A bill to direct the Secretary of Labor to establish and carry out a two-year demonstration project in which certain States may utilize a portion of their unemployment compensation accounts in the Federal Unemployment Trust Fund to carry out employment-related service programs designed to improve methods of locating employment opportunities for individuals who are receiving, or who are likely to begin receiving, unemployment compensation.

Directs the Secretary of Labor to carry out a demonstration project, during FY 1987 through 1989, to allow eligible States to use funds in their accounts in the Unemployment Trust Fund to carry out programs to improve methods of locating employment opportunities for individuals who are receiving, or who are likely to begin receiving, unemployment compensation.

Requires that an eligible State's account have no balance of advances and contain specified amounts above its solvency level. Limits project payments to such amounts (25 percent of the interest earned by the account during the previous fiscal year).

Sets forth reporting requirements.