HB 305-UNEMPLOYMENT COMPENSATION BENEFITS CHAIR CON BUNDE announced HB 305, version D, to be up for consideration. COMMISSIONER GREG O'CLARAY, Department of Law (DOL), said he had new information regarding a 26-week waiting period. MR. BILL KRAMER, Chief, Unemployment Insurance Program, Department of Law (DOL), brought a possible unintended consequence to the committee's attention. Last year, 13,780 people who filed for benefits under the voluntary quit, misconduct work provisions that have been discussed here recently - if these individuals were denied 26 weeks instead of six, as has been discussed, there's a possibility that the number of claims that are filed throughout the year could cause us to fall below the level required for the federal extended benefits to trigger on in Alaska. Part of the reason we trigger on to extended benefits each year in Alaska is because we have a high recipient rate.... The state has received it every year since 1971. CHAIR BUNDE asked if people had to wait 26 weeks, would fewer ask to get benefits or be discouraged from filing at all. MR. KRAMER replied that would be hard to predict. The number of weeks claimed is part of the calculation the federal government uses to trigger benefits. If the number of claims is reduced because of the extended denied period, it could change the time period for which the state gets extended benefits or the fact that we get it at all. During the last nine years of 1994 - 2002, an average of $7.3 million per year has been paid. CHAIR BUNDE asked what the other 47 states do about extended benefits. MR. KRAMER replied that it depends on the economic conditions within the state. Alaska triggers on every year during the winter through mid-summer. Most states do not trigger on to extended benefits regularly. During the recent recession only a handful of other states triggered on to the regular extended benefits program. CHAIR BUNDE drew attention to the chart that the department provided the committee on unemployment benefits that indicates denials are fairly steady across the past three years. The number of people who have applied for and received benefits has gone up fairly substantially. SENATOR SEEKINS asked what the trigger is for Alaskans to receive federal extended benefits. MR. KRAMER replied that there are three different formulas in place and federal law allows states to trigger on through any one of the three. The most common one - and the one that Alaska triggers - looks at the insured unemployment rate (IUR). It's calculated by dividing the average number of weeks of UI claimed for the past 13-week period. That number is divided by the average covered employment for the past four quarters of the past year. Recent figures indicate that 231,355 individuals were in covered employment in the state and the 13-week average was 17,797 weeks of unemployment, an insured unemployment rate of 6.56. That figure triggers the state for a minimum of 13 weeks extended benefits. SENATOR SEEKINS asked how much the state pays out in unemployment insurance per year. MR. KRAMER replied that it changes year to year. In 2003, $174 million was paid out; it was a high year and included two federal extension programs. One was a temporary extended unemployment compensation, which was 100 percent federally funded, and that was simply turned on by Congress without a trigger. At the same time, Alaska was triggered on to regular extended benefits, which was federally funded also. SENATOR SEEKINS asked how much federal money the state got. MR. KRAMER replied $10 million in regular extended benefits and $40 million for the temporary extension program. CHAIR BUNDE asked what the state's portion of the total was. MR. KRAMER guessed about $130 million. CHAIR BUNDE speculated that the state pays out $130 million in order to get the $40 million in federal funds. He asked if something more than six weeks, but less than 26 weeks, wouldn't stop the trigger. MR. KRAMER replied the challenge is trying to guess what people will do under the rules. Would some people now stay employed because the penalty is stiffer? Will some people find other ways to maintain their wellbeing when they are unable to get unemployment benefits? It's hard to predict.... He added that people who are denied through the current six-week provision are prevented from receiving any extended benefits for a benefit year. TAPE 04-35, SIDE B 2:20 p.m. CHAIR BUNDE mused that this situation begs the question of what denying unemployment benefits to some people would do to the state's welfare rolls. SENATOR SEEKINS moved to pass SCS HB 305(L&C) from committee with individual recommendations and attached fiscal note. Senators Gary Stevens, Hollis French, Ralph Seekins and Chair Con Bunde voted yea; and SCS HB 305(L&C) moved from committee.