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Staff models show modest near-term benefit increase but possible employer tax uptick if trust fund breaches $350M
Summary
Department staff told the subcommittee an isolated model of Representative McKenzie27s benefit-tier proposal would raise benefit payouts by about $9.9 million in the modeled year; if trust-fund balances dip below $350 million, staff estimates an incremental $6 million in employer taxes across two quarters. The timing of triggers and the effective date are critical to the outcome.
Department staff presented an analysis isolating the effect of Representative McKenzie27s proposed additional benefit tiers using 2025 claim experience and an assumed July 1 effective date. The isolated estimate increased benefit payouts by roughly $9.9 million over the modeled year. Staff emphasized the modeling intentionally did not fold in other changes (such as shortening duration) in that isolated estimate.
Staff also explained that the statutory fund-balance threshold for changing employer fund-balance reduction is $350 million. In staff27s forecast the fund hovered near that threshold (they reported a modeled $349 million in one forecast scenario), and if the fund dips below $350 million it would change the fund-balance reduction, which could lead to an estimated $6 million in additional taxes paid by employers statewide in the second and third quarters of 2027 in the modeled scenario.
The presenters stressed uncertainty: small changes in timing or triggers move whether impacts fall inside the department27s forecast window and whether employers actually experience the tax change in 2027 or later. They recommended targeted sensitivity and duration modeling, particularly to show how accelerated payouts under a 20-week schedule with higher weekly benefits could affect short-term fund draw compared with a 26-week distribution.
Next steps: staff agreed to run the requested scenarios and to provide the legal citation they referenced that addresses a claimant27s property interest in a monetary determination.
