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The Springfield News-Sun digs into important issues that affect jobs and the economy in Clark and Champaign counties. For this story, the paper spoke with state lawmakers, business leaders, policy experts and union representatives about proposed changes to the state’s unemployment compensation system.
By the numbers:
24 — Percent of Ohioans who received unemployment benefits in 2015
$3.4 billion — Amount Ohio borrowed from the federal government for the fund
$130.3 billion — Total amount Ohio and 36 states borrowed
14.6 weeks — Average duration for unemployment benefits in Ohio in 2015
26 — Maximum weeks Ohioans can receive benefits currently
Source: Ohio DJFS
By the numbers:
24 — Percent of Ohioans who received unemployment benefits in 2015
$3.4 billion — Amount Ohio borrowed from the federal government for the fund
$130.3 billion — Total amount Ohio and 36 states borrowed
14.6 weeks — Average duration for unemployment benefits in Ohio in 2015
26 — Maximum weeks Ohioans can receive benefits currently
Source: Ohio DJFS
Lawmakers have proposed fixes to Ohio’s unemployment system that went broke at the height of the Great Recession but two Clark County union leaders have raised concerns about the plan.
They are trying to walk a fine line to ensure the program is solvent while balancing the interests of both workers and businesses. That could mean unpopular options like cutting benefits, raising taxes on employers, or some combination, said state Sen. Bob Peterson, R-Sabina, co-chairman of the Unemployment Compensation Reform Joint Committee
“Everybody recognizes there are not enough dollars in the fund if we hit another recession,” he sad. “If times get tough and people lose jobs, we are not taking enough dollars in based on the claims we potentially might have.”
About 24 percent of Ohioans received unemployment benefits last year.
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Lawmakers are expected to craft legislation before the end of this year to resolve the issue, using Ohio House Bill 394 as a starting point. Former State Rep. Barbara Sears introduced that bill last year, but has since left for a position in Ohio Gov. John Kasich’s administration.
But Jason Barlow, president of the UAW Local 402 that represents more than 1,100 Navistar workers at its Springfield plant, recently testified that some of the original bill’s provisions could harm workers and lead to larger problems in the long run.
Language in that bill would have cut the maximum time Ohioans could receive unemployment benefits from 26 weeks to as low as 12 weeks. The number of weeks would be based on the unemployment rate in Ohio at the time the application is filed.
“The reduction or loss of six weeks of benefits and up to possibly 14 weeks of benefits would be disastrous and most likely lead to increases in home foreclosures, evictions, vehicle repossessions and other tragic events to families in Ohio,” Barlow testified.
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Dave Morrow, former bargaining chairman for the UAW Local 902, also testified last month. Morrow worked for more than 26 years at National Oilwell Varco, also known as Moyno, in Springfield before the plant announced plans to close last year.
He argued the provisions in Sears’ original legislation placed nearly all of the burden on workers to make the fund solvent.
“Proposed HB 394, if passed, would compound an already tragic situation,” Morrow testified. “This legislation would be devastating for people like me who, through no fault of their own, have lost their jobs, their health insurance, and who now have to depend on the meager pay of unemployment insurance.”
The unemployment compensation fund has provided benefits to workers since 1935 and is primarily funded through a payroll tax on employers. The federal government covers the cost of most administrative fees.
When the fund became insolvent in 2009, Ohio and 36 other states borrowed more than $130 billion to cover the cost of benefits for workers, according to information from the Ohio Department of Job and Family Services. Employers in Ohio were hit with additional fees while the state repaid the federal government.
Earlier this year, Ohio used money from its rainy day fund to repay the remaining debt. But the unemployment fund’s balance is still so low, another recession would force the state to borrow again, said state Rep. Kyle Koehler, R-Springfield. The challenge is ensuring the fund can provide help to workers who truly need it, without raising costs too steeply for companies.
“If we raise the taxes on business that are trying to employ people so we can protect workers during a recession, are we in fact possibly hurting the employers who create the jobs we need,” Koehler said.
Lawmakers should start from scratch with new legislation, said Zach Schiller, research director for Policy Matters Ohio, a left-leaning think tank. The fund has been inadequately financed for decades, he argued, and Ohio’s benefits aren’t out of line compared to other states.
Policy Matters Ohio proposed a five-point plan that includes creating a new 0.15 percent tax for employees and raising the taxable wage employers pay from the current level of the first $9,000 earned to $14,000.
The employee tax would cost workers making $40,000 less than $1 per week, and allow the fund to become solvent by 2025, Schiller said.
While Ohio HB 394 is a starting point, legislators are keeping all options on the table now and it’s too early to say how the final proposal might look, said Rep. Kirk Schuring, R-Canton, the committee’s other co-chairman.
“We’re in the middle of the process right now so we’re anxious to hear from as many witnesses as we can,” Schuring said. “The people who came in from the Springfield area were very valuable to the process and we hope we will hear more from others all across the state of Ohio.”
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