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You are here: Home / Archives for Department of Labor and Industrial Relations

Unemployment trust fund projected to reach $2.6 billion

September 3, 2009 By admin Leave a Comment

High unemployment and low contributions have battered Missouri’s unemployment trust fund, now projected to carry a $2.6 billion deficit by 2012.

Missouri’s unemployment rate has ballooned to 9.3%, driving the unemployment trust fund into the red by $600 million. The State Department of Labor projects that deficit to grow to $1.5 billion next year, when it projects the unemployment rate will top 10%. In 2011, the unemployment trust fund deficit is expected to grow to $2.6 billion and edge a little higher the following year.

State Labor Director Larry Rebman says addressing the fund must be a top priority of lawmakers next year.

"It’s imperative," says Rebman. "Employers in the state need to come to the table and discuss how we are going to fund this system. It is fully funded by employers and it has been underfunded for decades."

When Rebman talks decades, he means it. Rebman claims Missouri hasn’t properly funded the unemployment trust fund since the 1970s. He says problems began to be systematic by the 80s.

The fund relies on a tax on businesses, enacted by the Federal Unemployment Tax Act (FUTA). Missouri businesses pay a 6.2% tax into the fund. If a state fund maintains a balance, the federal government provides a 5.8% credit to businesses.

Rebman says the trend bothers him, both because of the growing deficit, but also because of the effect such a deficit will have on the ability of businesses to hire in the future.

"This is going to be a drag on employers as we come out of this recession," Rebman says, "and it is very troubling."

For now, the state is forced to keep borrowing money from the federal government to prop up the fund.

Download/listen Brent Martin reports (:60 MP3)
Unemployment Trust Fund projections

Filed Under: Business, Politics / Govt Tagged With: Department of Labor and Industrial Relations, Unemployment

Missouri compromise fails to lure in $133 million

August 20, 2009 By admin Leave a Comment

Missouri’s effort to secure $133 million federal dollars to expand unemployment benefits has been denied, because a compromise measure didn’t meet federal demands.

Congress offered Missouri the money to extend unemployment benefits to residents who lost jobs because of family illness, domestic violence or dislocation of a spouse. Unemployed workers in training programs would see benefits extended from 26 weeks to 52. The money came with a catch. To get the extra money for the next two years, the state would have to make the expansions permanent.

Missouri lawmakers sought a compromise and made the expansion temporary in HB 1075 . The federal Labor Department rejected the compromise.

"It’s really not a surprise, but it’s a continuation of an errant policy," says Missouri Chamber of Commerce President and CEO Dan Mehan.

Mehan says everyone knew the risk, that the federal government would likely reject the proposal. But Mehan insists the state didn’t have a choice, that businesses couldn’t accept temporary funding in exchange for costly, permanent changes. Businesses pay into the unemployment compensation fund. State labor officials estimated that making such permanent changes would have cost anywhere from $28-to-94 million a year.

The recession has hit Missouri hard. The state unemployment rate is 9.3%.

With federal disapproval, where does this leave Missouri?

"Exactly where we are," Mehan tells the Missourinet. "The (unemployment compensation) trust fund is in the red. We’re going to have to borrow to pay claims. We’re going to have to probably have to have a significant legislative solution to fix it for the future."

Mehan says the legislature will have to address the issue next year and any solutions will come at a cost. 

Download/listen Brent Martin reports (1:30 MP3)

Filed Under: Business, Politics / Govt Tagged With: budget, Department of Labor and Industrial Relations, Unemployment

Business group says state lost focus on unemployment money

May 21, 2009 By admin Leave a Comment

Federal authorities question whether the state legislature complied with the regulations required to access $133 million dollars in unemployment money. A business groups says the legislature shouldn’t have been grasping for the money anyway.

President Jim Kistler with Associated Builders and Contractors says the legislature lost focus during the session, working hard to draw down the federal funds, rather than addressing a mounting deficit in Missouri’s unemployment trust fund.

"Our group said from day one, beginning in October, that we need to address the insolvency first and as soon as we have the trust fund solvent, we’ll (be) more than happy to sit down and talk about increasing benefit levels as long as those benefits are directed at the people who truly need them," Kistler told the Missourinet.

Congress approved within the $787 billion economic stimulus package a provision that allowed states to access additional unemployment compensation funds. There was a catch, though. To access the funds, states had to agree to make permanent changes in their laws which would expand unemployment compensation to workers who previously wouldn’t have qualified. The Missouri legislature made provisions within HB 1075 passed this year temporary, promising to revisit the issue next year and consider making them permanent.

Kistler said the legislature shouldn’t even be considering any expansion of benefits, temporary or not.

"We said, number one, let’s use alternative financing to the maximum. Number two, let’s not increase benefits while we’re insolvent and then, number three, let’s take a look at how we can refocus the benefits we’re paying," Kistler said.

