Unemployment Compensation Reform Joint Committee Formed

Date: August 17, 2016

Legislative leaders in the Ohio General Assembly recently
announced the formation of the Unemployment Compensation Reform Joint
Committee.  The committee, comprised of
eight members of the legislature (four from each chamber) will be co-chaired by
Representative Kirk Schuring and Senator Bob Peterson.  The committee will focus on establishing
long-term solvency for the unemployment system. 
Over the course of the next three months, the committee will hold five
meetings seeking input from all interested parties.

Prior to the legislature breaking for summer recess, House
Bill 390 was passed by both chambers and signed shortly after that by Governor
Kasich.  This important bill provided the
administration with the authority to issue a loan to repay the outstanding debt
owed to the federal government.  This
debt was a direct result of the most recent economic recession where Ohio
ultimately borrowed over $3 billion to pay legitimate unemployment compensation
claims.  As a result of ongoing
borrowing, employers saw an erosion in the federal unemployment tax (FUTA)
off-set credit.  When not borrowing for a period of two or more years, Ohio
employers recognize a 5.4% credit on the 6.0% FUTA, paying a flat $42 per
employee.  FUTA is levied on the first $7,000 in wages.  However, to
expedite repayment of a loan, the credit is reduced and for 2015 Ohio employers
paid $147 per employee. 

Absent the enactment of House Bill 390 and repayment of the
outstanding federal debt by early November, Ohio
employers would see their FUTA off-set credit reduced, resulting in a
per-employee tax of $168, or four times the normal.  House Bill 390 will save Ohio employers
approximately $400 million in FUTA penalties! 
Ohio employers will see a state surcharge on their quarterly ODJFS
statements to repay this loan that will be approximately
$45.  Coupled with the normal $42 per
employee tax, employers will pay roughly $87 per employee next year.  This is
nearly half of what would have been owed.  This is
a huge win for Ohio’s small businesses. 
NFIB/Ohio applauds the efforts of the Ohio Legislature and Governor
Kasich.

While the repayment of the debt is critically important, we
cannot lose sight of fixing the long-term solvency of Ohio’s unemployment
compensation system.  The current
structure in place lends that when the next significant economic downturn hits,
Ohio will again very likely be borrowing to meet unemployment compensation
claims. 

NFIB/Ohio applauds the Ohio General Assembly for creating
this new committee.  We look forward to a
healthy, thorough discussion on how Ohio can improve our system.  While tough decisions need to be made, employers must not be asked to
shoulder the entire burden.  It is
necessary that a comprehensive review of our benefits, administrative functions
and eligibility are undertaken to craft a final product that rights the ship
and provides lasting stability.

Ohio’s unemployment compensation system has been on a
decades-long path of unsteadiness.  The
time is ripe for fixing this problem in a meaningful
way.  NFIB/Ohio encourages you to
share your stories and suggestions on the changes you feel necessary.  Please
contact Chris Ferruso, Legislative Director, at [email protected] and share your
thoughts.  We will continue to provide
updates as the process continues.  Be
sure to follow us on Facebook, Twitter,
and a www.NFIB.com.  

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