Ex-Service Member Eligibility for Unemployment Compensation

GAO was asked to provide information concerning changes in the unemployment insurance eligibility for ex-service members. The changes were brought about by the Omnibus Budget Reconciliation Act of 1981 which altered ex-service member eligibility for unemployment compensation so that military personnel who are allowed to voluntarily leave the service, or are eligible but choose not to reenlist, can no longer receive unemployment benefits after they leave the service. GAO was asked how much money the changes save, how much money remains in the unemployment compensation for ex-service members (UCX) program, how many ex-service members will be adversely affected by the change, and how many ex-service members will still be able to collect unemployment compensation benefits.

The change in unemployment compensation eligibility criteria was partly intended to encourage service members to reenlist if they were eligible to do so. Attrition continues to be a serious and costly problem for the services. However, unlike most civilian jobs, enlistment in the military service is a contract for a specific period of time, and it is not expected nor desirable for all who enlist to make a career of the military. Because individuals in the military are often stationed far from their place of residence, prior to separation military members have no real access to the civilian job market near their place of residence. It is too early to tell how the change will effect future enlistments or reenlistments. However, military service managers generally believe that it will have little effect on either initial recruitment or retention. The Act will result in sizable cost reductions and a large number of former service members may be adversely affected. The Federal Unemployment Benefits and Allowances account did not receive an appropriation during fiscal year 1981, but was funded by Continuing Resolution Authority for the entire fiscal year. The Department of Labor has estimated that approximately $38 million from the account would be required for the UCX program. Although claims continue to be paid, the current balance in the account which finances the UCX program is zero. GAO supports three pieces of proposed legislation which would give those with honorable discharges the same unemployment benefits as those members who receive dishonorable discharges.