A spokesman for Governor Nixon, Scott Holste, cautioned that it’s too early to assert that the bill passed this session won’t comply with federal law.

"It’s important to remember the U.S. Department of Labor has not issued any kind of ruling on the Missouri unemployment benefits, which is actually expanding those benefits to workers who had not previously been eligible," Holste said. "We have already succeeded in extending benefits for workers using stimulus package money as well as enhancing some benefits."

Holste added that the legislation does carry the option for the legislature to make the changes permanent next year.

Download/listen Brent Martin reports (2 min MP3)

Filed Under: Business, Politics / Govt Tagged With: Department of Labor and Industrial Relations, Jay Nixon

Missouri unemployment fund nearly broke, state asks federal government for $260 million

February 3, 2009 By admin Leave a Comment

The State Department of Labor is asking the federal government for $260 million  to cover a projected short-fall in the unemployment trust fund … the fund’s expected to go into the red as early as next week.

According to spokeswoman Wanda Seeny, as Missouri’s unemployment rate sits at seven point three percent … the highest in 25 years … the fund that pays out unemployment benefits is on the verge of being insolvent.

Seeney says the borrowed money will take the fund through April, when taxes employers pay on employee wages will come in and replenish the account. She says repayment to the federal government would also begin at that time.

Seeney says out-of-work Missourians should not worry about their benefits, that the department will do whatever it takes to ensure benefits continue to those who qualify.

The last time the state had to borrow money to cover benefits was in 2003 and 2004, which was paid back in 2006 and 2007, leaving little time for the fund to recover, Seeney says.

Click here for more about unemployment benefits through the Department of Labor and Industrial Relations.  

Jessica Machetta reports [Download/listen MP3]

Filed Under: Politics / Govt Tagged With: Department of Labor and Industrial Relations, Unemployment

Critics assail while Labor Department defends new system for paying UI claims

August 20, 2008 By admin Leave a Comment

A new system for distributing unemployment benefits to out of work Missourians went into effect in July. And that system is now coming under fire from some people who have lost their jobs and from others who are simply concerned about what they see as problems associated with the new system.

It’s a system that requires Missourians who claim benefits to be automatically enrolled in a debit card program administered by the Department of Labor and Industrial Relations’ Division of Employment Security in conjunction with Central Bank. Claimants may exercise the right to opt out of the debit card program and have payments sent directly to their bank accounts, but critics claim the option must be exercised within seven days of filing initial claims. That claim is disputed by the Department of Labor.

Maria Williamson, a Fenton auto worker who was laid off, doesn’t like the debit card system and insists she was not fully informed. "I didn’t know anything about this until the day I received the card in the mail," says Williamson, "And then that following Monday when I called the unemployment office, that is when I was told it was not an option for me. It was done. I was in the system under this debit."

Delays are a concern for Darin Gilley, president of a UAW local in a shop that supplies auto parts for vans. "I’ve had numerous members who have been affected by this recently," says Gilley, "And there’s a lot of complaints from them about both the fees and also the fact that it seems like their cards are not being loaded or having their accounts – have their money deposited in their accounts."

State Representative Rachel Storch (D-St. Louis) finds the new system cumbersome and somewhat confusing. Says Storch: "If you’re savvy enough to figure out that you have seven to ten days to opt out of this you can choose to have direct deposit to you own bank. But that requires that you go on line, print out the appropriate forms, mail them into the Department of Labor – to Employment Security, and they put you back onto direct deposit … otherwise you will be receiving the debit card."

The Department defends the new program, saying it provides improved security and service. It adds the new program will save taxpayers $643,762 a year. As for the specific compaints regarding the option to opt out and the fees charged, Labor Department spokesperson Daisy Olivo tries to put minds at ease.

"You now have the option," says Olivo, "Of either choosing to receive your UI benefits via the debit card or direct deposit." She acknowledges there was initially a seven day period in which claimants had to choose to receive money through direct deposit or on the debit card, but that seven day period has been waived and claimants can request direct deposit at any time.

On the concern regarding fees, Olivo makes it clear there is no need to pay charges or fees: "Funds can be obtained free via these debit cards at any MasterCard member bank location by using a teller. That would be at approximately 3,000 locations in the State of Missouri." Olivo adds debit cards are also accepted at thousands of retail establishments throughout the state, with the ability to receive cash back from purchases – at no charge.

Download/Listen: Steve Walsh report (:60 MP3)

Filed Under: Politics / Govt Tagged With: Department of Labor and Industrial Relations, Unemployment

Local Governments Win Legal Challenge to Minimum Wage Law

January 8, 2008 By admin Leave a Comment

A legal challenge to a portion of Proposition B – the minimum wage law approved by voters in November of 2006 – is successful.

Local governments had filed the challenge, asking that police officers, firefighters, and other emergency personnel who do not work standard work hours be excluded from the law. Cole County Circuit Judge Richard Callahan has ruled these employees should be covered under federal employment rules, as they have been for many years.

