Archive for Tuesday, August 25, 2009

Legislators have tough questions for state labor secretary over dwindling unemployment trust fund

August 25, 2009, 8:18 a.m. Updated August 25, 2009, 5:29 p.m.

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— A Republican legislator chewed out Kansas’ labor secretary Tuesday, accusing him and his staff of missing early signs of trends that are now draining the state fund used to pay benefits to unemployed workers.

Secretary Jim Garner faced hostile questions from Republicans on the House Appropriations Committee because the Department of Labor now projects that the Unemployment Insurance Trust Fund will run out of money by the end of the year. The department announced earlier this month that it might have to borrow money from the federal government to keep paying benefits on time.

Rep. Jason Watkins, a Wichita Republican, told Garner that lawmakers relied on “wrong information” from the department this spring in agreeing to a proposal from the Democratic administration to improve benefits, starting in January. The change allowed the state to collect $69 million in additional federal stimulus funds earmarked for unemployment benefits.

Watkins said the department assured legislators the trust fund would have enough money into the future and could afford the improved benefits. He was skeptical of Garner’s statements that the department didn’t know until July that its previous projections were seriously flawed.

The state imposes a payroll tax on employers to help finance unemployment benefits, and the current rates might rise next year to replenish the trust fund.

“I think somebody did make a mistake. I think somebody was asleep at the wheel,” Watkins told Garner. “I think this Legislature was given wrong information.”

Garner said he took issue with the notion that the department made a mistake. He said it relied on federal forecasting models until unusually high benefit payments in June — some $78 million — showed conditions in Kansas were abnormal.

The secretary said the state not only received an unusual volume of claims but a higher-than-normal percentage of jobless workers are eligible for benefits, and they’re collecting benefits longer. He said all of those trends spiked after the spring.

The state began the year with $566 million in the trust fund, and the balance had dropped to less than $335 million last week. Without any changes, the department says, the fund would have a deficit of $292 million by March.

“You are trying to hold me accountable for a situation that most economists and most labor officials were not able to predict,” Garner said.

But Watkins said the department should have seen trouble coming before July because of layoffs in manufacturing, particularly aviation.

“I do think this could have been identified earlier,” Watkins told Garner. “I believe somebody needs to be held accountable.”

Comments

KS 5 years, 11 months ago

It is really very simple. The Departmen of Labor will give out benefits to anyone. Now, as they say, the chickens are coming home to roost. Oh, I know, let's just tax the employers more. That's the simple soultion and then watch them close down or leave Kansas.

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