HB 620 Sponsor Testimony
Thank you Mr. Chairman, members of the committee, for the opportunity to give sponsor testimony on HB 620
HB 620 is a product of the House and Senate Joint Committee on Unemployment Compensation Reform. I co-chaired that committee with Senator Peterson. The committee met from late August until early November and had 5 hearings with over 30 witnesses.
When we commenced the first committee meeting, I told everyone that the purpose of the joint committee was to have a conversation about making Ohio’s unemployment compensation system solvent so that it could sustain benefits during the next economic downturn and avoid having to borrow money from the federal government. To that end, that is what HB 620 does.
In crafting the bill, we determined the amount of money it would take to make the unemployment fund solvent and from there attempted to achieve that solvency level through an equal share of employer contributions and employee benefit savings.
On the employer side, the taxable wage base is increased from $9,000 to $11,000. Additionally, the minimum safe level flat rate is increased by one basis point from .2 to .3.
On the employee side, benefits are frozen until solvency is attained. The number of weeks eligible from unemployment is as sliding scale range from 20-26 weeks depending on Ohio’s unemployment rate. The balance approach set forth in this bill will bring the unemployment fund to solvency in 7 years and 10 years if there is another recession. It is important to note that if you look back on the last 10 years, 67% of the time the number of weeks available under the proposal would be greater than 20 weeks. Also to better demonstrate the length of 20 weeks, it would be from December 1, 2016 to April 19, 2017.
The dependency benefit is broadened so that every unemployed claimant is eligible for a dependency benefit, similar to the Pennsylvania model. It is important to note that under the current dependency plan in Ohio law only approximately 17% of Ohio’s unemployed claimants qualify for the benefit.
I also want to mention, that in the uncodified section of the bill, it encourages the General Assembly to adopt a resolution that would create a constitutional ballot issue to establish an Ohio unemployment bond fund. The fund would be available to borrow from in the event of a severe economic recession and also avoid having to borrow from the federal government. Additionally, the bill reactivates the Ohio Unemployment Advisory Council and stipulates that they meet on a regular basis and offer periodic recommendations.
In closing Mr. Chairman, members of the committee, the current balance of Ohio’s unemployment fund is approximately 550 billion dollars and certainly not enough to sustain benefits the next time our economy drops. Moreover, because of the penalties incorporated in HB 390, if we have to borrow from the federal government again there will be additional state surcharges that will be imposed coupled with the federal surcharges. That is an untenable situation, that will hurt Ohio’s employers and employees and is why we must pass the solvency plan now.
77 S. High Street, Columbus, Ohio 43215-6111