OUTLINE OF PROPOSED AMENDMENTS

TO SENATE BILL 107/HOUSE BILL 91

February 5, 2010

I. OFFSETS FOR COST OF MODERNIZATION

• Elimination of Sick Claims: The proposed amendment would eliminate sick claims.
This change would move Maryland in line with about 80% of other states and would
save $2.7 - $3 million.

• Increasing minimum weekly benefit: Maryland’s minimum weekly benefit has been $25
for decades. It has not been adjusted for years either to reflect increases in the federal
minimum wage or increases in the maximum weekly benefit. The benefit accrues to
individuals who have earned only $900 during the entire 4-quarter base period, with the
additional requirement that earnings in one of those quarters be at least $576. The
proposed amendment would increase the minimum to $50 per week and would save
about $1 million. At $50, Maryland would be in line with over half the states with
minimum weekly benefits ranging from $50 up to $129. Neighboring states are as
follows: D.C. - $50; VA - $54; PA - $35; NJ - $85; NY - $64; RI - $68.

• Increasing penalties for misconduct and gross misconduct: Under current law, claimants
who are discharged for misconduct are assessed a penalty of waiting 5-10 weeks before
they can collect benefits. The proposed amendment would increase this range to 10-15
weeks for a savings of $2-2.5 million/year. Employees discharged for gross misconduct
are disqualified from receiving benefits until they are reemployed and have earned
wages equal to 20 times their weekly benefit amount. The proposed amendment would
increase this penalty to 25 times the weekly benefit and would save an additional $2-2.5
million/year. The proposal would not change the standards governing discharges for
misconduct or gross misconduct.

• Decreasing disregarded wages: Under current law, Maryland disregards the first $100
paid to a claimant when calculating the weekly benefit amount. For example, if a
claimant earns $100 during a week, there is no impact on the weekly benefit amount. If
a claimant earns $101 during a week, his or her benefit amount will be reduced by $1.
Most states disregard some amount of earnings; New York is the only state which does
not exclude any wages in calculating the weekly benefit. The rest either exclude a
certain percentage of the weekly benefit amount or disregard a flat amount. Of the states
that disregard a flat amount of earnings, Maryland excludes more than most, e.g. VA -
$50, WV - $60, ME - $25. Among states using a percentage of weekly benefit amount,
examples include: DE – the greater of $10 or 30% WBA, NJ - $5 or 20% WBA. The
proposed amendment would reduce the amount Maryland disregards from $100 to $50,
and would save about $10.5 million annually.

Total Value Of Proposed Offsets: $18.2 - 19.5 million

II. PAYMENT PLANS AND INTEREST RATE REDUCTION

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• Mandating payment plan options through 2011: DLLR would offer a menu of options
for both 2010 and 2011 which would allow spreading payments out through the end of
each calendar year.

• Permanent payment plans triggered by Table F: After 2011, DLLR would be required to
offer a menu of options during any year in which Table F were in effect. The law would
mandate options allowing payment through the end of August to ensure as much revenue
in the trust fund as possible by the September 30 snapshot date used to determine the
table for the following year.

• Interest rate reduction to .5% through 2011: The interest rate would be reduced from
1.5% to .5% for 2010 and 2011.

• Interest rate reduction triggered by Table F: After 2011, the interest rate would
automatically be reduced from 1.5% to .5% during any year in which F were in effect.

III. DIRECTIVE TO UI OVERSIGHT COMMITTEE

The proposed amendment would direct the Committee to study and make recommendations
by December 1, 2010 on cost-neutral plan to effectuate a graduated increase of the
maximum weekly benefit to 54% of the average weekly wage.