State Official's Remarks at W&M Hearing on Employment Security Bill

TESTIMONY OF JOSEPH WEISENBURGER

JUNE 23, 1998

3:00 PM

[1] Good afternoon Mr. Chairman and committee members. My name is Joseph Weisenburger, Deputy Commissioner of the New Hampshire Department of Employment Security. Thank you for the opportunity to express our views regarding this important proposed legislation.

[2] Good paying stable jobs are the economic foundation of our towns, cities and our Nation. Our ability to compete worldwide, provide a stable US economy and worker job security require a well functioning state employment security system. However, because of the federal deficit and growing federal micro management the current system has become more rule bound and less efficient, short changing employers who use and finance the system and workers who use the program for temporary financial assistance and to find new jobs. The role of the federal government is the root problem. A prerequisite to making the needed fundamental changes is to shift or devolve the responsibility for program funding and administration to the states.

[3] The current system is called a federal/state partnership. However, because the federal government controls the administrative funding lever it controls the state activities. These activities, many of which are part of a federal agenda, are often inconsistent with a state's vision for its employment security system. The federal government's micro management of the system diminishes its efficiency and effectiveness.

[4] Last year you reformed the welfare system by transferring more authority and responsibility to the states. This year the Congress will likely reform the Job Training system by block granting programs to the states. Both the Welfare system and the Job Training system rely on the state employment security system for employment services and important labor market information. Governors need the authority and flexibility to leverage the resources of these three workforce programs in a way that meets the needs of their state and its local labor markets. Transferring the authority for determining funding and program specifics for the Employment Security System from the federal government to the states as, HR 3684 does, will not only improve the efficiency and effectiveness of Employment Security programs but also those of the Welfare and Job Training programs.

[5] HR 3684 is a consolidation of various state proposals to devolve the Employment Security system to the states. It addresses concerns raised by other stakeholders, most of whom want to preserve the federal/state partnership. The consensus reach by the states with individual proposals (Georgia, New Hampshire, Ohio and Virginia) increases the role of the states in the federal/state partnership. It is a reform proposal with some of the characteristics of devolution. The Issues leading to the proposal are:

o The Federal budget process causes insufficient state

o Administrative shortfalls lead to errors causing benefit

o Employers are unnecessarily burdened with two separate tax and

o Federal oversight and micro management including cumbersome

o Services to employers and unemployed workers have

[6] The proposal addresses these issues by authorizing the state legislatures to make appropriations, from state specific accounts in the federal employment security administrative account (ESAA), that reflect the needs and workload of the state. It consolidates the FUTA tax filing and the state tax filing into a single tax filing. And, it strengthens the public employment services by tieing it more closely to the unemployment compensation program and gives the governors greater flexibility in establishing the role of the employment service in the state's workforce development system.

[7] If passed this bill will transfer the administration and funding of the Employment Security System from the federal government to the states while retaining national interests and a minimal, but important amount of federal oversight. The proposal will not increase the federal deficit and in fact will increase tax collections through more efficient collection methods and save employers enormous amounts of time and money by consolidating tax filings. But more importantly, the reform will restore deteriorating services and program integrity.

[8] As a state administrator I naturally have an interest in policy development, but my real concern comes from the effect that political decisions relative to employment and unemployment have on the day to day lives of millions of workers and their families.

[9] We know that unemployment contributes to increases in crime, family breakups, spousal and child abuse, drug and alcohol abuse, home foreclosures, car repossessions and bad debt. It also reduces charitable contributions, community service, tax collections, new business startups, college educations and most importantly a worker's self esteem. These maladies cost us all a great deal of money. The problems of unemployment are poignantly described in the preamble to state unemployment laws.

"Whereas, economic insecurity due to unemployment is a

[10] This legislation is not about power and control. It is about stabilizing employment and working to minimize the hardship that accompanies unemployment.

[11] The Employment Security system is an institution that has served this nation's workers and employers well over the past 60 years. But its ability to continue that service is in serious jeopardy.

[12] Even with record low unemployment the states are stretched beyond their ability to effectively and efficiently run the program. About 7.5 million workers received unemployment benefits in 1997 and over 18 million, or one of every seven workers in the country, used the public employment service. What will we do when a recession occurs. The infrastructure will be gone.

[13] On Thursday, 6/18, we received the preliminary allocations for FY 1999 from the Department of Labor based upon the President's budget. It cut State staffing levels an average of 6.24%, or about 2600 positions. New Hampshire had the highest cut in the nation, 10.79%. By the department's own figures, New Hampshire is currently funded 15% below this year's workload for base staff. An additional 10.79% cut will be devastating. In order to avoid closing offices and laying off trained and experienced staff, we have assessed employers with a state administrative tax which leaves them paying twice for the same service.

[14] Title III, section 302 of the Social Security Act, requires the Secretary of Labor to fund the states with amounts "necessary for the proper and efficient administration" of the state law. That never happens. Instead, budget levels for the unemployment insurance and the employment service are held below the level needed by the states, so other special programs like "School-to-Work" and "One-Stop" Career Centers can be funded.

[15] While these special programs may have merit, we strongly believe proper funding for proven core programs is more important.

[16] Twenty-eight states currently support this legislation. After receiving the preliminary budget figures for next year, I expect additional states will join our coalition.

[17] Mr. Chairman, we thank you and the co-sponsors for introducing this legislation and we urge the committee to approve it.