985D316934ECBBE88725875A005DB369 Hearing Summary

PUBLIC
BILL SUMMARY For UNEMPLOYMENT INSURANCE TRUST FUND OVERVIEW

INTERIM COMMITTEE TASK FORCE ON ECONOMIC RECOVERY AND RELIEF CASH FUND
Date Sep 24, 2021
Location SCR 352

Unemployment Insurance Trust Fund Overview - Committee Discussion Only

Attachment Tag

File Name

Attachment E

Attachment E.pdf

11:03:32 AM

Daniel Chase and Ryan Gedney, Colorado Department
of Labor and Employment, distributed copies of their presentation regarding
the status of the Unemployment Insurance (UI) program in Colorado (Attachment
E). Mr. Chase reviewed the status of UI prior to the pandemic, and federal
changes to the UI program as a result of the pandemic. Mr. Chase
responded to questions from the task force regarding gig workers and whether
they or their employers paid into the UI Trust Fund prior to the pandemic.
Mr. Gedney shared charts related to UI claims (found in Attachment E).

11:10:55 AM

Mr. Chase and Mr. Gedney responded to questions
from the task force regarding state and federal obligations for UI benefits.
Mr. Chase continued by discussing the UI Trust Fund, describing how the
trust fund is funded, and how benefits are paid from the trust fund. He
emphasized that the UI Trust Fund can only be used to pay benefits for
state unemployment insurance claims, and the federal government provides
loans to continue to pay unemployment benefits if the states' trust funds
run out of funds.

11:15:25 AM

Mr. Gedney discussed the employer UI contribution
schedule and how the schedule has changed since 2020. He described how
the employer contributions are calculated. Mr. Gedney responded to questions
from the task force regarding modeling of future employer costs.
He discussed recent legislation that made changes to employer premiums
and surcharges. Mr. Chase and Mr. Gedney discussed the availability
of federal loans for the trust fund.

11:22:19 AM

Mr. Chase discussed interest payments due
to the federal government, and Mr. Chase noted that Governor Polis has
issued an executive order directing that the interest payments be paid
from Coronavirus Relief Funds. Mr. Gedney explained that most employers
are concentrated on the lower end of the premium rate schedule, and explained
that layoffs during the pandemic are not counted against employers' experience
ratings. Mr. Gedney responded to questions from the committee regarding
how the industries most affected by the pandemic are typically affected
by recessions.

11:27:06 AM

Mr. Chase responded to questions from the
task force regarding fraudulent claims, overpayment claim notices, and
liability to victims of unemployment insurance fraud.

11:35:35 AM

Mr. Gedney discussed the balance of Colorado's
UI Trust Fund, noting that it became insolvent on August 18, 2020. He explained
that the state has had to borrow to pay benefits twice before. Mr. Gedney
explained the various UI benefit programs. Mr. Chase explained the various
provisions of law that become effective when the UI trust fund is in deficit,
including the interest surcharge (by law interest payments cannot be made
by traditional premium revenue); the solvency surcharge, a rate schedule
shift which will move employers to the highest rate schedule in 2022, and
the Federal Unemployment Tax Act (FUTA) credit reduction.

11:41:52 AM

Mr. Chase discussed considerations for policy
makers regarding the trust fund, and noted that any reduction to employer
contributions should be backfilled with stimulus funding to ensure the
stability of the UI Trust Fund. Mr. Gedney shared a forecast of the UI
Trust Fund balance, assuming current law, and based on the strength of
the economic recovery. He continued by discussing the solvency surcharge
and estimates of employer costs and how long the surcharge may be in effect.

11:49:52 AM

Mr. Gedney discussed the FUTA credit reduction,
and explained how a reduction in the FUTA credit could affect employers.
He responded to questions from the committee regarding the FUTA credit,
the UI Trust Fund, and the calculation of the solvency surcharge.

12:01:24 PM

Mr. Gedney discussed impacts to other states'
UI trust funds during the pandemic, and noted that some states have paid
off their loans or bolstered their UI trust funds with federal relief funds.
Mr. Chase and Mr. Gedney discussed the employer wage base and rate schedule
over time. Mr. Chase and Mr. Gedney discussed the importance of SB
20-207 to the solvency of the UI Trust Fund in future years.

12:10:15 PM

Mr. Gedney discussed
borrowing and the repayment strategy during the Great Recession, including
bonding.

Unemployment Insurance Trust Fund Overview - Committee Discussion Only

Colorado General Assembly