That pleases Gary Markenson, Executive Director of the Missouri Municipal League, one of the plaintiffs in the suit. Markenson says forcing local governments to pay overtime for emergency personnel could have bankrupted cities and counties and forced layoffs. Unions representing these employees were in accord with the effort to exempt these workers from Prop B.

Download/Listen: Steve Walsh report (:60 MP3)

Filed Under: Crime / Courts Tagged With: Department of Labor and Industrial Relations

Lawmakers Urged to Focus on Short-Term Second Injury Fix

November 11, 2007 By admin Leave a Comment

State lawmakers considering changes to the Second Injury Fund are reminded they need to concentrate on an immediate problem before tackling other issues with the fund.

State Labor Director Omar Davis has heard lawmakers talk about many aspects of the Second Injury Fund. He wants the discussion re-focused, "We have a crisis right now in the fund, with revenue not meeting expected expenditures."

Davis says much of the talk among members of a special House committee studying the fund has been focused on the long term. Davis reminds members two separate audits indicate the fund is on the brink of insolvency. A state audit issued earlier this year forecast that expenditures from the fund would exceed revenue by $57 million. The audit stated that changes made by lawmakers in 2005 would reduce costs to the fund in the long-term, but would not come in time to stem the short-term financial problems.

It’s certain the fund can’t take hits like the one described to the committee by Workers Compensation Division Director Jeff Buker. A 2005 accident left a truck-driver passing through the state with extensive injuries. The only tie to Missouri was that the accident occurred in the state. He wasn’t a Missourian and the company wasn’t from Missouri. Still, the Second Injury Fund has paid more than $1 million in medical bills and will continue to pay for the trucker’s care.

Both Buker and Davis say such cases can be addressed by the legislature, after it deals with the looming short-term problem.

Download/listen Brent Martin reports (:60 MP3)

Filed Under: Legislature, Politics / Govt Tagged With: Department of Labor and Industrial Relations

Committee Considers Fixes to Second Injury Fund

November 7, 2007 By admin Leave a Comment

It appears certain the state’s Second Injury Fund is heading for bankruptcy; what to do about that is all but certain.

The Special Interim Committee on Second Injury Fund is holding hearings on the issue. Lawmakers made changes to the Second Injury Fund in 2005, but those changes won’t reduce costs in time to relieve the short-term problem of expenditures outpacing revenue by more than $57 million the next two years. Lawmakers differ on how they view the problem.

Rep. Steve Hunter (R-Joplin) objects to workers who make claims for non-work related injuries just prior to retiring. Hunter compares reaching a $60,000 settlement with the Second Injury Fund just before retirement to payola. He says it’s better than slots, because the odds of getting the pay-off are greater.

But Rep. John Burnett (D-Kansas City) counters that in order to get that payment, a worker must suffer a permanently disabling injury. He remarks that such workers don’t just get to hit this "slot machine" without suffering a physical injury that renders the worker permanently and totally disabled.

Though the hearing listened to a range of perceived problems with the fund, the real problem is the short-term. Audits indicate long-term stability due to the 2005 changes.

Hunter isn’t optimistic the legislature will approve a fix next year. He calls himself a realist in assessing the unlikelihood of approving changes to the Second Injury Fund during an election year.

Created in 1943, the Second Injury Fund provides benefits for disabled workers or workers injured on the job who suffered previous injuries.

A real question lingers out there for the committee. If the fund becomes insolvent, who is liable for payments to workers incurring a second injury?

Download/listen Brent Martin reports (:60 MP3)

Filed Under: Legislature, Politics / Govt Tagged With: Department of Labor and Industrial Relations

Minimum Wage Going Up in New Year

October 5, 2007 By admin Leave a Comment

Missouri’s minimum wage will rise by 15 cents an hour on January 1st – from $6.50 to $6.65 an hour.

The minimum wage law that was adopted last year requires the State Labor Department to determine on September 30th, any required adjustments to the minimum wage earnings based on changes in the Consumer Price Index.

The rate change is based on a 2.2 percent change in the CPI between July of 2006 and July of this year.

Filed Under: News Tagged With: Department of Labor and Industrial Relations

Blunt Shuffles Administrative Chairs

September 12, 2007 By admin Leave a Comment

Governor Matt Blunt (R-MO) makes some changes to the look of his administration.

On the heels of his announcement that Terry Jarrett is leaving the Missouri Administrative Hearing Commission to become a member of the Missouri Public Service Commission, the Governor has announced Labor Director Rod Chapel will fill the vacancy on the Administrative Hearing Commission.

Omar Davis, the general counsel for the Department of Revenue, is now nominated to head up the Department of Labor. Davis previously worked with Blunt when he was Secretary of State.

The nominations are subject to Senate confirmation.

Download/Listen: Governor Blunt’s announcement (3:00 MP3)

Filed Under: Politics / Govt Tagged With: Department of Labor and Industrial Relations, Matt Blunt

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