As the nation’s economy continues to hum along, state unemployment insurance programs continue to heal from scars created by the Great Recession. However, Ohio and Pennsylvania can’t seem to get out of their own ways to correct difficulties created by past high unemployment.
Ohio lawmakers worked all year on a plan to correct the funding deficits in that state’s unemployment fund, but have adjourned for the year with no solution.
“It seems like both sides would like to have it 100 percent their way,” said Rep. Kirk Schuring, the Ohio House’s second-ranking Republican. “I’m still working with the interested parties, but I do not have an agreement.”
Several analysts of the Ohio unemployment fund indicate that it does not have the necessary reserves needed to handle even a slight economic downturn. Like many states, Ohio borrowed money ($3.4 billion) from the federal government to handle unemployment benefits payments owed to unemployed workers during the Great Recession. The state paid $257 million in interest on the loan and did not repay their loan with-in the designated payment period (two years). As a result, Ohio employers paid higher federal unemployment taxes until 2016 when the loan finally was paid off.
According to Catherine Candisky at The Columbus Dispatch, Schuring has proposed a House Bill that would generate about $370 million a year from 2019 to 2030 by raising the taxable wage base paid by employers to $11,000 per employee, up from $9,500. On the employee side, workers would pay a new co-insurance payment of 10 percent of the amount paid by his employer. In addition, benefits would be frozen for 10 years, the maximum number of weeks paid cut to 24, down from 26, and additional payments for dependents reduced. Currently, Ohio workers do not, like most states, pay a co-insurance fee for unemployment insurance.
Pennsylvania has a completely different issue with their program. Their fund is solvent, but they cut so much funding from the Pennsylvania Department of Labor that unemployment benefits claimants found long phone hold times and delays in getting benefits.
Last year state lawmakers passed a massive cut in state unemployment insurance taxes only to have to reverse mush of those cuts this year.
According to the Pennsylvania DOL, delays have skyrocketed since last year’s cuts to more than 600,000 busy signals in October of this year. This year average wait times to speak with a call center representative grew by 31 percent. These numbers increased even though the number of initial claims fell 18 percent.
The Pennsylvania DOL is now making plans to rehire a portion of the furloughed claims administrators it was forced to layoff after the previous cuts were passed last year. These budget increases will not affect state unemployment insurance taxes in 2018.