SB28 UI Fund is Broke but Dems Want More Benefits

SB28 by Sen. Rollie Heath (D)

ESTABLISHMENT OF THE COLORADO "WORK SHARE PROGRAM" TO ALLOW PAYMENT OF UNEMPLOYMENT COMPENSATION BENEFITS TO ELIGIBLE EMPLOYEES WHO HAVE RECEIVED A REDUCTION IN WORK HOURS.
Status: 02/26/2010 Senate Committee on Appropriations Refer Unamended to Senate Committee of the Whole

CRBC Position: Oppose

The bill proposes to set up a new program under the unemployment system in the Colorado Department of Labor and Employment to allow employers, in lieu of laying off a percentage of their workers in a unit, to cut back on all workers’ hours by that percentage (between 10% and 40%) and then apply to have those employees file for a proportional amount of unemployment insurance benefits.

This is a new expansion of benefits – currently employers can cut back to 32 hours per week with no benefits allowed.

This proposal goes against a basic premise of the UI system – that workers receiving benefits must be actively looking for work or additional work.

SB 28 sets up a complicated and difficult program that is unmanageable and unverifiable – employers cannot prove that they would have laid off a certain number of workers and cannot give assurances that employees will be returned to full hours in the future, but especially not in the short time-frame given in the bill.

UI Fund Costs – SB 28 will be a further cash flow drain on the Unemployment Insurance Fund which is currently insolvent. Even though employers who choose to utilize the fund will pay a higher experience premium in following years, the fund will bear an immediate cash flow outlay. Also, in order for an employer to realize the equivalent costs savings of layoffs, he/she would have to reduce hours by a greater percentage – thereby impacting the UI fund to a greater degree.

Administrative Costs – administrative cost estimates have varied from an initial $60,000 per year to $486,000 for the initial year to $231,000 for the initial year – but we still do not have a formal fiscal note. We know costs will be high as each plan for each employer must be reviewed and accepted by the Director of CDLE. CDLE says these costs will be covered by the federal government…but that money still is paid employers through our federal unemployment tax (FUTA).

SB10-28 creates an expensive program that few employers could utilize and that will put further drain on the UI fund if they do.

Virginia Morrison Love
Colorado Competitive Council

ACTION: Contact your Senator and explain how adding more cost to a program that is already borrowing between $80M -$100M a month makes no sense.