House week in review
by Rep. Hubert Collins
Kentucky’s unemployment insurance trust fund is in better shape than many states’ unemployment funds, a panel of state lawmakers heard recently.
Kentucky now owes the federal government $930 million—down from $948.7 million in early 2012—which it borrowed to be able to make its unemployment benefit payments in recent years, Kentucky Education and Workforce Development Cabinet Secretary Joe Meyer told the Interim Joint Committee on Labor and Industry. In contrast, California owes approximately $9 billion to the federal government to pay back money borrowed for unemployment benefits, said Meyer. And at least a few states right next door have struggled more than Kentucky has with unemployment trust fund debt.
Ohio, for one, owes the federal government around $1.8 billion, said Meyer, while Indiana owes around $2 billion and Illinois owes more than $1 billion. Only Tennessee and West Virginia were specifically mentioned by Meyer as owing nothing.
At the end of 2012, Meyer said the debt owed by Kentucky to the federal government will be reduced to approximately $915 million.
By the end of 2013, “…we expect that debt to be down to $768 million,” said Meyer.
The state’s Unemployment Insurance (UI) Trust Fund is projected to pay out approximately $508 million in benefits this year, or $46.6 million less than it paid out in 2011. Meanwhile, employer contributions collected this year are expected to total $505.5 million, or $62.2 million more than employer contributions from 2011. The reason for uptick in contributions? Improvement in the economy, and an increase in the taxable wage base, said Meyer.
Kentucky’s unemployment picture is also improving based on new jobs data, said Meyer. During the last 12 months, the state economy gained 37,700 net new jobs, he said, adding that the current rate at which jobs are being added to the economy exceeds growth of the number of people looking for work.
Also, the state’s preliminary unemployment rate for June 2012 remained at 8.2 percent for a second consecutive month, according to data released today by the state Office of Employment and Training. Last month’s preliminary rate is 1.4 percentage points below the jobless rate of 9.6 percent from a year ago, the data shows.
The committee received an update from Meyer earlier in the meeting on the implementation of House Bill 495, sponsored by House Speaker Pro Tem Larry Clark. The legislation authorized the state to obtain financing for the payment of interest on federal unemployment loans, and authorized a surcharge on employers contributing to the unemployment insurance trust fund to repay the financing beginning in 2014.
After exploring its options, Meyer said the state went through a bid process and borrowed $76 million from JPMorgan Chase and Company at a fixed interest rate. Meyer said the money is available in two draws, with the first draw of $47.7 million used to repay interest due to the federal government in Sept. 2011 and interest that will come due this Sept. The second draw of up to $26.3 million, Meyer said, is available to pay interest coming due in Sept. 2013.
“I think the deal has been structure in a good way in the interest of Kentucky taxpayers and businesses,” he said.
Lawmakers are always interested in the rise and fall in the number of unemployment insurance claims, and how many of those claims are disputed by employers. Meyer reported that the latest numbers, from 2011, indicate that a total of 173,071 new claims for benefits for filed in the Commonwealth last year; of those, 48 percent were disputed by employers. And of those disputed, or “protested” claims, 66 percent—or 54,631—of claimants were denied benefits while the rest were approved.
A denied claim can lead to an appeal, either by an employer or a claimant, in hopes of having benefits approved or denied, whatever the case may be. According to Meyer, there were around 22,380 claims cases on first appeal and 22,746 decisions by the lower authority unemployment insurance appeals branch released in 2011. Of those decisions, 16 percent were appealed by employers and 84 percent were appealed by claimants (or former employees), but the cases were decided in favor of both employers and claimants exactly 31 percent of the time.
Cases that were appealed further to the state’s UI Commission totaled around 4,370—121 which were eventually appealed to circuit court.
If you would like to review the state’s UI Trust Fund annual report for 2011, just log on to “http://workforce.ky.gov/UITrustFundReport2011.pdf” and you can read the entire report firsthand. There is so much more to be gleaned from the report than I am able to share here.
Have a good week.
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