Issues

Fight is on to protect unemployment comp safety net

Pennsylvania’s unemployment compensation system was designed to provide a safety net for workers who lose their job through no fault of their own.

The system’s ability to continue to be that safety net is now in serious jeopardy, which is why the General Assembly is considering legislation (H.B. 916) designed to ensure that UC benefits continue to be available for those most in need.

The problem

Pennsylvania’s UC Trust Fund is broke. It’s that simple. Pennsylvania has been paying out more money from its UC Fund than has been coming in. The state is second only to California in the amount of UC benefits paid out over the past year, despite an unemployment rate that is lower than most states. This is due to the liberalization of benefits over the years beyond the original safety net intent, made worse by private-sector job losses that occurred during the recession and that have been slow to return. Pennsylvania’s UC taxes are also among the highest in the nation.
To keep the fund operating, Pennsylvania has borrowed $3.8 billion from the federal government – a debt that is third behind California and Michigan in the amount of money borrowed to shore up its UC system. To make matters worse, the federal system is also insolvent. If states like Pennsylvania continue to borrow from the federal government to fund their UC systems, the debt ceiling will have to be raised, which means an even bigger federal deficit.

The solution

House Bill 916 would control costs; tighten eligibility requirements to ensure the system is there for those truly in need; and restore solvency to the state's UC Trust Fund.

The bill would reduce benefits slightly, and calls for commonsense reforms like requiring UC recipients to actively participate in work search programs – something they don’t have to do under the current law.

House Bill 916 is a responsible approach to a tremendous fiscal challenge that threatens the entire unemployment compensation system.

Taking these steps today will restore solvency to the system by 2018 and leave the UC Trust Fund with a balance of $670 million. Without action, the Commonwealth would still face a loan debt of more than $2 billion!
The state cannot continue to pay out money it does not have.

Pennsylvania workers deserve to have peace of mind in knowing that if they lose a job through no fault of their own, they will have a lifeline in place to help them out as they take steps to seek new employment opportunities.
The General Assembly can provide that by restoring balance, fairness and sound financial principles to Pennsylvania’s UC system through enactment of H.B. 916.