Causer: Unemployment Compensation Reforms Aim to Boost Job Creation

HARRISBURG – Pennsylvania currently has the ninth most costly unemployment compensation (UC) system in the country, and that works against our efforts to maintain existing jobs and create new ones. The General Assembly is working to change that and on Wednesday sent a significant unemployment compensation reform bill to the governor’s desk for his signature.

The state is currently in debt by nearly $4 billion to the federal government for money we borrowed to pay UC claims during the economic downturn. Under Senate Bill 1310, we will issue bonds to pay off the loan from the federal government, and employers will instead repay the bonds which carry a lower interest rate and “flatten” the cost to employers over the next seven years.

The bill also makes some changes in UC eligibility to restore solvency to the state’s UC Trust Fund. Those changes include freezing the maximum benefit rate and changing financial eligibility requirements in base year earnings. This is in addition to reforms adopted last year requiring UC claimants to actively search for a job to continue receiving benefits and creating an offset for severance pay.

The measure is expected to garner $2.345 billion in savings between 2013 and 2019, the year the trust fund is expected to achieve total solvency. The governor has said he will sign the bill.