Kokomo Tribune; Kokomo, Indiana

Local News

December 6, 2013

State agency opposes limited unemployment plan

(Continued)

Gov. Mike Pence’s administration doesn’t see work-share programs as a panacea but rather a source of potential problems.

Joe Frank, a spokesman for state Department of Workforce Development, said work-share programs are difficult to administer, subject to fraud, and create disincentives for impacted workers to find other employment.

“It opens up a lot of difficult questions including, Who’s going to be watchdog on this? And who’s really eligible?” said Frank.

Cost is a major concern, Frank said. Indiana already owes the federal government roughly $1.7 billion it borrowed for its unemployment trust fund during the economic downturn, to pay benefits to unemployed workers under the traditional benefits system.

Brinegar noted that the federal government has created a grant program to help states launch work-sharing programs. When Pence was in Congress, he was part of a bipartisan group that supported the Middle Class Tax Relief and Job Creation Act of 2012 that incorporated a provision on work-sharing. Federal grants under the law provide 100 percent reimbursement rates to the unemployment insurance trust fund for up to three years once a work-sharing law is passed. Estimates are that Indiana could receive $50 million in federal funds over that period.

But Frank said that incentive is temporary, and the state would eventually have to pick up the costs of a work-sharing program once the federal money runs out.

There’s some disagreement over how much that cost would be. Nationally, only a fraction of employers and workers — about 17,000, according to Frank — have opted into the states’ programs.

A study by the Congressional Research Service concluded that the impact on states’ unemployment trusts funds would result in minimal impact beyond the current level of obligations. The study said the cost of partial jobless benefits for work-sharing employees is roughly equivalent to the cost of full benefits for those who would otherwise be laid off.

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