Cleveland Plain Dealer...
Ohio fund paying jobless benefits out of money, but state not working on long-term fix
Monday, August 06, 2012
By Olivera Perkins 

The fund that pays jobless benefits in Ohio went broke in 2009, and state officials still haven’t worked on a long-term solution. 

The fund that pays jobless benefits in Ohio went broke in 2009, and there’s no evidence the state is looking for a lasting solution. 

The sagging Ohio Unemployment Compensation Trust Fund needs a long-term fix to make it solvent, say experts and others who are urging officials to make it a priority. And even though the unemployed still receive benefits because of federal loans obtained by the state, such debt comes at a cost. 

Next month, the state expects to pay $65 million in interest charges on the debt, said the Ohio Department of Job and Family Services, which oversees unemployment programs. Last September, Ohio paid $70 million in interest. 

“For us to be spending money on interest charges given the needs of the people of Ohio is bad policy,” said Zach Schiller, research director for the think tank Policy Matters Ohio, that wants state officials to find a sustainable solution for the fund. “It potentially has an impact on whether we cut funding to our school systems, whether we have cops on the beat and whether we have enough money to pave roads.” 

The current trust fund debt is nearly $1.8 billion. It was at its highest at $2.6 billion in 2011. 

Mike Evangelist, a policy analyst with the National Employee Law Project, said employers need to pay more into the fund. The fund’s source is a tax that employers pay on the first $9,000 of an employee’s salary. That is far below the national average for taxable wages, which is more than $16,000. 

“By law, it (minimum taxable wage) has to be at least $7,000,” said Evangelist, whose organization tries to get public officials to address insolvent trust funds. “Ohio is pretty bad. Only a few states are lower.” 

State Rep. Ron Young, the Leroy Township Republican who chairs the Commerce, Labor and Technology committee, is also concerned about a continuing big expense that could have potentially been avoided. 

Opinions differ on what caused the insolvency and how it should be addressed. Schiller agrees with several experts who say many states have trust funds that are broke because the amount of tax that employers pay into the fund is too low. The high unemployment in recent years highlighted the flaw. 

Young and state Sen. Kevin Bacon, the Columbus area Republican who chairs the Insurance, Commerce and Labor committee, believe the trust fund went broke because of an economic anomaly -- the Great Recession. 

Both legislators are hesitant to make changes they deem may be too severe. They say as Ohio’s jobless rate dropped, it has helped lower the debt as fewer people make unemployment claims. 

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