Jobless-fund solvency plan proposed

Republican state legislators unveiled a plan Wednesday to shore up Ohio’s unemployment-compensation system that they say requires equal contributions from businesses and workers.

The fix, years in the

making, would reduce unemployment benefits, increase employer taxes and create a new premium paid by workers. Supporters say the changes are needed to ensure there is enough money to cover benefits for jobless workers in the next economic downturn.

"Everybody has to make some sacrifices," said Rep. Kirk Schuring, R-Canton, of the bill introduced Wednesday.

Ohio voters would have a say in the proposed fix; it requires a bond fund that must be approved in a statewide vote.

According to the nonpartisan Legislative Service Commission, employees would cover 50.5 percent of the cost of the bill through 2030, while employers would pick up the rest. If a recession occurs during that time, employees would pick up an estimated 51.5 percent of the cost.

However, that is an average across those years. The employer share of the cost increases dramatically starting in 2029, once a proposed 10-year freeze on benefits is lifted. In 2030, employers would be covering 62 percent of the cost.

The proposal would raise about $370 million a year from 2019 to 2030 by:

Raising the wage base on which employers pay tax to $11,000 per employee from $9,500.

Charging employees a new co-insurance payment of 10 percent of the amount paid by their employer.

Freezing the amount of weekly benefits for 10 years.

Reducing the maximum number of weeks that benefits can be received to 24 from 26.

Limiting additional payments for dependents under certain circumstances.

House leaders had initially hoped that a plan would be ready last April.

"We’ve taken more time to really hammer out a good strategy and a good deal,” said House Speaker Cliff Rosenberger, R-Clarksville. “Not everybody is going to be happy with it, but this is a hard issue."

The analysis shows that under current law, the unemploymentcompensation fund is projected to become insolvent in 2021 with no recession, and in 2020 with a moderate recession. Under the bill, the fund would remain solvent through 2030 without a recession, and it would become insolvent in 2021 with a moderate recession but recover in a year or so.

The bill would redefine "solvency," making it easier to achieve by reducing the required minimum safe level of the fund by $600 million in 2030.

The bill was introduced after a 10-member group representing both business and labor and led by Schuring and Sen. Bob Peterson, R-Sabina, failed to reach agreement on a proposal after having met since January.

Roger Geiger, executive director of the National Federation of Independent BusinessOhio, said there are no easy answers, and he appreciates the work done by legislators, "but we don't feel it's 50-50."

"This is not the fix. It's going to take more debate."

Labor officials had not yet seen the proposal.

State officials and analysts had long warned that the state’s system fails to build adequate reserves during times of low unemployment to cover benefits during downturns. Those predictions played out after the Great Recession hit in December 2007, and Ohio and many other states were forced to borrow from a federal loan fund to keep paying benefits.

Under a mandatory repayment system, Ohio businesses for years had to pay higher federal unemployment taxes to reduce the state’s $3.4 billion debt.

Ohio is one of a handful of states that have not fixed their systems since the recession.

Legislators also introduced a resolution to create a state bond fund that would be available if the insurance fund is depleted and the state needs to borrow money.

“We can borrow from our own bond fund, versus having to go to the federal government. We can borrow the money under our terms and conditions,” Schuring said, calling it a safety net.

He said he isn't surprised that the plan faces opposition.

“I’m not saying this is the perfect solution,” Schuring said. "But it’s the start of a process. At least we’ve got something that’s got an equal share as far as solvency.”