FRANKFORT – When it comes to policy, unemployment insurance may not generate as many headlines as education and public safety, but for working families dealing with the loss of a job, few programs are more important.
President Roosevelt signed this safety net into law 80 years ago last week as part of the Social Security Act. Since then, it has weathered numerous ups-and-downs in the economy, but beyond the Great Depression itself, none tested the system quite like the crisis that hit the country in 2008.
Kentucky’s unemployment insurance trust fund saw a record number of new claims that December, and less than a month later, the fund’s reserves were gone. Having little choice, Kentucky – and eventually more than two dozen other states – began borrowing from the federal government to maintain benefits.
We ultimately received nearly $1 billion as a result, but state, business and labor leaders knew that paying this back would not be easy without a plan. Doing nothing would have required our businesses to shoulder hundreds of millions of dollars of additional cost.
Fortunately, a task force that Gov. Beshear appointed came up with a solution that threaded this needle and led to a 2010 law drawing near-unanimous support in the General Assembly.
Early last week, we learned just how effective that law and a 2012 follow-up really are when state leaders and task force members announced that Kentucky had paid its debt off two years earlier than planned.
The law’s provisions will continue so the fund can build back reserves to cushion any future downturns, but by clearing the ledger with the federal government, businesses will save $165 million they otherwise would have had to pay in unemployment taxes next year.
Although Kentucky is still feeling the after-effects of that downturn seven years ago, there is no doubting the economic numbers are much better now than they were then.
Our unemployment rate is half of what it was since its peak in June 2009 and has been below the national average now for 11 straight months. According to the state’s Education and Workforce Development Cabinet, a federal survey shows we have added more than 40,000 seasonally adjusted non-farm jobs over the past year. That includes 6,700 jobs in manufacturing and almost 3,000 in construction.
These gains are reflected in the state’s budget, which ended the fiscal year on June 30th with a surplus that, after accounting for additional expenses, exceeded $82 million. It boosted our “Rainy Day” fund to $209.4 million, a level not seen since the 2008 fiscal year. The current fiscal year’s first month, meanwhile, grew by four percent, well ahead of what had been projected and putting us on a path toward another surplus.
As we head into fall, preliminary work will begin in earnest on the state’s upcoming two-year budget, which the next governor will propose in January and which the General Assembly will approve by April. Finding the best way to meet the state’s needs is always a challenge, but as recent budgets and the 2010 law on unemployment insurance have shown, it’s a task we are now better-equipped to handle.
For those who have any comments or questions about this or any other issue, please don’t hesitate to contact me. My address is Room 366B, Capitol Annex, 702 Capitol Avenue, Frankfort, KY 40601; or you can email me at Rick.Rand@lrc.ky.gov.
To leave a message for me or for any legislator by phone, please call 800-372-7181. For those with a hearing impairment, the number is 800-896-0305.
I hope to hear from you soon.