Jobless fund in red, still bleeding
By end of next year, state may owe U.S. government $3 billion
Candisky, Catherine. Columbus Dispatch, Aug. 15, 2009.
"Had we started charging more and limiting benefits a year ago, the hole wouldn't be quite as deep." -- Andrew E. Doehrel, state Chamber of Commerce
Ohio's ailing unemployment-compensation fund is $1 billion in the hole as of this week, and the shortfall is expected to top $3 billion by the end of 2010 -- six years sooner than projected.
Since Ohio's fund went broke earlier this year as the jobless rate soared, the federal government has been picking up the tab. But the money eventually must be repaid.
While the debt has gotten little attention from state officials, business and labor leaders agree a solution must be found.
"If we put this off until we owe $3 billion, now you're talking about having to jack up (employers') rates very, very high and doing something very questionable with benefits," said Andrew E. Doehrel, president of the Ohio Chamber of Commerce and a member of the state's Unemployment Compensation Advisory Council.
Zach Schiller, spokesman for Policy Matters Ohio, a Cleveland-based research group, said, "At some point, Ohio will have to pay this back and we'll have to figure out how to do that. Nationwide, states are more than $12 billion in debt, so it's a national problem."
There is no deadline for repaying the money, although interest will begin to accrue on Jan. 1, 2011. By the end of that year, the state's interest payment alone would be $171 million, said Brian Harter, spokesman for the Ohio Department of Job and Family Services.
If the debt is not settled by Jan. 1, 2012, federal guidelines require that a tax be imposed on Ohio businesses to repay the money.
Ohio is among 17 states that have depleted their funds for paying unemployment compensation and are now borrowing from the national trust fund to cover jobless benefits. As of Monday, the states owed $12.6 billion, according to the U.S. Department of Labor.
Ohio depleted its unemployment-compensation fund in January. It was drained amid rising unemployment and after years of collecting less in unemployment taxes than the fund paid out in benefits.
At that time, Ohio was among five states borrowing from the federal trust fund.
States operate unemployment-compensation systems under federal guidelines. If funds are depleted, states are required to borrow from the federal government to ensure that unemployed workers continue to receive benefits.
Earlier this year, Congress agreed to waive interest payments on such loans through the end of next year.
Ohio officials have known for years that the fund was in trouble. Since 2001, the fund has collected less in employer taxes than it paid out in jobless benefits in every year but one.
States set their benefit amounts and tax rates. In Ohio, employers pay on the first $9,000 earned by each employee, an amount unchanged since 1995.
The tax and benefits are based on recommendations from the advisory council, subject to approval by the General Assembly. An agreement on how to fix the problem continues to be elusive.
"Had we started charging more and limiting benefits a year ago, the hole wouldn't be quite as deep," Doehrel said. "Now, the changes that will be needed will be more severe on both sides of the equation."
Wednesday, August 19, 2009
Tuesday, August 18, 2009
Governor Strickland's Executive Orders to cut state adoption assistance program
Executive Orders Implement Cuts in Adoption Assistance, Child Care
Hannah News
Gov. Ted Strickland this week issued two Executive Orders (EOs) implementing cuts to the state's adoption assistance programs and child care program that were included in HB1, the FY10-11 budget. The first, EO 2009-15S, which was effective Monday, Aug. 10, addresses reductions in certain adoption expenses while EO 2009-16S, which was effective Wednesday, Aug. 12, deals with the publicly funded child care program. Both put into immediate effect revised rules reducing expenditures in these areas for 90 days. This gives the Department of Job and Family Services (ODJFS) time to pursue revised rules through the normal rule-making process. Both executive orders are posted on www.hannah.com
The adoption changes center on ODJFS appropriation line item 600-528 Adoption Services which, according to Crystal Ward Allen, executive director of the Public Children Services Association of Ohio (PCSAO), covers expenditures in four major areas:
- The Post Adoption Special Services Subsidy (PASSS). Funding and eligibility criteria for this program, which offers eligible families up to $10,000 a year to help pay for the treatment of a physical, developmental, mental or emotional conditions, has been kept the same as in FY09 by ODJFS.
- The State Adoption Maintenance Subsidy (SAMS) program. This is a state program for adoptive children who are not eligible for the federal Title IV-E program but who have special needs. This covers approximately 7 to 8 percent of the special needs adoptions - children who by 2018, Allen explained, will be covered under the federal program.
- State match for the federal Title IV -E. Title IV-E program covers 92 to 93 percent of the special needs adoptive children; it is a federal, state and locally funded program. The feds share in the cost at the same rate as the state's Medicaid reimbursement which is currently at an uncharacteristically high 68.34 percent due to the American Recovery and Reinvestment Act (ARRA). Normally, according to Allen, the federal reimbursement is between 60 and 62 percent.
