OKLAHOMA CITY – Unprecedented pressure on the fund from which unemployment benefits are paid to jobless Oklahomans has reduced the fund by more than $1 billion in less than three months.
Business disruptions caused by the coronavirus pandemic, coupled with the severe downturn in the energy industry, have taken a toll on Oklahoma’s Unemployment Insurance Trust Fund despite infusions of federal aid.
The total balance of the trust fund as of May 24 was $1.484 billion, the highest it had been in at least 22 years, Oklahoma Employment Security Commission (OESC) spokesman Jeff Fryer reported.
In comparison, the trust fund balance on Aug. 14 stood at $407 million, according to Liza Steger of Saxum, an Oklahoma City public relations firm hired by the OESC to assist in its public information efforts.
Apparently the last time reserves dipped that low was nine years ago, when the fund balance was recorded as $334.8 million on June 30, 2011.
The UI trust fund is underwritten with taxes collected from employers and has been supplemented this year with infusions of federal aid. For example, according to the OESC the $1.3 billion trust fund balance on July 3 included $575 million collected from businesses and $725 million from the U.S. government.
CONTRIBUTION RATES IMPOSED ON EMPLOYERS TO INCREASE NEXT YEAR
It’s fortunate that initial claims for unemployment benefits have been declining. The OESC has not imposed a “condition factor” since 2014, but condition factor “D” goes into effect for employers next year, Steger said.
The Oklahoma Employment Security Act specifies four condition factors, A, B, C and D, all of which boost the balance in the unemployment trust fund. “A” is the least severe measure imposed on employers, while “D” is the most severe.
The Employment Security Act defines “Condition ‘d’” in this manner: ”If the balance of the unemployment compensation fund is less than two times the net benefits paid for the most recent 20 consecutive completed calendar quarters divided by 5, as of July 1 of any given year, the contribution rate for the next calendar year for each employer shall be increased by sixty-six and two-thirds percent (66 2/3 %) of the rate...” Several other specific conditions are addressed in the Act, too.
This year the maximum benefit for an unemployed worker is $539 and the minimum benefit is $16.
CLAIMS DECLINE FOR 7TH WEEK
The OESC reported a continued decline in unemployment claims for the week of Aug. 8, for the seventh consecutive week.
The unadjusted advance number of initial claims in the first full week of this month totaled 4,673, a decrease of more than 1,900 from the previous week. The four-week moving average of initial claims totaled 7,522, a decrease of 1,252 from the previous week.
Also, the advance unadjusted number of continued claims totaled 118,131, a decrease of nearly 5,000 from the previous week’s revised level. Continuing assistance claims peaked at 178,974 the week of June 20.
First-time filings peaked at 93,885 initial claims for unemployment benefits registered during the week ending May 2, the OESC reported. Prior to the arrival of Covid-19 and the collapse in the energy industry, triggering massive job losses, no more than 2,000 first-time jobless claims were being filed.
Until these concurrent crises, the previous highest week for initial claims for unemployment benefits in Oklahoma occurred 29 years ago: 9,778 initial unemployment claims filed one week in January 1991, ledgers extending back to 1987 reflect.
“We paid more claims in the first three weeks of the pandemic than OESC did during all 12 months of 2019,” said Secretary of Digital Transformation David Ostrowe.
The unemployment rate in the Lawton area in June (the latest month for which data is available) was 7.1%, less than half of the 15.7% rate in May and nearly a third of the 19.1% rate in April, the U.S. Bureau of Labor Statistics reported.
ANTIQUATED MAINFRAME SLOWS CLAIMS PROCESS
“As unemployment numbers continue to decrease, we are maintaining our commitment to helping Oklahomans get their unemployment benefits,” said OESC Interim Executive Director Shelley Zumwalt. “We’re working on technology solutions, continuing to train employees and implementing new measures to combat fraud.”
The agency’s “continued focus” remains on “process improvements to provide help to Oklahomans,” she said.
One of the major problems with which the OESC has had to cope is its antiquated mainframe, which dates from 1978, Zumwalt told a Wall Street Journal reporter earlier this month. “It’s a system that you navigate by pushing F9 and F6,” she said. “That’s the engine that runs the claims process for this agency.”
“We have been implementing newer systems, but it can pose new challenges when working with the older system,” Fryer said on June 10.