|
FT. MITCHELL, KY Tues., Jan. 13, 2009 – Kentucky employers are paying more for unemployment insurance for their employees, effective Thurs. Jan. 1, 2009, due to the dwindling balance in the state's Unemployment Insurance Trust Fund.
“Kentucky Education Cabinet Secretary Helen Mountjoy invited a handful of Chamber of Commerce representatives Monday to her office to discuss the difficult situation Kentucky faces with its Unemployment Insurance Trust Fund,” said Steve Stevens, president, Northern Kentucky Chamber of Commerce. “While the situation isn't a pleasant one for Kentucky's employers, we appreciate the Beshear Administration alerting us and are willing to listen to any ideas that Kentucky employers might have to solve a very, very difficult situation.
The Kentucky Unemployment Insurance Fund Trust finished the 2008 calendar year with balance of approximately $85 million, compared to a balance of approximately $230 million a year earlier. In every state in the nation, unemployment insurance benefits are exclusively paid for by employers, with no contribution from the employee. Benefits are set by each state, and currently Kentucky's maximum weekly benefit is capped at $415 per week. In 2008 the average Kentucky weekly paid benefit $ 292, but in December 2008 the average weekly benefit was $304. Today, approximately 142,000 Kentuckians are unemployed.
Every employer in Northern Kentucky should watch the end of January and early February for a notice from The Office of Employment and Training (OET). That notification will be the only warning of the March 31, first quarterly billing, and due at the end of April, 2009. In some cases, per employee cost may only increase by $5 or $10 dollars. But some industries, for example construction, may see significant increases in their per employee cost. Because the balance of the Trust Fund dropped below $150 million on or before December 31, employers will experience an increase in their unemployment insurance fee, which is paid quarterly.
“While every employer wants to know precisely how much their increase will be, we are unable to calculate that amount, because each employer has a unique, customized situation,” Stevens said.
Kentucky unemployment insurance fees are based on the first $8,000 of taxable wages of each employee. Typically, employers may pay a modest tax rate of 1.5 percent, which would translate into an annual cost of $120 per employee. However, a second factor makes the calculation more complicated. Each employer in Kentucky has a second criterion, commonly referred to as the ‘reserve ratio.’ This number is a a unique, customized bank account and The Office of Employment and Training (OET) in state government keeps track of the amount of contributions by employers and the amount of benefits claimed by employees.
“If an employer has a experienced a high level of unemployment claims by their employees, their rate will be higher. Employers who have had little or no employee claims of unemployment, will have a higher, which is good,” Stevens said. “The bottom line is that we cannot accurately advise our members that their Kentucky employment insurance costs are going to increase by a specific percentage.”
As of mid-January, the Kentucky Unemployment Trust Fund balance stood at $51.56 million, and dropping, according to Kentucky Education Cabinet Secretary Helen Mountjoy.
"No one who qualifies for benefits will be denied,” Sec. Mountjoy said. “A study group will be formed in February or March to study the shortcomings of Kentucky's unemployment insurance trust fund and make recommendations to Governor Beshear and the General Assembly on solutions. The most recent legislative actions on employment insurance occurred in 1999 and 2000.”
Currently, Michigan, Indiana, South Carolina and California are in a deficit balance situation and have borrowed funds from the federal government to keep their state fund solvent. Political and financial observers have speculated that more than 30 other states are expected to experience a deficit situation in the coming months, including Kentucky.
-30-
|