Ohio MapDuring the last economic downturn, Ohio borrowed a total of $3.39 billion in loans from the federal government in 2009 through 2014 as a result of the state’s unemployment compensation fund dropping to zero in January of 2009.  The state also paid interest on the loan totaling $257.7 million.  As a result, Ohio employers were penalized in the form of increased FUTA (Federal Unemployment Tax Act) tax.  Under current unemployment compensation law, it is projected that the Fund balance will become insolvent in 2021 with no recession and in 2020 with a moderate recession and projected to be negative in 2030 with or without a recession.

On October 11, 2017 State Representative Kirk Schuring, R-Canton, introduced House Bill 382 in hopes to bring solvency to Ohio’s unemployment compensation system.  The proposed changes to Ohio’s unemployment compensation law in the bill are projected to generate approximately $370 million a year from 2019 to 2030.  Under H.B. 382 the Fund is projected to remain solvent through 2030 without a recession and projected to become insolvent in 2021 with a moderate recession, but recover quickly and then remain solvent through 2030.

The bill would increase the taxable wage base for contributory employers to $11,000 and increase the top rate of the MSL (minimum safe level) flat rate tax from 0.2% to 0.3%.   The current taxable wage base in Ohio is $9,000 through 2017 and will be increasing to $9,500 for calendar years 2018 and 2019.  The increase to $11,000 would begin on the first day of January immediately following the bill’s effective date.

The bill also establishes an employee coinsurance payment equal to 10% of the amount paid by the employer.  Current law prohibits an employer from deducting any portion of an employer’s contribution from an employee’s pay.  While the bill still prohibits this, it does require an employee to pay a coinsurance payment when they have satisfied the monetary requirements necessary to receive benefits.  It is important to note that while an individual who satisfies the monetary requirements and makes the required coinsurance payments under the bill, they will not be guaranteed benefits, as they would still need to satisfy the nonmonetary requirements that exist under current law.  If the bill is passed into law, Ohio would become the fourth state to require employee contributions, following Alaska, New Jersey and Pennsylvania.

Under this bill the current maximum weekly benefit amount of $443-$598 (based on number of allowable dependents claimed) would be frozen for ten years, extending a current freeze that applies in 2018 and 2019.  The maximum allowable weeks would also be limited to 24 instead of the current 26 weeks, with exception on whether the unemployment in the industry is caused by weather which would allow for an additional 2 weeks and bring the maximum allowed back up to 26 in those certain industry/weather related situations.  After the 10 year freeze ends, it is projected that the maximum weekly benefit amount would increase to $662 in 2029 should this bill go into effect in 2019.

The bill also includes a provision to adopt a joint resolution to put a constitutional amendment on a statewide ballot that would allow the state to issue bonds in order to repay any future debt to the federal government should Ohio ever be forced to borrow again in the future as a result of insolvency.  If both houses of the General Assembly approve the resolution, then Ohio voters could see this as an issue on a future ballot.

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