- Non-Recurring Adoption Expenses. This state/federal program provides a one-time payment for non-ongoing expenses. The cap on this payment had been $2,000; it now goes to $1,000. The federal government covers 50 percent of the amount.
According to the emergency rules, the state's portion for both SAMS and Title IV-E drops from $300/month to $240/month per child beginning with the September payment. This presents a problem for the counties, Allen said, explaining that the average subsidy amount is approximately $550/month. In addition, federal requirements, backed by a couple of court decisions, preclude reducing the IV-E subsidy based on lack of state funds. Allen estimated counties face an $8 million funding gap, which she said they are in the process of "trying to determine how to manage ....
"Some counties have resources and can increase their local share." Others may have to renegotiate the subsidy amount with each of the affected families or adjust other programs. The following summarizes the funding for this line item:
Adoption Services FY09 FY10 FY11
State $43.7 million $22.8 million $24.1 million
Federal 42.8 million 49.3 million 46.3 million
TOTAL $86.5 million $72.2 million $70.4 million
Allen said her association is supporting SB155, sponsored by Sens. John Carey (R-Wellston) and Dale Miller (D-Cleveland), which "makes a slight change to Ohio's tax code" and designates the resulting funds for adoptions and Disability Medical Assistance. She expressed the hope that the bill will be incorporated into the budget correction bill which may done as early as the end of September.
Hannah News
Gov. Ted Strickland this week issued two Executive Orders (EOs) implementing cuts to the state's adoption assistance programs and child care program that were included in HB1, the FY10-11 budget. The first, EO 2009-15S, which was effective Monday, Aug. 10, addresses reductions in certain adoption expenses while EO 2009-16S, which was effective Wednesday, Aug. 12, deals with the publicly funded child care program. Both put into immediate effect revised rules reducing expenditures in these areas for 90 days. This gives the Department of Job and Family Services (ODJFS) time to pursue revised rules through the normal rule-making process. Both executive orders are posted on www.hannah.com
The adoption changes center on ODJFS appropriation line item 600-528 Adoption Services which, according to Crystal Ward Allen, executive director of the Public Children Services Association of Ohio (PCSAO), covers expenditures in four major areas:
- The Post Adoption Special Services Subsidy (PASSS). Funding and eligibility criteria for this program, which offers eligible families up to $10,000 a year to help pay for the treatment of a physical, developmental, mental or emotional conditions, has been kept the same as in FY09 by ODJFS.
- The State Adoption Maintenance Subsidy (SAMS) program. This is a state program for adoptive children who are not eligible for the federal Title IV-E program but who have special needs. This covers approximately 7 to 8 percent of the special needs adoptions - children who by 2018, Allen explained, will be covered under the federal program.
- State match for the federal Title IV -E. Title IV-E program covers 92 to 93 percent of the special needs adoptive children; it is a federal, state and locally funded program. The feds share in the cost at the same rate as the state's Medicaid reimbursement which is currently at an uncharacteristically high 68.34 percent due to the American Recovery and Reinvestment Act (ARRA). Normally, according to Allen, the federal reimbursement is between 60 and 62 percent.
- Non-Recurring Adoption Expenses. This state/federal program provides a one-time payment for non-ongoing expenses. The cap on this payment had been $2,000; it now goes to $1,000. The federal government covers 50 percent of the amount.
According to the emergency rules, the state's portion for both SAMS and Title IV-E drops from $300/month to $240/month per child beginning with the September payment. This presents a problem for the counties, Allen said, explaining that the average subsidy amount is approximately $550/month. In addition, federal requirements, backed by a couple of court decisions, preclude reducing the IV-E subsidy based on lack of state funds. Allen estimated counties face an $8 million funding gap, which she said they are in the process of "trying to determine how to manage ....
"Some counties have resources and can increase their local share." Others may have to renegotiate the subsidy amount with each of the affected families or adjust other programs. The following summarizes the funding for this line item:
Adoption Services FY09 FY10 FY11
State $43.7 million $22.8 million $24.1 million
Federal 42.8 million 49.3 million 46.3 million
TOTAL $86.5 million $72.2 million $70.4 million
Allen said her association is supporting SB155, sponsored by Sens. John Carey (R-Wellston) and Dale Miller (D-Cleveland), which "makes a slight change to Ohio's tax code" and designates the resulting funds for adoptions and Disability Medical Assistance. She expressed the hope that the bill will be incorporated into the budget correction bill which may done as early as the end of September.
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