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Lawmakers skip assessment of unemployment fund

June 13, 2018

Despite Indiana’s unemployment rate of 3.2 percent, the General Assembly is still required by law to perform a yearly checkup of the unemployment fund to make sure the nest egg is strong and healthy enough to support Hoosier workers who are laid off.

However, at present, no examination has been scheduled.

karen tallian mug Tallian

The issue was raised at the normally perfunctory meeting in May of the Legislative Council, approving the interim study committee topics. Sen Karen Tallian, D-Portage, pointed out that not only was the review of the unemployment trust fund omitted, but the Interim Study Committee on Employment and Labor, which is supposed to do the exam, was not even scheduled to meet.

“We’ve left off any review by any committee of the status of the employment compensation system,” Tallian said during the hearing. “It’s supposed to go to the labor committee every year. I’m voting no.”

Rep. John Bartlett, D-Indianapolis, joined Tallian, but the council still approved the list of topics and summer study committees by an 11-2 vote.

Speaking after the hearing, Tallian said the decision not to assign the unemployment fund review “tells you something about the priorities of the leadership.” She speculated the leaders did not include the unemployment fund because they consider it too controversial.

The senator also noted to the council that the state’s worker’s compensation benefits have not been raised since 2016. She suggested that would be another topic the employment and labor committee could study.

Indiana’s unemployment fund practically evaporated during the Great Recession as the jobless rate swelled to 10 percent in 2009 and 2010. The state had to borrow about $2 billion from the U.S. Department of Labor to cover its obligations to the idled workforce.

In 2015, Indiana withdrew $250 million from the general fund and paid off the federal government for the unemployment loan. That move was touted as preventing Washington from imposing a $327 million penalty on Hoosier businesses, but less than a year later, the unemployment fund had to dig into its own wallet and reimburse the state for the $250 million.

Leonard Leonard

Currently, according to Rep. Dan Leonard, R-Huntington, the unemployment trust fund has between $250 million and $275 million. If the economy falters as dramatically as it did in 2008, he estimated the fund would be depleted in about 3 ½ months.

Pointing to calculations based on a Labor Department formula, Leonard said Indiana should have between $750 million and $780 million tucked away. Still, that would not satisfy the Huntington businessman, who is considered to be the expert in the Statehouse on the unemployment fund.

“I don’t think that’s enough,” Leonard said. “I like the sound of a billion dollars.”

From budget to labor

Tallian said she is not pushing a “crazy liberal policy,” but pointed out an annual examination of the unemployment cash reserves is mandated in Indiana Code section 22-4-18-1. The insolvency caused by the 2008 economic downturn convinced the Legislature to monitor the fund, taking a yearly measurement of how much money is available, the number of claims paid and the duration of those claims. It also provides an overall picture of the health of the state’s employment.

When jobs are plentiful and the economy is humming, Tallian acknowledged, few are concerned about unemployment and having the money to cover jobless claims. But, she said, the fund still needs to be monitored to ensure when a downturn comes, the state will be prepared to pay laid-off Hoosiers.

“Somebody has to be watching,” she said.

The Portage senator said Senate President Pro Tem David Long, R-Fort Wayne, talked to her after the council hearing and said he would see what he could do about getting the topic assigned. When asked by Indiana Lawyer about Tallian’s concern, Long’s office referred the inquiry to House Speaker Brian Bosma who, as chair of the Legislative Council, will decide if the unemployment fund gets studied.

Bosma’s office did not respond to a request for a comment by IL deadline.

Last summer, the employment and labor committee was also not included in the interim study list. The group was shoehorned into the summer session with a single meeting solely to examine the state’s unemployment support.

Ripley Ripley

Mike Ripley, vice president of health care and employment law policy at the Indiana Chamber of Commerce, said he “wholeheartedly” agrees with Tallian. The fund, he said, should be reviewed each year because at stake is the ability of the state to pay claims during an economic recession.

“It’s very important to have legislative eyes on that trust fund on an annual basis,” Ripley said.

The employment and labor committee was assigned the duty of assessing the unemployment nest egg as part of a bill authored by Leonard during the 2017 legislative session. Previously, the budget committee had that responsibility but, as Leonard told his colleagues during a hearing on his measure, that body was “not thrilled” about having to monitor the fund and had asked that the job be moved elsewhere.

Leonard’s legislation requires the Indiana Department of Workforce Development to make an annual presentation to the employment and labor interim committee. The bill sailed through the Statehouse with no opposition, was signed by Gov. Eric Holcomb and took effect July 1, 2017.

At this point, Leonard said he is not concerned about the balance in the trust fund which, he calculated, will reach a billion dollars by 2020 or 2021. Even so, taking time to look at the balance and discuss the state’s preparedness for unemployment is appropriate.

“I wish more people had an interest and would study it more, because I think it is an important part of economic development,” Leonard said of the unemployment trust fund. “It’s one of the things employers look at when they move to this area.”

Helping injured workers

Indiana employees who are injured or disabled on the job depend on the state’s worker’s compensation to help pay the bills. If the benefits are not bumped up periodically to keep pace with inflation, Tallian said, the people who are hurt on the job could take a financial hit.

The last increases passed by the General Assembly began in 2014 and ended in 2016. Since then, the compensation payments have stagnated and, Tallian pointed out, the soonest they could rise would be in 2019, but only if the Statehouse passes legislation boosting the amount.

Ripley agreed the Legislature should at least discuss the benefit schedule. The business community, he said, is very concerned that injured workers get the care they need, so business leaders likely will talk amongst themselves about the worker’s compensation system before the 2019 session.

Often, he said, summer is a good time to have such discussions. The interim study committees get a pretty good perspective with the additional time members have to examine the issues. During the legislative session, deadline pressure can make getting all the information difficult.

Tallian plans to introduce a bill next session that would bump up worker’s compensation benefits. She predicted her measure would get a hearing but then would be shuffled over to an interim committee for further study.

“Things move slow (in the Legislature),” she said. “You just have to be persistent.”•

 

 

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