The 1st meeting of the Interim Joint Committee on Labor and Industry was held on Thursday, June 16, 2005, at 10:00 AM, in Room 131 of the Capitol Annex. Representative J R Gray, Co-Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Alice Kerr, Co-Chair; Representative J R Gray, Co-Chair; Senators Julian M Carroll, Julie Denton, Denise Harper Angel, Jerry P Rhoads, Jack Westwood, and Ken Winters; Reprentatives Joe Bowen, C B Embry Jr, Bill Farmer, Charlie Hoffman, Dennis Horlander, Joni L Jenkins, Thomas Kerr, Charles Miller, Russ Mobley, Rick G Nelson, and Jim Stewart III.
Guests: Laura Owens, Commissioner, Department for Workforce Investment; Ann Guarineri, Executive Director, Office of Budget Administration, Department for Workforce Investment; Janet Givens Claiborne, Director, Division of Unemployment Insurance, Office of Employment and Training
LRC Staff: Linda Bussell, CSA; Melvin LeCompte; Betty Davis; Adanna Hydes; and Ashli Schmidt, Committee Assistant
Co-Chair Gray welcomed the committee and guests and stated that he would chair the first part of the meeting, while Co-Chair Kerr would chair the second half. Co-Chair Gray introduced and recognized the new members of the committee, which include: Sen. Julian Carroll, Sen. Denise Harper-Angel, Sen. Richie Sanders, Sen. Jack Westwood, Sen. Ken Winters, Rep. Joe Bowen, Rep. Bill Farmer, and Rep. Miller. He then welcomed the new Executive Director of Labor Management Relations Tom Cannady and staff member Jody Craig.
Co-Chair Gray reminded the members of the upcoming 2005 Labor Management Conference to be held September at Kentucky Dam Village. Although a definite decision to hold a committee meeting during the conference has not been made it is listed on the tentative conference agenda. Co-chair Gray said if the committee meets during the conference, the meeting will probably be held on Wednesday, September 14. He said the committee has traditionally held a September meeting during the conference and that members would be notified as soon as a decision regarding the meeting has been made. Co-Chair Gray advised the members who wish to attend the conference to request approval from their respective leadership offices and to submit their registration forms early in order to secure suitable lodging.
Co-Chair Gray made a brief presentation on the current financial problems of the unemployment insurance trust fund and similar problems that existed in the early eighties. He informed the members that the legislature enacted legislation during the 1982 General Assembly that addressed trust fund solvency. He noted that the 1982 legislation was so successful in strengthening the financial status of trust fund that the General Assembly was able to reduce employer taxes and increase employee benefits in 1998 and 2000.
Co-Chair Kerr chaired the remainder of the meeting, and welcomed the panel of guests which included: Laura Owens, Commissioner, Department for Workforce Investment; Ann Guarineri, Budget Office, Kentucky Education Cabinet; Janet Givens Claiborne, Director of Unemployment Insurance, Office of Employment and Training.
Commissioner Owens stated that the unemployment insurance trust fund problem is not a crisis at this time, but it could potentially become a crisis if any significant downward change was to occur. Stressing the importance of corrective legislation needed in the 2006 General Assembly, Commissioner Owens introduced Janet Claiborne, the Director of the Division of Unemployment Insurance, and stated that she was very open to recommendations from the committee.
Mrs. Claiborne thanked Co-Chair Gray and the committee for the opportunity to share information about the status of the unemployment insurance program. Giving a brief history, Mrs. Claiborne stated the unemployment insurance law was adopted in Kentucky in 1936 and provides temporary wage replacement benefits for qualified unemployed workers. The law also contains a mechanism that collects approximately $300 million tax dollars annually to ensure the integrity of the unemployment insurance trust fund. She then directed members to handouts located in their folders which contained information relating to benefits, contributions and historical information about the program and payouts from the trust fund. Mrs. Claiborne then introduced staff members: Larry Moore, Carlos Craycraft, and Don Hogan.
Mrs. Claiborne stated that due to significant changes to the trust fund balance, Schedule C of the tax table had been triggered into effect on December 31, 2004. Currently, the trust fund balance is at $309.8 million, which consists of $213 million in employer taxes and $96 million in Reed Act Funds. Mrs. Claiborne stated that not since 2000 have contributions kept pace with the benefits paid. Benefits have almost doubled in the past decade, with average benefits being $258 a week for an average of 14 weeks. Mrs. Claiborne also shared some initiatives being taken by her agency to maximize revenue for the trust fund. One initiative is an enhanced effort to recover benefit overpayments. Another initiative is a partnering relationship between the Division of Unemployment Insurance and the Department of Revenue in a pilot project to assist and enhance the effort of collecting delinquent taxes.
Co-Chair Gray questioned the panel about what happened when an individual reapplied for unemployment benefits after mistakenly receiving them previously. Larry Moore responded that there are repeat customers, especially ones who have cyclical employment, but there are effective tools to offset the cost.
Sen. Westwood stated that after reviewing the information in the handouts, he saw an upward growth in the trust fund. Mrs. Claiborne responded that though there was a slight growth in 2004, there is not a current influx of revenue, simply quarterly payments from employers have just been received.
Rep. Jenkins questioned the panel about the occurrence of delinquent employer taxes and what is being done to collect the delinquent taxes. Mr. Moore replied that most employers are appreciative of the program, which has resulted in a low rate of delinquencies. In response to questioning by Rep. Hoffman, Mrs. Guarineri stated that many states are experiencing financial problems with their unemployment insurance trust funds and that Kentucky is one of the twenty states experiencing the worst problems. She said that Kentucky's problems are not as bad as those that exist in states like New York, North Carolina, and Texas.
In response to a question by Sen. Winters, Mrs. Claiborne stated that she does not see much relief coming for the trust fund. However, she said agency officials track the status of the trust fund daily and the Mercer model is utilized to detect employment trends and make economic projections for the future.
Sen. Carroll said many individuals while on unemployment go out and look for jobs that pay cash, so they can still receive unemployment benefits. He said it had been suggested to him the possibility of allowing an unemployed worker to take a job at a lower wage than what they were making and still receive unemployment benefits on a temporary basis. Commissioner Owens responded that there was conversation about this topic among the states and that this may be an upcoming solution in the years ahead. Sen. Carroll stated this would encourage people to work at a lesser salary because they would still be receiving benefits and offered his assistance in researching this topic.
Sen. Harper Angel discussed her background as the Jefferson County Property Valuation Administrator. She said many people are rewarded for not wanting to work and encouraged more up front screening in the unemployment insurance decision-making process.
Co-Chair Kerr dismissed the panel and asked if there was any new or old business. There being none, she stated the next meeting would be held on July 21, 2005 and reminded members of the Labor Management Conference in September.
There being no further business, the meeting was adjourned.