Ohio seeks interest-free loan to revive parched unemployment fund

Long before the state's record-breaking unemployment rate in October jumped to 7.3 percent, Ohio officials knew that its Unemployment Compensation Fund would likely dry up by January 2009, according to a June 2008 Policy Matters Ohio report.

Mindful of the evaporating fund and a red-inked budget, Gov. Ted Strickland last week wisely asked the feds for a no-interest loan –– a bold move that will surely better position Ohio for a more attainable economic recovery and provide some room for positive changes.

In addition to the same economic ills currently plaguing states nationwide, Ohio's unemployment insurance fund has not been adequately funded for many years. In fact, Ohio employers pay a tax on the first $9,000 of each employee's wages, but the national taxable wage base for all states was $11,482 last year, reports PMO.

There's room for change, says Wayne Vroman, Urban Institute in Washington, D.C., who was asked to give his recommendations (PDF) to the Ohio Department of Job and Family Services, including these steps:

• Increase the taxable wage base in 2009
• Freeze the maximum weekly benefit during 2009-2011 (impacting 1 of 4 recipients).
• Link Changes in the Taxable Wage Base to Growth in Average Wages (avoiding a repeat of static funding levels that Ohio experienced over the last 20 - 30 years).
• Ease the Requirement for Monetary Eligibility Recommendation.

Labor cannot be expected to shoulder the burden alone. Although a Nov. 28 Akron Beacon Journal Op-Ed agreed with Vroman's call for a "temporary freeze" in benefit levels for struggling unemployment claimants, this same news outlet yesterday said that cutting benefits to meet the increasing need is not the only answer.

Strickland's request for a no-interest loan shows leadership in working to create a long term solution and involve all players, including Ohio employers who pay far less according to national figures.