Legislators Consider Unemployment Fund Changes

Article excerpt

An unemployment insurance trust fund topping $609 million is prompting legislators to consider either reducing employer taxes or boosting unemployment benefits.

Lawmakers cut the employer tax by 25 percent at a cost of $54 million last session, to run through fiscal year 1998. Dave Murrie, deputy director of the Oklahoma Employment Security Commission, told members of the state House Commerce, Industry and Labor Committee Thursday that another 25 percent reduction, from July 1 of next year to Dec. 31, 1999, would cost an additional $25.5 million.

The state system is so sound, said commission analyst Roger Jacks, that it would take an unemployment rate of between 8 percent and 9 percent to significantly draw down on the fund. Jacks, the OESC program chief, said the program could survive with between $200 million and $250 million in the trust fund. Unemployment in Oklahoma is about 3.5 percent, although only 1.1 percent or so actually receive benefits, Murrie said. Roughly 85 percent of state workers are covered by unemployment insurance. Murrie said his agency may pay out maximum benefits of $4,440, or 40 percent of a taxable wage base of $11,100. The allowed maximum weekly benefit is currently $252. Changing the formula to 50 percent would raise the overall benefit maximum to $5,550, an increase of about 25 percent. This could cost between $25 million and $38 million a year. House members and commission officials also discussed changing the procedure for charging employers for the benefits laid-off workers receive, which affects their tax rating. Regulations permit the state not to charge an employer if a worker goes into an approved training program -- at a college or vo-tech school, for example -- but those charges are levied among all other employers, said Murrie. However, an employer's tax rate cannot be cut if a company sets up its own training program. He said rates can be reduced only by some criteria based on risk. An unemployed worker in Oklahoma receives benefits for 13 to 14 weeks on average, Murrie said. At present, an employer is not charged for a particular laid-off worker until the fifth week of benefits. If that was changed to the 10th week, it would cost about $23 million to the fund. Bob Kenyon, with the Dallas regional office of the U.S. Department of Labor, praised the Oklahoma program, pointing out that over the last eight years it has been recognized several times for its benefit system, employer notification and appeals processes and other activities. …