House committee hears competing plans to shore up Ohio unemployment fund

At a hearing of the House Public Insurance and Pensions Committee, witnesses and lawmakers discussed House Bill 321, a measure aimed at improving the solvency of Ohio's unemployment compensation (UC) trust fund. Testimony focused on proposals to raise the taxable wage base and to introduce employee contributions, and on how changes would affect low-wage and seasonal workers as well as construction employers.

Bailey Sanden, working wages fellow at Policy Matters Ohio, told the committee that Ohio's UC system is underfunded largely because employer taxes have not kept pace with the modern economy and the taxable wage base has not been adjusted for decades. "This is a scandal that should be addressed," Sanden said, noting that Ohio still taxes only the first $9,000 of wages and that if the base had been indexed it would now exceed $16,000. Sanden also cited program statistics, saying about 21.1% of unemployed Ohioans currently receive benefits and that only 25.7% of claimants exhaust the full 26 weeks available in most states.

Sanden urged that any employee contribution be structured so workers who pay in are eligible to draw benefits. She supported a stand-alone bill rather than folding UC financing changes into the biennial budget and recommended that an employee contribution begin only on wages above the minimum qualifying amount so contributors would not be excluded from benefits by existing eligibility rules.

Representatives asked about tradeoffs between raising the taxable wage base, increasing employer charges for firms with "negative" experience ratings, and cutting benefit weeks. Sanden and other labor witnesses opposed reducing the 26-week maximum and argued that the fund's core vulnerability stems from a too-low taxable wage base and structural flaws in the state's experience-rating and mutualized-account calculations.

Construction-industry witnesses said the sector depends on UC to retain trained workers through seasonal shutdowns. Chris Runyon, president of the Ohio Contractors Association, described construction work as highly skilled but subject to weather and transient assignments, saying unemployment "is a key in keeping those workers engaged in our industry" during seasonal gaps. Runyon warned that some reform options could impose very large costs on major contractors and risk harming the industry's competitiveness with neighboring states.

Andrea Ashley of the Associated General Contractors of Ohio echoed those concerns, pointing to regional competition for skilled labor and to major projects that require a stable construction workforce.

Matt Smith, legislative director for the Ohio AFL-CIO, urged broader, longer-term reforms: permanently raising and indexing the taxable wage base, avoiding cuts to benefit weeks, and modernizing employer contributions. "If the fund does go broke, the state has to borrow money from the federal government," Smith said, warning that federal borrowing can lead to lost FUTA tax credits and higher employer costs over time.

Committee members pressed witnesses for clarifications about eligibility thresholds, the effects of seasonality and apprenticeship training, the potential scale of employer liabilities, and whether employee contributions should be subject to collective bargaining. No vote was held; members were encouraged to review written testimony from additional stakeholders before further action.

The committee adjourned without taking a vote on House Bill 321.