Bill Redirects Money from Unemployment Tax to Unemployment Fund Administrative Services

Jul 8, 2013

Gov. Tom Corbett has signed into law a bill that is aimed at filling a hole in the unemployment compensation fund left by a cut in federal dollars.

House Bill 26 will provide the Pennsylvania Department of Labor and Industry funding from the employee UC tax.

“It’s (the tax) not changing," said Sara Goulet, Department of Labor and Industry spokeswoman. "It will not be increased to employees. It’s a tax that they already pay. It’s very small, to the tune of about 30-some dollars a year, so it’s not a lot of money, but it comes out of employees paychecks. It’s already being taxed, so it’s nothing additional.”

The money from the tax is being re-directed to administrative services and is not expected to have an adverse effect on unemployment benefits, Goulet said, and in fact, the hope is that the process of getting benefits improves.

“We really hope it allows us to improve some of the efficiencies because we’ll have additional funding used to administer the actual benefits to people,” she said, “so we really look at it as truly a benefit to everyone who’s an unemployment compensation claimant.”

The number of people receiving benefits changes monthly, and as of May about 223,000 individuals in Pennsylvania were receiving unemployment compensation. Over four years, the re-direction of funds is expected to net $30 million to $40 million per year, which is not expected to have an adverse effect on the UC Trust Fund.

“The trust fund is solvent,” Goulet said. “We can equate it to if you had a bank account with a million dollars in it and you took $20 out of it. It’s a very small amount based on the amount in the fund right now.”

The funds will be used for staff training, expenditures for information technology and other infrastructure, and to cover other administrative costs. The bill was passed with unanimous support in both the state House and Senate.