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Montana unemployment system modernized, department proposes new lower tax tier to reduce employer rates
Summary
Department officials told the appropriations subcommittee that a new claims platform cut claim processing times, the unemployment trust is strong, and the agency will propose adding a lower tax tier to the employer tax table to allow rate reductions while maintaining a recession reserve.
Sarah Swanson, commissioner of the Montana Department of Labor and Industry, and agency analysts described improvements to the state's unemployment insurance system and a legislative proposal to add a lower tax tier to Montana's employer tax schedule.
The department reported that the new Montana Unemployment System Environment (MUSE) reduced claimant processing times; Commissioner Swanson said the average time to file a new claim had fallen from about 49 minutes on the old system to “less than 13 minutes for a new claim and less than 3 to file your weekly pay claim.”
On fund health and tax policy, the department said Montana's unemployment trust is among the stronger state funds nationally. The agency commissioned an independent actuary and concluded that adding a twelfth tax rate would let the state lower employer unemployment taxes now while preserving a prudent ending balance for recession risk. The department cited an actuarial threshold of roughly $20,000,000 as a minimum ending balance to prepare for a recession and indicated it expects to return to the Legislature in two years to consider additional ESA (Employment Security Account) rate reductions if projections hold.
The department also disclosed a past accounting anomaly discovered during system work: an unemployment benefit bank account reconciliation showed approximately $12,000,000 more in the bank than the accounting system recorded; the agency said it has since audited and corrected records and launched additional business-process modernization with outside consultants.
Why it matters: changes to the employer tax schedule affect Montana businesses' payroll costs; modernization of claims processing affects timeliness of benefit payments for claimants. The subcommittee discussed legislative language to add the new lower rate; agency staff identified the bill as House Bill 210 (tax-schedule amendment) in committee discussion.
Ending: Committee members requested follow-up materials including the actuarial report, fund-balance projections and the methodology behind the proposed tax-table change before any final legislation is approved.
