HOUSE COMMITTEE ON BUSINESS AFFAIRS AND LABOR
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09:40 AM -- Unemployment Insurance
Mike Cullen, director of the Unemployment Insurance Office within the Colorado Department of Labor and Employment, presented a background on Colorado's Unemployment Insurance Program and distributed an outline of his discussion (Attachment A). Staff also distributed a memorandum on unemployment insurance (Attachment B). He explained that unemployment insurance is a federal and state program that provides temporary income replacement for workers who have lost their job through no fault of their own. Mr. Cullen explained that the basis for the program at the federal level is provided in the Social Security Act and the Federal Unemployment Tax Act and that the states must conform to the framework provided in these documents. There was a discussion about what would happen if Colorado did not conform to the federal law. Mr. Cullen stated that nonconformity would result in the loss of federal administrative funding and the loss of a 5.4 percent federal tax credit for employers.
The director talked about the solvency of the unemployment insurance fund and said they are in a better position then they were in the last recession because they are taking in more taxes. He said they are not projecting insolvency. He talked about the make-up of the Unemployment Insurance Trust Fund. He explained that the money that goes into the unemployment insurance trust fund cannot be used for any other purpose even though it is a cash fund per federal rule. He talked about the Unemployment Support Fund.
Mr. Cullen discussed the various ways to file for unemployment benefits, including via telephone or over the internet. To be eligible, a claimant must have earned at least $2,500 in wages during the base period and must not be at fault for the separation from employment. He said it takes about four to five weeks to receive benefits. He responded to a concern a member had regarding people who receive unemployment benefits and still work part-time. Mr. Cullen explained that claimants can earn up to 25 percent of their weekly benefit and still receive unemployment benefits. There was a discussion about the amount people waiting to get a hold of the unemployment office. Mr. Cullen talked about the increase in calls over the last few months and that they have a fixed number of employees based on federal funds and are hiring more now from the administrative funds.
The director talked about the appeals process for claims and the fraud unit who collects fraudulent moneys with penalty and interest assessed. The money collected goes into the Revenue Fund that funds employees in the unit.
In response to a question, Mr. Cullen stated that about 400 or more employees at the unemployment office are federal employees. Representative Rice asked about the requirement that claimants look for a job while receiving unemployment benefits. Mr. Cullen said claimants are required to acquire five job contacts a week. That number can be adjusted by the workforce center. Claimants are required to keep a record of all their contacts and are asked occasionally to present them for review. About one to two percent are reviewed. Mr. Cullen talked about the Integrity Section that investigates tips and leads of fraud and stated the most common is a claimant who claims benefits after they receive a new job.
Director Cullen discussed the Emergency Unemployment Compensation Program that started in July of 2008 which provides up to 13 weeks of additional unemployment benefits that is provided by federal government funds. He explained there is a separate team that handles the Emergency Unemployment Compensation claims for the federal government. Recently, the 13 weeks was expanded to up to 20 weeks. Additionally, high unemployment states can also receive another 13 weeks of Emergency Unemployment Compensation benefits (tier two). Mr. Cullen stated that about over 40 states are on tier 2 which requires a total unemployment rate of 6 percent of average of last three months. Mr. Cullen senses that Colorado will trigger tier 2 benefits sometime in February. Mr. Cullen said our unemployment rate is currently at 5.8 percent.
Representative Rice commented about holding similar briefings throughout the session with all the departments the committee oversees.