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Lawmakers press DEW on trust-fund targets and how UI tax rates are set
Summary
Committee members pressed DEW Director Cheryl Stanton for detail on the $590 million April 30 trust-fund balance, statutory reserve formula and the five-year rebuild plan that projects a 2020 reserve need between $946 million and $970 million.
The committee devoted a lengthy exchange to unemployment insurance finances, taxable-wage forecasting and the balance between reducing employer taxes and ensuring future solvency. Director Cheryl Stanton explained the reserve target is derived from a statutorily based formula that uses the last three worst recessions and the state's taxable wage base; that led her team to estimate a 2020 target roughly between $946,000,000 and $970,000,000.
Members asked why the April 30 figure of about $590 million did not prompt immediate tax reductions. Stanton said collections are assessed monthly and payments from employers continue to be processed through mid-May; she said the agency runs weekly reports on initial claims and benefit payouts and will notify the legislature if payout trends threaten the trust fund. "If we start to see that creep up, that's when it's time for me to come talk to you all," Stanton said.
Lawmakers raised concerns that the five-year rebuild could impose unnecessary near-term burdens on private employers; Stanton responded that the agency evaluates taxable-wage growth and benefit payout projections annually to try to avoid overcorrecting rates in any single year.
