STRAIGHT FROM THE SENATE
STATE UNEMPLOYMENT FUND FIX BALANCES NEEDS OF WORKERS, CONCERNS OF BUSINESSES
STATEHOUSE – Members of Indiana’s General Assembly recently approved a plan to replenish the state’s bankrupt jobless fund.
This plan balances the needs of workers and addresses the concerns of businesses – especially given the national economic climate.
Indiana’s fund is now partially sustained by a more than $800 million interest-free loan from the federal government, an amount that is estimated to top nearly $1 billion by year’s end. For some time, premiums paid by businesses – which fund unemployment benefits for laid-off Hoosiers – have failed to keep pace with benefits paid out to workers.
Our state risked facing a federal government takeover of the fund if lawmakers failed to find a fix in the near-term. A federal takeover could have resulted in a massive, permanent expansion of Indiana’s unemployment insurance system and additional premium increases on top of those required to balance the fund.
Thirty states have jobless funds which are already insolvent or at risk of insolvency, according to the National Association of State Workforce Agencies. Many of these states are placing the burden to replenish their funds solely on the shoulders of businesses without first looking to find efficiencies in their systems.
Common sense, cost-saving reforms
Indiana’s solution, HEA 1379, balances nearly dollar-for-dollar up to $302 million in cost saving reforms to the system with approximately $315 million in premium increases.
A compliance center will also be created in order to monitor the fund and help prevent improper overpayments to unemployment insurance claimants. Beyond this year’s reforms, an oversight committee will make future recommendations to lawmakers.
Jobless Hoosiers receiving benefits will actually apply for one job per week, not just look for one as current law provides. Workers fired for poor attendance, working under the influence of alcohol or stealing from their employers will no longer be able to claim benefits. This common-sense approach will help save money.
Competitive new premiums
Indiana’s unemployment insurance fund, supported by employers who pay premiums based on their use of the trust fund, operates much like insurance premiums in which high-risk drivers pay higher premiums for their auto insurance.
The nearly 40,000 Hoosier employers who have never tapped the fund will actually receive a slight decrease in premiums, while those who use the fund more frequently will see increases – but only to levels that maintain Indiana’s economic competitiveness with other states.
Businesses experiencing the largest increase in their annual, per employee contributions – those who draw down the fund’s balance the most by laying off the most workers – will still pay lower premiums than the Midwest average of $1,042.
New premiums will also be phased in over the next two years, giving businesses still recovering from the recession relief from approximately $100 million in 2010 premiums.
This session, lawmakers needed to craft an unemployment reform bill that worked for all Hoosiers. We needed to protect the state’s unemployed and those who are working, Indiana’s large and small businesses. We worked in a bipartisan fashion to create and enact a fair and comprehensive bill that closes loopholes and protects many small businesses from premium increases.
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