other State Funds	$0	$0	$0

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 2009	FY 2010	FY 2011
UC Administration Funds	($0 to $34,000,000)	($0 to $34,000,000)	($0 to $34,000,000)

Total Estimated Net Effect on All Federal Funds	($0 to $34,000,000)	($0 to $34,000,000)	($0 to $34,000,000)

ESTIMATED NET EFFECT ON FULL TIME EQUIVALENT (FTE)
FUND AFFECTED	FY 2009	FY 2010	FY 2011


Total Estimated Net Effect on FTE	0	0	0

☐ Estimated Total Net Effect on All funds expected to exceed $100,000 savings or (cost).

☐ Estimated Net Effect on General Revenue Fund expected to exceed $100,000 (cost).

ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED	FY 2009	FY 2010	FY 2011
Local Government	$0	$0	$0

Officials at the Department of Labor and Industrial Relations assume the proposed legislation will establish criminal penalties for the unauthorized disclosure of confidential unemployment insurance (UI) information. This proposal is the result of a federal mandate. 20 CFR Part 63 requires the Department to comply with heightened confidentiality requirements pertaining to unemployment benefit information by no later than October 2008. Federal funding to Missouri will be jeopardized if the proposed legislation is not enacted by jeopardizing the certification of the state's UI program. If the program fails to be certified, Missouri would lose $34 million in federal funds the state receives to administer the UI program.

The Federal Unemployment Tax Act (FUTA) imposes a 6.2% payroll tax on employers. Most employers never actually pay the total 6.2% due to credits they receive for the payment of state unemployment taxes and for paying reduced rates under an approved experience rating plan. FUTA allows employers tax credits up to a maximum of 5.4% against the payroll tax if the state UI law is approved by the Secretary of Labor. Not enacting the proposed legislation may cause Missouri's program to fail certification. As a result, Missouri employers could lose approximately $977 million annually in FUTA credit.

The Department is planning to absorb any cost incurred to implement the proposed legislation with current federal funding.

Oversight assumes it is unclear whether the state would lose its unemployment insurance federal funds. Oversight has shown the potential loss as a range from $0 to $34,000,000.

Officials from the Office of the Secretary of State (SOS) state many bills considered by the General Assembly include provisions allowing or requiring agencies to submit rules and regulations to implement the act. The SOS is provided with core funding to handle a certain amount of normal activity resulting from each year’s legislative session. The fiscal impact for this fiscal note to the SOS for Administrative Rules is less than $2,500. The SOS recognizes that this is a small amount and does not expect that additional funding would be required to meet these costs. However, the SOS also recognizes that many such bills may be passed by the General Assembly in a given year and that collectively the costs may be in excess of what the office can sustain with the core budget. Therefore, the SOS reserves the right to request funding for the cost of supporting administrative rules requirements should the need arise based on a review of the finally approved bills signed by the governor.

Oversight assumes the SOS could absorb the costs of printing and distributing regulations related to this proposal. If multiple bills pass which require the printing and distribution of regulations at substantial costs, the SOS could request funding through the appropriation process.

Business owners could possibly lose payroll tax credits estimated at $997 million annually.

This bill authorizes the Division of Employment Security within the Department of Labor and Industrial Relations to establish rules governing the confidentiality and disclosure of information obtained from any employing unit or individual regarding unemployment records required by the division in the administration of the Employment Security Law. A state or federal official or agency is allowed to receive disclosures as required by federal law. It will be at the division's discretion for any other party to receive disclosures as authorized by state or federal law.

Any person who intentionally discloses or otherwise fails to protect confidential information in violation of this provision will be guilty of a class D felony.

FISCAL IMPACT - State Government	FY 2009 (10 Mo.)	FY 2010	FY 2011
UC ADMINISTRATION FUNDS

Loss - DOLIR
unemployment insurance payments	($0 to $34,000,000)	($0 to $34,000,000)	($0 to $34,000,000)

ESTIMATED NET EFFECT ON
UC ADMINISTRATION FUNDS	($0 to $34,000,000)	($0 to $34,000,000)	($0 to $34,000,000)