Ohio’s 1936-era, financially precarious unemployment insurance system is in dire need of funding support. The matter was previously handled in a nonpartisan way, but that is a challenge in a Statehouse that is becoming more and more hostile.
It appears that statehouse business and labor groups, who in the past fashioned compromise unemployment compensation laws, are no longer aiming for that. However, as Anna Staver of Cleveland.com recently revealed, Ohio’s unemployment fund may once more be bankrupted by the country’s next recession.
According to Staver, one rescue plan, House Bill 321, put up by Republican Representative Bob Peterson of Fayette County, would raise employer contributions and demand around $100 annually from a worker making $75,000 who works for businesses that drain the system more than they contribute.
Rep. Michelle Teska, a Republican from Centerville, a suburb of Dayton, is the sponsor of House Bill 376, which would reduce the maximum benefit weeks from 26 to 20, saving an estimated $154 million a year, according to Staver. Republican Representatives Heidi Workman of Rootstown, Jack Daniels of Akron, and Sarah Fowler Arthur of Ashtabula are co-sponsors of the benefit cut.
Ohio’s unemployment benefits are administered by the Ohio Department of Job and Family Services. The Unemployment Compensation Fund has $1.7 billion, according to state Job and Family Services Director Matt Damschroder’s April testimony before the Ohio House’s Public Pensions and Insurance Committee. According to current forecasts, the fund will still become insolvent by 2032 if unemployment rates stay largely unchanged.
He stated that following the 2008 Wall Street crash, Ohio had borrowed $3.4 billion from the U.S. Treasury twice in recent decades to pay unemployment compensation (and paid $258 million in interest). The remaining debt was paid off in 2016 with the help of unclaimed money, a cash pool that was recently used to help the Cleveland Browns’ owners, Dee and Jimmy Haslam, and a short-term increase in the unemployment tax.
Additionally, according to Damschroder, Ohio borrowed an additional $1.5 million from Washington in 2020 to pay for unemployment benefits during the COVID pandemic. The loan was paid back in 2021 using money from the federal American Rescue Plan Act.
Ohio’s unemployment compensation system was established by the General Assembly in December 1936, based on legislation passed by Congress. The maximum unemployment benefit in Ohio was initially set at $15 per week, which could only be paid out for a total of 16 weeks in a year, or $240.
The maximum benefit available now is $15,600 per week for a maximum of 26 weeks. (A household in Ohio with one person makes $15,650, which is the Federal Poverty Guideline.)
There was a time when lobbyists and members of the General Assembly worked together to draft laws pertaining to unemployment benefits. For instance, the Ohio Manufacturers Association, the National Federation of Independent Business, and the Ohio AFL-CIO were among the lobbyists who flanked then-House Speaker Cliff Rosenberger, a Republican from Clarksville, Clinton County, when he announced the passage of a bill to financially strengthen Ohio’s unemployment compensation program in late 2016. The bill was drafted and supported by both labor and business lobbies in the Statehouse. At the Statehouse, that type of productive policymaking appears to have disappeared.
Nonpartisan budget specialists believe that the Peterson bill, HB 321, would only be a temporary solution. The Teska measure, HB 376, would further reduce the earnings of Ohioans without jobs, which is the last thing the state’s economy needs.
Legislative leaders and relevant lobbyists have long since had to sort this mess out without sacrificing benefits. In addition to endangering Ohio’s unemployed citizens, statehouse neglect also jeopardizes the state’s standing as a financially stable and business-friendly state.
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