Feds: Missouri benefit plan doesn't qualify for stimulus money

JEFFERSON CITY, Mo. -- Missouri's attempt to draw down $133 million in federal stimulus money for unemployment benefits may not pass muster with the federal government.

On their final day in session, Missouri lawmakers on Friday passed a bill expanding eligibility for jobless benefits in an attempt to qualify for enhanced federal funding. Gov. Jay Nixon praised the bill as one of the session's successes.

But Tuesday, the U.S. Department of Labor said Missouri would not qualify for the money because of the wording used in the legislation.

Among the chief reasons cited by the Labor Department is that Missouri's legislation automatically would halt the expanded jobless benefits after spending the federal money.

The federal economic stimulus package includes $7 billion for incentive payments to states that adopt laws expanding eligibility for unemployment benefits. The intent is for states to permanently change laws so that more jobless people qualify for more benefits.

Missouri's legislation would offer unemployment benefits to people who leave jobs for family reasons, including the illness or disability of a relative, domestic violence or to accompany a spouse who has taken a job elsewhere.

It would provide an additional 26 weeks of jobless benefits for people participating in job training, and it would change the time period of workers' past wages that are analyzed to determine eligibility for jobless benefits.

But unless renewed by the legislature next year, Missouri's expanded benefits would expire once it spends the federal money. The legislation also states that the expanded benefits will not occur unless first approved under the stimulus act by the U.S. labor secretary.

The Republican-led Missouri Legislature passed the measure only after receiving a written plea and assurance from Nixon that the unemployment eligibility changes would only be temporary.

The U.S. Labor Department, which analyzed the Missouri law at the request of the AP, said the legislation has two problems that would disqualify the state from receiving the money.

The Labor Department said the federal stimulus law requires it to reject any state provisions not "currently in effect as permanent law or which are subject to discontinuation."

The Missouri law would be "subject to discontinuation" because of the automatic expiration, the Labor Department said in its written analysis.

Furthermore, the Missouri bill says its provision will take effect only after Labor Department approval, whereas the federal law requires the state law to be in effect before federal approval for the money, the U.S. Labor Department said.

The Missouri Department of Labor and Industrial Relations issued a written statement Tuesday saying it would work with federal officials on the expansion of eligibility for unemployment benefits.

But it did not respond to repeated requests from the AP for an explanation of why the Missouri legislation would qualify the state for the incentives.

A spokesman for the governor had no immediate comment.

An official with the National Employment Law Project, which advocated for federal law, said Missouri was the first state to try to get the federal incentive money for expanded unemployment benefits by making temporary changes.

"They won't qualify," said Rick McHugh, an attorney who is the group's Midwest coordinator. "So they won't get the money."

In February, Missouri's Republican House and Senate leaders held a news conference with GOP Lt. Gov. Peter Kinder to declare they would reject the one-time federal money rather than change the state's unemployment compensation laws. They said they feared businesses would shoulder a higher tax burden to continue the expanded benefits when the federal money ran out.

But Republican lawmakers changed course after agreeing to use the legislative wording backed by Nixon's administration. Nixon touted the bill Friday at his post-session news conference.

"With bipartisan support we have passed a measure that will begin the process of temporarily expanding and extending unemployment benefits to eligible workers while protecting Missouri businesses from increased costs," Nixon said.

The federal government's concerns should not effect a separate provision in the legislation that uses federal stimulus funds to provide up to 20 weeks of additional jobless benefits for unemployed through the end of 2009.

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Jobless bill is HB1075.

On the Net:

Legislature: http://www.moga.mo.gov

U.S. Labor Department: http://www.doleta.gov