- Report Published -
|Funding Requirements of Unemployment Compensation Act|
|SJR 14 (1992)|
|The 1992 General Assembly passed Senate Joint Resolution 14 establishing a joint subcommittee of the House of Delegates and the Senate to review the funding needs of the Virginia Unemployment Compensation System. Declining reserves in the Unemployment Trust fund resulting from the current prolonged economic recession prompted the General Assembly to call for this study.|
This subcommittee formally continues the work of a subcommittee chaired for many years by former Senator Elmon Gray. That subcommittee, comprised of members from the House Labor and Commerce Committee and the Senate Committee on Commerce and Labor subcommittee customarily met each year to receive a report from the Virginia Employment Commission (VEC) about the Unemployment Insurance (UI) Trust Fund's then current and projected solvency. The subcommittee also served as a vehicle for discussions between business and labor concerning UI taxes and benefit levels.
The following Senate members were appointed to the SJR-14 joint subcommittee pursuant tot he resolution; Senators Schewel from Lynchburg, Scott from Newport News, R.J. Holland from Windsor, Chichester from Fredericksburg, and Russell from Bon Air, and Delegates Murphy from Warsaw, Jones from Norfolk, Armstrong from Martinsville, Fisher from Vienna and Wilkins from Amherst.
Senator Elliot S. Schewel was elected Chairman, and Delegate W. Tayloe Murphy was elected vice-chairman. The Subcommittee adopted the following study plan: (i) devote the first meeting to the VEC's trust fund solvency report together with any recommendations from the VEC's advisory board; and (ii) convene a follow-up meeting in October to vote on any issues presented by the VEC, and to review several UI bills carried over from the 1992 Session and referred to this subcommittee for comment.
The subcommittee learned that the UI Trust Fund's solvency is expected to decline form 65% to less than 60% in 1993. The VEC projects that improving unemployment levels will result in an 86% solvency level by 1996. That projection corresponds to a projected Virginia unemployment rate of 4.5% in 1994 through 1996.
The VEC briefed the subcommittee on three recommendations from the VEC's advisory boards: (i) lower the minimum UI tax rates for new employers, (ii) off-set UI pool costs with trust fund generated interest at a 75% solvency level rather than the current 50%, and (iii) lower the minimum weekly benefit from the current $65 to $30. None of these advisory group recommendations were endorsed by the subcommittee.
The subcommittee also reviewed three bills carried over from the 1992 to 1993 Sessions with requests from their assigned committees that this subcommittee review them. The subcommittee recommended to the Senate Commerce and Labor Committee that it PBI SB-428, a bill proposing to index maximum UI benefits to 60% of the Commonwealth's average weekly wage. A similar recommendation was made to the House Labor and Commerce Committee concerning HB 773. HB 733, as introduced, proposes to permit accumulation of the one-week waiting period currently required by statute. Finally, the subcommittee made no recommendation on the merits of HB 774, which would have eliminated current restrictions on the VEC's ability to off-set severance pay against UI benefits.
The subcommittee received no recommendations for changing the current benefits or tax structure other than those outlined above. Accordingly, it makes no recommendations for changes in the UI tax and benefit levels at this time.