Unemployment Insurance Task Force Seeks Answers

by Gabe Bullard on April 29, 2009

From Kentucky Public Radio’s Tony McVeigh

A task force charged with finding ways to replenish Kentucky’s depleted unemployment insurance trust fund is holding frequent meetings in Frankfort
In recent years, Kentucky has been paying out more in unemployment benefits than it takes in through employer contributions. The situation was untenable, especially in a period of rising unemployment rates, and earlier this year, the state’s unemployment insurance trust fund went broke. To meet ongoing obligations, Governor Beshear announced the state would begin borrowing money from the federal government.

Helen Mountjoy
“This will enable us to pay benefits to everybody who is eligible. But this is only a short-term solution to a complex and long-term problem. Our current system is unsustainable,” said Beshear.
Indeed, not only is the trust fund broke, but the borrowed money must be paid back with interest, and the current tab is 245-million dollars and climbing. To find solutions to the problem, Governor Beshear created an 18-member bipartisan task force chaired by Education and Workforce Development Secretary Helen Mountjoy. Mountjoy says the group’s first challenge is to come to agreement on an unemployment insurance modernization plan that alters the way the state calculates unemployment payments.
“What we’re looking at is a way that we can insure that the most recent work history of a person is used as the basis for calculating whether they’re eligible for unemployment insurance or not and what their level of benefit might be,” said Mountjoy.
Adopting new guidelines could earn the state 30-million dollars in federal stimulus money, which would be used to help replenish the unemployment insurance trust fund. And Secretary Mountjoy says the task force needs to come to quick agreement on the issue in case Governor Beshear calls a special session in June.
“The things that we are looking at now, starting today with these modernization elements, are things that would require changes in Kentucky statutes,” said Mountjoy.
But Mountjoy says the panel of lawmakers and business and labor leaders has an even bigger challenge in the months ahead.
“To look at the system of unemployment insurance that we currently have in Kentucky – the one which currently is bankrupt. We are borrowing money from the federal government in order to continue paying benefits to people who qualify for them – to look at that entire system and again make recommendations that can go to the governor and the general assembly for making that system both stable and solvent,” said Mountjoy.
Task force member Jim LeMaster of the Kentucky Association of Manufacturers says the group is going to need some help.
“The legislature has a policy where they don’t vote on anything without a fiscal note. If we don’t have some help out there, with some expertise, I don’t know how we address this issue. I mean we’re just sort of in the dark if we don’t come to some method of trying to find somebody to give us some help in that area,” said LeMaster.
One member suggested hiring a Washington consultant to study Kentucky’s unemployment insurance system and make some solvency recommendations, but Rep. Rick Nelson says the task force should look closer to home.
“We’ve got two – at least two, maybe more – fine universities that would seem we use those folks for a lot of other things. And our own Finance Cabinet and state government – I would hope that we could maybe get some people locally to do a model for us, instead of spending 150-thousand dollars,” said Nelson.
Secretary Mountjoy says the group can also call upon experts in the Labor Cabinet, but she’s open to all suggestions. Final task force recommendations for restoring and maintaining the viability of the unemployment insurance trust fund are expected to be ready for consideration by the 2010 General Assembly.

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