Committee considers removing volatile solvency formula, extends workforce fund spending window

CARSON CITY — Lawmakers heard Assembly Bill 21 on proposals to change how Nevada gauges unemployment trust fund solvency and to give the unemployment-related Career Enhancement Program (CEP) more time to obligate workforce dollars.

David Schmidt, chief economist in DETR’s Research and Analysis Bureau, told the Senate Committee on Finance, Commerce and Labor that section 1 of AB 21 would repeal a formula in NRS 612.550 that looks back 10 years and calculates a recommended reserve level based on a single worst year. Schmidt said the formula is “too volatile” and can produce widely varying recommendations — for example, DETR’s presentation showed recommended balances moving from about $1.2 billion in 2019 to an $8.2 billion estimate more recently because the statutory method reflects only a 10-year worst-year calculation.

Schmidt said DETR already uses the federal Average High Cost Multiple — a 20-year look-back that averages a jurisdiction’s three worst years — for practical solvency analysis, and AB 21 would remove the outdated statutory formula while leaving rate- and trust-fund-setting to analytic and administrative processes rather than a prescriptive 10-year calculation.

Section 2 of AB 21 targets the Career Enhancement Program, the workforce-services fund tied to employer payroll tax collections. Schmidt explained the CEP revenue collection is concentrated early in the calendar year because taxable wages are subject to the tax only up to a wage cap (presented in testimony as roughly $40,000). Current statute requires CEP funds that remain unobligated to revert to the unemployment trust fund after 90 days; AB 21 would extend that period to 180 days to give agencies more time to plan and contract services without permitting indefinite retention of revenue.

DETR Director Chris Gould and Schmidt also told the panel that DETR plans a conceptual amendment to AB 21 to add a third section addressing background checks required for certain DETR fraud-team staff to access IRS systems under IRS Publication 1075. Troy Jordan, deputy director, said recent federal or IRS interpretations require statutory authorization for the Department of Public Safety to provide FBI background checks to DETR for employees who need access for fraud cross-matching; the amendment would add statutory authority for DPS to perform those checks for DETR staff.

Supporters included Paul Moratkin of the Las Vegas Chamber, who said the change to remove the 10-year formula “modernizes” the statute and does not jeopardize solvency, and Andrew McKay of the Nevada Franchise Auto Dealers Association, who said less volatility provides more predictability for businesses. No testimony in opposition was recorded in the hearing transcript.

Committee members asked clarifying questions. Senator Ellison asked whether federal funds during the COVID period offset trust fund payouts; Schmidt replied that some federal programs (PUA and federally funded extended benefits) provided significant federal dollars but the state trust fund also saw a large initial outlay from March to December 2020. Senator Steinbeck asked what DETR would use in place of the statutory formula; Schmidt said DETR already uses the federal Average High Cost Multiple and presents both calculations to the Employment Security Council and in the rate-setting process.

The committee recorded no final vote on AB 21 in the provided transcript. DETR said it will circulate the amendment language to the committee when available. The hearing moved on to a later public-comment agenda item without recorded committee action on AB 21.