The federal government considers Indiana’s current unemployment insurance (UI) trust fund balance of $650 million to be insufficient. The fed’s calculations show that Indiana should be somewhere between $1.7 and $1.8 billion. Moreover, the Indiana Department of Workforce Development (DWD) calculates that the state’s balance will be around $1 billion by the end of 2020 based upon current forecasts and will never get much higher than $1.1 or $1.2 billion. The general consensus among all parties is to maintain a balance that could sustain an economic downturn, but not everyone is certain that it needs to be at $1.8 billion, though all agree that it should be above $1 billion.

With that backdrop, DWD proposed a plan to raise UI taxes before the end of session. The agency’s proposal would have kept all employers in Schedule E through 2025 but tweaked their rates within the schedule based upon their experience. The Chamber was receptive to the initial concept but saw no data when the idea was first discussed. It was believed that the tweaking of rates would not be noticed by a majority of employers. However, when rates were put on a spreadsheet, we were able to determine that some of the highest percentage rate increases were among those that had the best rates and had been working on getting their experience lower. In some cases, those rates would have increased as high as 100-140%. No way was the Indiana Chamber going to support such a scheme.

Senate Pensions and Labor Committee Chairman Phil Boots (R-Crawfordsville) planned on amending HB 1062, the UI bill authored by Rep. Dan Leonard (R-Huntington), with DWD’s recommended changes. But the Chamber and allies pulled out all stops and were able to get backing from legislators and House and Senate Leadership to support our position and oppose the increase. As a result, Sen. Boots did not attempt to amend the tax increase into the bill. 

The Chamber supported HB 1062 as passed by the House; it makes various changes to unemployment compensation law concerning confidentiality, the method of sending notices to claimants and employers, plus permanently removing the cap on expenditures from the penalty and interest fund (used by DWD as resources for fraud collection). The bill ultimately passed in good form from the Pensions and Labor Committee 8-3 on Wednesday.           

Resource: Mike Ripley at (317) 264-6883 or email: [email protected]