Senate committee advances bill to cap unemployment system upgrade fund, lower employer rates

Frankfort — The Kentucky Senate Standing Committee on Economic Development, Labor and Tourism voted unanimously to report favorably an unemployment-insurance bill sponsored by Senator Mike Nemes that would cap the Service Capacity Upgrade Fund and lower employer contribution rates.

The bill, described by sponsor Senator Mike Nemes as aimed at stabilizing the state’s unemployment insurance financing, would cap the fund known in the transcript as the SCUF (Service Capacity Upgrade Fund) at $15,000,000 and reduce employer rates now being charged to sustain the upgrade fund. "So, this is an unemployment insurance bill. It's about the SCUF fund," Nemes said, describing the fund as a reserve created after problems with the unemployment insurance computer system.

Nemes told the committee the SCUF was established after a computer failure left the system without sufficient resources for fixes and that employers "raised their rate to take care of this." He said the bill’s intended effect is to lower those employer rates while leaving enough money to make annual upgrades and to provide for a new system if necessary.

A floor amendment Nemes described would do two things: place a $15,000,000 cap on the SCUF and halt transfers into SCUF if the regular unemployment-insurance fund is below its target level from the prior year, redirecting new revenues to the unemployment fund instead. "That will cap that," Nemes said of the proposed limit, and he added the redirection safeguard so the state would not maintain a top-tier computer system without money to pay benefits.

During the committee vote, Senator Thomas asked to explain his aye vote and praised the governor’s fiscal stewardship, saying the governor had "shown tremendous accountability and responsibility with the use of Kentucky monies" during his tenure. Several senators and the chair voiced support during the brief discussion.

The clerk recorded an initial committee tally of 9–0 and the chair announced the bill would be reported with a favorable recommendation. Committee members later registered additional aye votes, and the chair stated the count rose "up to 11 to 0." The committee did not take further amendments on the record during the hearing; the measure will be sent to the full Senate for floor consideration.

The committee meeting included brief introductions and recognition of guests, including education representatives and students from Pike and Pendleton counties. The chair closed the item and called for a motion to conclude the committee’s business.

The transcript did not include a bill number or the formal text of the amendment; the bill was described in committee only as a measure sponsored by Senator Mike Nemes addressing the SCUF and employer rates. The committee record shows the bill was reported favorably and will proceed to the Senate floor for further action.