Numbers don’t lie. Ohio’s Unemployment Trust Fund is broke. The state still owes $770 million to the federal government from the billions Ohio borrowed during the last recession. That debt has led to federal penalties costing employers more than $100 per employee in additional federal unemployment taxes. Although the debt will be repaid by 2017, Ohio can’t risk repeating this pattern in the future. There is no simple fix to this issue, but any plan to truly address the systemic issues with unemployment compensation must involve a compromise between employers and individuals. Last week, Rep. Barbara Sears (R-Monclova Township) introduced House Bill 394, representing a realistic compromise and a fair and balanced approach to fixing the fund.

This bill is a reasonable and sensible approach to addressing the system’s problems by looking at both what is being paid into the fund by employers and what is being paid out in benefits. These comprehensive changes will address the fund’s solvency issues going forward.

Here’s what the bill does:

• Temporarily increases the taxable wage base for employers from $9000 to $11,000 until the fund reaches the minimum safe level (MSL). Once the MSL is reached the base goes back to $9000. If the fund drops below 50 percent of MSL the base increases to $11,000 again. (This increase would not kick in until the federal debt was paid off and the penalty removed.)
• Reduces the number of weeks an individual can receive unemployment benefits from 26 to a range of 12 to 20 weeks based upon the unemployment rate. i.e. the higher the unemployment rate the more weeks an individual is eligible for benefits.
• Disqualifies applicants who were fired for not showing up to work 3 days in a row without calling or violating the terms of an employee handbook.
• Requires applicants to take a drug test if they were fired due to unlawful use of a controlled substance.

The last time major changes were made to address problems with the unemployment compensation system was in the 1980s. Thus, the time to fix the system is now while the unemployment rate is low (4.5 percent). Rep. Sears has crafted a well-researched and thoughtful compromise with give and take on both the part of the business community and individuals receiving unemployment compensation. This legislation would take preventative measures to ensure the state will not have to borrow billions of dollars from the federal government if an economic downturn happens in the future. HB 394 is a fair fix to a broken system.