OKLAHOMA CITY – Legislation that will cut the number of weeks a jobless worker can collect unemployment benefits, from 26 weeks to 16, was signed into law by Governor Stitt.
House Bill 1933 by Rep. Ryan Martinez (R-Edmond) and Sen. Zack Taylor (R-Seminole) goes into effect next year.
On Jan. 1, 2023, an Oklahoman discharged from a steady job will be entitled to draw unemployment benefits for:
26 weeks if he/she was laid off prior to that date.
16 weeks if the employee lost his/her job between Jan. 1, 2023, and Jan. 1, 2025.
Starting in 2025 the duration of unemployment benefits will be limited to 16 weeks if the state’s average unemployment insurance claims are at or below 5,000. Two extra weeks will be added for each 15,000 increments if the average unemployment insurance claims climb above 5,000, but in those circumstances the duration would be capped at 20 weeks.
In the event of another deep recession and continuing claims for unemployment benefits surpass 40,000, the maximum duration of benefits “shall immediately be raised” to 26 weeks, HB 1933 stipulates. The elevated duration limit “shall be in place” only until continued unemployment benefit claims fall below 40,000, at which point the previous maximum limits will resume, the new statute dictates.
First-time filings peaked at 93,885 initial claims for unemployment benefits during the week ending May 2, 2020, the Oklahoma Employment Security Commission 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.
In the file week that ended May 14, 2022, the unadjusted number of initial claims totaled 1,890, an increase of 176 from the previous week, the OESC announced on May 26. For the same file week, the less volatile four-week moving average of first-time claims was 1,942, a slight increase of 28 from the previous week.
The number of continued claims on May 14 totaled 11,266, a decrease of 132 from the previous week. The four-week moving average of continuing claims was 11,163, a decrease of 38 from the previous week.
HB 1933 passed both legislative chambers by wide margins.
The House of Representatives’ fiscal staff said that according to the OESC, HB 1933 would “likely reduce the amount of benefits it pays out” but the agency was unable to provide an estimate of “what that reduction might be.”
House Bill 3096, filed in 2020, proposed similar limits on unemployment benefits and the number of weeks benefits could be collected. The House fiscal staff said the OESC estimated that jobless benefits paid in 2019 under those conditions would have been reduced by approximately $120 million.
Oklahoma’s maximum weekly benefit this year is $476, and the maximum benefit amount is $9,900, the OESC reports.
Taylor was the principal author of HB 3096 and the Senate sponsor of HB 1933.
Under new statute,
jobless benefits
on tiered system
The new system will “adjust how the state pays unemployment compensation to a tiered system based upon the number of weekly claims,” Taylor said in a press release dated April 27. “This means individuals would qualify for more weeks of benefits when the economy is performing poorly,” and fewer weeks of benefits “when the economy is strong.”
Later that day Southwest Ledger sent Taylor an email asking him, “Have you ever been laid off from a job and had to avail yourself of Oklahoma’s unemployment benefits?” The senator did not respond.
In his press release, Taylor said HB 1933 would “effectively end unemployment tax increases on Oklahoma businesses.”
Oklahoma’s Unemployment Insurance Trust Fund is fed from taxes imposed on employers, not from employee paychecks. Approximately 90,000 employers contribute to the UI Trust Fund, OESC records show. Some employers, such as farmers, are exempt from the tax.
“In years past the trust fund has paid out around $250 million annually,” OESC Executive Director Shelley Zumwalt told the Ledger in October 2020.
However, because of the coronavirus pandemic that started in Oklahoma in March 2020, the Unemployment Insurance Trust Fund was depleted. Between March 1, 2020, and Dec. 18, 2021, the OESC paid out “a bit over $5.2 billion” in state and federal benefits, Zumwalt said.
Consequently, Conditional Factor D, the highest rates that the OESC can assess against employers, was imposed starting in January 2021. It was the first time a conditional factor had been enacted in seven years, Zumwalt said. Oklahoma remains in Conditional Factor D this year.
After the recession in 2007-09 “Oklahoma took around three years to improve the conditional factor,” Zumwalt said. “As our economy continues to recover and the UI Trust Fund is replenished, we expect to see the conditional factor improve over time.”
Employer contribution rates range from 0.3% to 7.5% of payroll. Nearly three-fourths of Oklahoma employers (72%) pay at the lowest rate, Zumwalt said.
The majority of employers (73%) experienced no change in their contribution rate for 2022, and many employers (19%) saw their rate decrease this year, Zumwalt told the Ledger. “Only 4% of employers have had a rate increase,” which averaged less than 1% (0.97%), she said. The other 4% of employers are new; their contribution rate is 1.5%.
A company’s unemployment tax is calculated as a percentage of payroll per employee, up to the annual taxable wage base. The taxable wage base this year is $24,800, OESC Communications Director Taylor Adams said.
The tax rate is higher for employers that dismiss workers at relatively high rates, and lower for employers who have a relatively steady workforce.
The UI Trust Fund’s exclusive purpose is to provide financial support to workers who have been laid off through no fault of their own.
Unemployment benefits paid to a worker who has been laid off are determined by the employee’s prior earnings. The amount for which an individual qualifies is based on wages earned from his/her employer during the base period, which is the first four of the last five completed calendar quarters.
OESC still using
aged mainframe
Senator Taylor said that “indexing” unemployment benefits will lower UI tax rates from $2.80 to $1.90 per $1,000 of wages “in just five years.” He also said projections show “program dependency” could drop by 35% in four years, moving a UI enrollee’s average time on unemployment from 13.4 weeks to 8.7 weeks.
Taylor’s press release never explained where those statistics came from.
The OESC said the numbers didn’t come from them. Their 40-year-old computer system is incapable of calculating the average number of weeks that unemployed Oklahomans have collected benefits.
The OESC’s IBM mainframe dates from 1978, Zumwalt said in 2020 when the OESC was inundated in unemployment claims stemming from the coronavirus pandemic. “It’s a system that you navigate by pushing F9 and F6. That’s the engine that runs the claims process for this agency,” she said. “Everything has to be done manually.”
During an interview last year Zumwalt said, “The technology we’re using in our office in 2021 was new in 1981. It processes claims and all our payments go through it. We can’t process claims at night because that’s when it’s running batch files.”
Some OESC staffers still use COBOL (Common Business-Oriented Language), a computer language developed in the early 1960s. COBOL was employed in several state unemployment agencies to retrofit antiquated government systems that struggled to process the tsunami of unemployment claims spawned by the coronavirus crisis, Zumwalt said.
The OESC is still engaged in a comprehensive digital transformation project, Adams said. The “BT40 project” is “a complete business process transformation that will touch every aspect of the agency, not just software and hardware,” Zumwalt said.
UI Trust Fund
‘strong, stable’
Sen. Taylor said in his April 27 press release that “transitioning” to the system established in HB 1933 will “stabilize the unemployment insurance fund” and will increase Oklahoma’s Unemployment Insurance Trust Fund “by $324 million in just three years.
Oklahoma’s Unemployment Insurance Trust Fund held approximately $335 million on May 25, OESC Communications Director Taylor Adams reported.
“Our trust fund is one of the strongest and most stable in the nation,” Zumwalt told the Ledger on May 6. During the height of the coronavirus pandemic two dozen states took out federal loans, at less-than-ideal interest rates, to keep their unemployment systems afloat, she said. Oklahoma is one of only two states whose fund for paying unemployment benefits “has never gone into ‘the red’. Our mechanism works.”