ARIZONA STATE SENATE
Phoenix, Arizona
CORRECTED
Purpose
Makes numerous substantive
changes to the statute regulating unemployment insurance and focusing on increasing
benefits and lowering thresholds for benefit eligibility. Doubles the amount counted as wages by the
Department of Economic Security (DES) for computing unemployment payments to
the unemployment trust fund.
Background
Unemployment insurance is offered as an economic safety net program to individuals who find themselves, through no fault of their own, out of work for a period of time. In such cases, individuals must meet certain criteria, like availability to work, able to work and registered to work. If qualified to receive benefits, individuals are then given a proportion of their wages from a trust fund funded by employers in the state. Concerns have been expressed that Arizona lags behind other states in the amount of benefits that are paid out to unemployed individuals.
S.B. 1093 makes numerous substantive changes to current statute. Some of these include: changing different variables used to compute the wage benefits paid to the unemployed; changing different minimum and maximum dollar amounts regarding unemployment taxes paid by employers; and changing different minimum and maximum dollar amounts regarding benefits for eligible recipients.
Currently, wages are counted as anything up to $7,000 unless the amount over is subject to certain federal tax laws. Under S.B. 1093 that amount is doubled to $14,000. DES estimates that doubling this amount will increase the amount collected by almost 40 percent. DES estimates that it will collect about $132 million dollars in FY 2000 for its unemployment trust fund. In doubling the amount, DES estimates it will collect about $225 million per year. Currently, there is over $1 billion in the unemployment trust fund. DES estimates that the unemployment benefits paid out from the trust fund total about $160 million based on the prior 12-month period.
S.B. 1093 also lowers the
amount that employees must earn in a single calendar quarter to be eligible for
benefits by $700 while at the same time it raises, to $75, the amount that an
individual may earn per week and not receive a reduction in benefits. Finally, S.B. 1093 requires that eligible
recipients receive an extra $25 per week per dependent in benefits
The adjustment of variables,
the shifting of dollar amount thresholds and the establishment of new benefits
all have no impact on the state general fund according to DES. While the resulting impact on the
unemployment trust fund is unknown at this time, it is expected to be minimal,
according to DES.
Provisions
1. Doubles the base amount of defined wages (from $7,000 to $14,000). Amounts in excess are prohibited from being defined as wages unless those amounts are taxable under federal law and are counted as required contributions into the state unemployment fund by employers.
2. Reduces the amount, to $300 from $1000, that an individual must have earned in one calendar quarter of the individual’s base period to be eligible for benefits.
3. Requires an additional $25 per week per dependent for eligible unemployment recipients.
4. Removes the $205 weekly benefit cap.
5. Increases the amount, from $30 to $75, that a benefit recipient may earn per week without experiencing a corresponding reduction in weekly benefits.
6. Expands the definition of “base period” of employment to include “the last four completed calendar quarters...”. The definition includes instructions for contacting employers for immediate wage information and for computing wage items based on the “…day before the application date.”
7. Removes unemployment benefits exemptions for seasonal employees and school bus drivers.
8. Provides for a general effective date.
Prepared by Senate Staff
January 25, 2001