Ohio Unemployment Fund Could Lose Its Job, Officials Say
ONB COLUMBUS: Like many Ohio workers who have lost their jobs over the last decade, Ohio’s fund for jobless workers may itself become unemployed come next spring if expenditures to the jobless continue to out pace employer contributions.
In a story in The Columbus Dispatch (TCD) Thursday calling attention to how close Ohio’s Unemployment Compensation Trust Fund is to hitting bottom, jobs losses, rising energy prices and problems in the housing market, among others, are so worrisome to new Democratic Gov. Ted Strickland that he’s looking for outside help to figure out how to keep it above water.
The fund, managed by an advisory board including the president of the Ohio Chamber of Commerce who serves as its co-chairman, has retreated from $2.3 billion in 2000 to $555.7 million this November. A further dip to $155 million by April if the state’s economy doesn’t improve and if the amount employers pay into it is not increased is not far fetched.
But it should be noted with some curiosity that Andrew E. Doehrel, the Ohio Chamber’s president, a staunch, unapologetic advocate for business, doesn’t seem to be a member of the choir including President Bush and other Republicans that’s been singing the song about the strength and resiliency of the economy. According to Doehrel, recession is stalking Ohio.
"The recession has been so long and so deep that the fund has not been able to replenish itself. If the fund goes broke, everybody loses." [Andrew Doehrel, President, Ohio Chamber, TCD]
From a labor perspective, as articulated by Bill Burga, retired president of the Ohio AFL-CIO who co-chairs the trust fund’s advisory council with Doehrel, Ohio’s declining economy is directly related to job losses. Job statistics show that since 2000, when Ohio could claim 232,755 employers, the state has lost 5,947 so far.
Each employer is taxed on the first $9,000 that each employee is paid every year, according to the report. The imbalance between expenditures and revenues results from a stagnant taxable wage base has stayed constant contrasted with increasing annual benefits based on the average weekly pay.
A research analyst from Policy Matters Ohio (PMO) said that Ohio is not one of the 17 states where the taxable wage base is indexed so it grows along with wages. Zach Schiller of PMO said Ohio employers have paid less than the national average in employment taxes for the last decade.
In fact, PMO issued warnings in 2002, when it gave Ohio and “F” on a national report card on failing to keep its unemployment insurance fund in good health.
During the last decade, Republicans, who have been supported by guys like Doehrel, have controlled Ohio’s power bases, from the governor’s office to the legislature. Keeping employer contributions low was part of their strategy of catering to the wishes of the business sector, which they thought would attract more business to the state. That obviously has not happened.
You get what you pay for, but since Ohio hasn’t sufficiently paid into its unemployment trust fund, unemployed workers may not get the help the fund was created to deliver. And now that matters have deteriorated, a further hit to Ohio’s battered general revenue fund budget could come from interest payments on the money it may be forced to borrow to keep the fund afloat.
In 1980, the trust fund went bankrupt but was revived with federal help. In April of 2006, the trust fund advisory council advised the Ohio legislature to act by easing the burden on the system, but that didn’t happen.
Schiller says a problem that could have been corrected will only become worse. He predicts that Ohio will again have to seek a federal handout.
John Michael Spinelli is a former Ohio Statehouse government and political reporter and business columnist. He now serves as the OhioNews Bureau Chief for ePluribus Media Journal. Find ONB archives here.
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