Funds for benefit increase unused - East Valley Tribune: Business

Funds for benefit increase unused

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Posted: Wednesday, January 29, 2003 9:30 am | Updated: 1:19 pm, Thu Oct 6, 2011.

More than $140 million in federal funds that could be used to help cover an increase in the unemployment insurance benefit has been sitting in a state trust fund since mid-2002, according to the Arizona Department of Economic Security.

In Arizona, the maximum, weekly benefit is $205, below Alabama and Mississippi, and the lowest in the nation.

At the same time, the state trust fund that pays the benefit now hovers, and even surpassed last year, $1 billion and is the eighth-highest relative to costs in the nation.

In the trust fund sits a $144 million rebate in federal unemployment insurance tax revenue, said Joe Edwards, program specialist with the DES.

“When there is, according to the federal formula, a surplus of federal unemployment tax monies that are collected into various funds for administration and other things, they redistribute some of the excess to the state,” he said.

“Arizona's share of that was $144 million. It's deposited into the (state) unemployment trust fund and it is the prerogative of the Arizona Legislature and they can do one of a number of things with that amount of money.”

The Legislature can appropriate this money to either increase and pay unemployment insurance benefits, or cover administrative costs of the state's unemployment insurance program, such as hiring more staff or improving automated systems.

It can also choose to leave the money in the trust fund to pay out benefits over time and increase the balance of the fund. The U.S. Department of Labor authorized the rebate last March, and the money was distributed in the middle of last year, Edwards said. The rebate wasn't distributed in time for the Legislature to consider allocating it during its regular session last year, he said.

State Sen. Slade Mead, R-Phoenix, said last week that he had just heard about the $144 million rebate and was investigating why the money hadn't yet been paid out.

“If indeed this is the case that that money is there, I think we should be looking at how to distribute it to those people who are in need of unemployment help,” he said. “It's outside the regular unemployment insurance fund.”

Last week, state Sen. Barbara Leff, R-Paradise Valley, said legislation will be introduced in the current session seeking an increase in the maximum, weekly benefit. When contacted Tuesday, she said it has not yet been determined how big of an increase will be sought.

If the Legislature decides to leave the rebate money in the trust fund, it could, over time, help maintain or lower the overall unemployment insurance tax rate for all employers, Edwards said.

Children's Action Alliance recently criticized the Legislature's failure to increase unemployment benefits.

The Arizona Chamber of Commerce, which represents the business community, said it has no problem with increasing the maximum benefit as long as it doesn't threaten the stability of the trust fund and increase taxes on employers.

In the meantime, having the nation's lowest maximum, weekly benefit means the state is receiving less money for federal benefit extensions than other states, Edwards said. This month, President Bush signed hastily passed legislation extending unemployment benefits for 2.5 million unemployed workers nationally. The measure extended a federal program that provides 13 weeks of benefits for the unemployed who have exhausted their 26 weeks of state aid.

“We get federal money at the same rate that we pay regular benefits,” Edwards said. “So in that sense we don't get as much as some other states because we pay less than other states. If we paid a higher weekly benefit, we would get more money.”

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