As part of the Ohio Chamber of Commerce’s continued efforts to enact meaningful unemployment compensation reforms, I provided interested party testimony on Senate Joint Resolution 4 (SJR 4) in front of the Ohio Senate Finance Committee yesterday. In my testimony, I urged the committee to consider adding solvency reform measures to SJR 4 while noting Ohio has not met the federal government’s unemployment solvency standard since 1974.

Senate Joint Resolution 4 calls for a constitutional amendment that would enable the state to issue bonds to pay for unemployment benefits when Ohio’s unemployment trust fund is insolvent. Additionally, the bonding authority can only be used if the cost of the bond is cheaper than taking a Title XII loan from the federal government. This cost savings measure would benefit employers because they will be assured the state is borrowing on the most favorable terms.

However, the Ohio Chamber asked for additional reforms to be included in the Resolution because on its own, it does not address the root problem with unemployment compensation which is Ohio’s inability to cover unemployment benefits during a recession.

The Ohio Chamber has long sought solvency reform measures to put our trust fund on a path towards solvency because employers alone are on the hook for paying back any loans and interest when the state needs to borrow money to cover unemployment benefits. In previous General Assemblies, we have advocated for a reduction in the number of benefit weeks, an increase in the employer taxable wage base and the elimination of dependency benefits.

These reforms will improve the unemployment trust fund’s solvency since increasing the taxable wage base provides an influx of cash into the trust fund while a reduction in the number of benefit weeks and the elimination of dependency benefits will limit the fund’s expenditures.

We believe these reforms will have a positive impact on Ohio’s business climate because it can prevent the disastrous situation from the 2008 recession from repeating. Due to Ohio’s insolvent trust fund at the time, Ohio had to borrow from the federal government to cover unemployment benefits. This resulted in employers paying back nearly $3.6 billion in principal and interest payments over a five year period. As SJR 4 advances its way through the legislative process, the Ohio Chamber is committed to finding solutions that prevent employers from having to pay back excessive loans and interest charges attributable to Ohio’s broken unemployment compensation trust fund.