unemployment trust fund

[Carolyn Branagan]

Vermont’s Unemployment Insurance Finance system is in big trouble.  This should be no surprise to anyone. In spite of the steps taken by the Vermont legislature last session to make the system solvent,  the Trust Fund ran out of money at the end of February. So far the state has borrowed more than $50 million from the federal government in order to keep it working. Nearly 40 other states have done the same thing and by the end of the calendar year Vermont will have borrowed $93 million. If no changes are made, Vermont will borrow another $187 million by the end of 2011. This money along with interest has to be paid back at some point.

Part of the problem is that until last year the taxable wage for unemployment purposes had not changed since 1983. The taxable wage amount had not changed since1983,  but last year it was finally changed from $8000 to $10,000. Employers have been getting a great deal. In 1983 the taxable wage amount was raised from $6000 to $8000, roughly half the current average wage. The current average annual wage now is $39,000. The $10,000 cap on taxable wage is scheduled to go back to $8000 at the end of this year if no change is made. The revenue coming into the Trust Fund in 1987 was the same amount that came into it during 2007, 2008 and 2009.

Employers also pay a federal unemployment tax called the FUTA. This tax is 6.2% on the first $7000 of wages paid in the calendar year. Employers normally receive a credit against the federal unemployment insurance tax of up to 5.4% for an effective rate of .8% or a maximum of $56 per covered worker per year. The highest amount of benefits an unemployed person was able to collect increased each year between 1998 and 2002. The increase matched the Cost of Living Allowance, COLA. Now that we are in the most severe recession since the Great Depression the trust fund is paying out far more than it is taking in. We are spending much more on unemployment benefits than we are taking in.

This is a terrible time to be increasing tax obligations on employers. Both the benefits to the unemployed and the amount of taxes asked to be paid by employers need to be indexed. If that had happened in 1983 we would not have the problem we have now. Please contact me at cbranagan@leg.state.vt.us to let me know how you think we should solve this problem. I want to hear from you
 
Representative Carolyn Branagan
Franklin-1, Fairfax/Georgia
Vermont House of Representatives

 

[special ED]

theres alot of fraud going on ,you need find someway to check up on people,collecting then working under the table at the same time

[Carolyn Branagan]

Ed,

Yes, we've heard this is a huge problem. We're  thinking of imposing some kind of penalty/fine. Thanks for the reminder.

Also......I found someone to fix the grill. Hope all is well with you.

Carolyn

[special ED]

sorry for that carolyn,grills are just not my thing .I have a hard enough time getting mine to work after being outside all winter long ,I just turn the gas on and stand a lond distance away and throw the matches until it lights,sometimes it looks like arora borealis at night

[Mummy]

Why would you question "most" of these hard working folks who have worked for years and paid into this system?  Barrow the money!

If you need to study something ... Study the females who are using their reproductive systems to stay home, live with a partner and collect for years on $$, health insurance, rent, food stamps, electric and fuel.   And they are also baby sitting under the table. 

Those of you in office need to develop a Watch Dog Department who follow up on these young females who are abusing that system.  In addition, this same office could follow up on those who do abuse the unemployment program at the same time.

Hey - Thanks for asking!

[aheyer]

As somone who works in unemployment, albeit on the side of employers, I need to correct you Mummy that that we as employees pay in to the unemployment system as we work.  In fact, it is the employers who pay for unemployment through their tax rates.  If someone is fired from a job, a common misconception is that they have been paying into the fund, and generally that is the argument used when one is rightfully denied benefits.  That is why companies such as mine exist, to help employers process claims and ensure that all state requirements are being met while at the same time keeping their costs and tax rates as low as they can be. 

With that being said, as Caroyn stated Vermont certainly is not alone in struggling to find money to keep money in their unemployment funds, as every state seems to be having the same issues.  I have to agree with Ed that steps need to be taken to ensure that those collecting benefits against their old employers and the fund need to adhere to the requirements of unemployment (both being unemployed and also actively seeking work).  My thought is that the problem will not be corrected until a balance can be found between the amount that one as an individual can collect in unemployment benefits and the amount that employers are required to pay into the fund.

[David Shea]

Why was this deficit addressed sooner?  It does not take a doctorate in economics to have seen the writing on the wall. 

Total unemployment fund / (Total Vermonters collecting * average monthly benefit) = months of unemployment funds left.

Crisis management...

[special ED]

can I lay myself off and collect unemploment bennies?

[Mummy]

Aheyer-  Not sure what busines you are in but my point is YES borrow the money for the maturity of these folks are hard working folks who have lost their jobs!  If you want to start to save money then stop supporting all the females who are staying home due to pregnancy (AND LIVING WITH A PARTNER) while collecting at all of our expense for the next 18-years and on!

There are always loop holes and that is where the Gov. needs to have a system in place to verify what needs to be verified.  Also, beaware that there are those who get firered and then there is IBM who just firers after 20 plus years.  They don't lay them off  ... they firer them.  Otherwise all of the IBMer's who were firered in January of 2009 would be called back to work but instead not IBM can hirer them back without the pensions or pay. 

This too may be a new trend where one day it could be your company firering you and you could be without the buffer of unemployement to help you figure things out!   Something to keep in the back of your mind.  If Big Blue can do it and get away with it, why a smaller company? 

[cedarman]

I'm not sure of all the rules around unemployment, however, I don't think the system needs to get larger.  I'm surprised Ed is advocating for making government larger.  I suspect that adding "investigators" to try to catch people working while drawing benefits may not create a large enough reduction in payouts to cover the added beaurocratic cost.  Investigators would have to actually be out with a camera to have documented evidence of work AND payment.  Just because you are unemployed, it doesn't mean you can't work - you just can't be working for financial gain (that's the tough part to prove if there are no checks involved).

Disability payments on the other hand are a different story - video evidence of doing work could be enough for a fraud case.

I think cost/savings ratio could be beneficial to the people paying the bills when investigating welfare/SSDI cases.  I knew a few people when i was growing up that were collecting government disability benefits (money, food stamps, fuel, etc), but were still working.  In some cases, the benefits were because the person couldn't read or write to an "employable" level (as determined by a state test - which they intentially did poorly on).

To get back to the unemployment fund issue.  It needs to be corrected.  Maybe the best option is to borrow some, and increase the tax slowly over time as the economy is recovering until the tax rate is at a sufficient level to sustain payments to 10 or 15% of the work force unemployed at any given time.  Since the "benefit" is to the employee, (as much as I hate to say this) maybe we as employees should be shouldering some of the cost.

[special ED]

cedarman, I am self employed {if you didnt know that} and I have slow periods sometimes that makes life difficult ,I run into many people that take a layoff and then go do side work ,That has an impact on me as well as other contractors and it is hard for me to sit by and listen to what is going on without an opinion. For the under the table people it is very easy for them to under bid me and still make money ,I say if the government makes rules then they damn better inforce them,the under the table people donot pay taxes on the money they make ,and to put salt in the cut they are still collecting from the teet ,Now dont get me wrong if they want all the perks for having their own business LOL and I would say bid on a level playing field ,you and I know that will never happen