SB 436-FN - AS INTRODUCED
2024 SESSION
24-3009
06/05
SENATE BILL 436-FN
AN ACT relative to maximum benefits payable in unemployment compensation.
SPONSORS: Sen. Perkins Kwoka, Dist 21; Sen. Soucy, Dist 18; Sen. Altschiller, Dist 24
COMMITTEE: Commerce
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ANALYSIS
This bill establishes the minimum and maximum amounts of weekly benefits based upon the statewide average weekly wage and national cost of living adjustments.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
24-3009
06/05
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Twenty Four
AN ACT relative to maximum benefits payable in unemployment compensation.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 Weekly Benefits Payable; Minimum and Maximum. RSA 282-A:25 is repealed and reenacted to read as follows:
282-A:25 Weekly Benefit Amount for Total Unemployment and Maximum Total Amount of Benefits Payable During any Benefit Year.
I. The annual minimum weekly benefits amount payable to an eligible individual shall not be less than 33 percent of the most recent statewide average weekly wage published by the department of employment security and shall be updated every 5 years by:
(a) Multiplying the current year’s weekly benefits amount payable to an eligible individual by the sum of the previous 5 years’ cost of living adjustments as described in 20 CFR 416.405;
(b) Rounding up the product derived in subparagraph (a) to the next whole dollar; and
(c) Adding the rounded up product in subparagraph (b) to the current minimum weekly benefits amount payable.
II. The maximum weekly benefits amount payable to an eligible individual shall not be more than 150 percent of statewide average weekly wage published by the department of employment security and shall be updated every 5 years by:
(a) Multiplying the current year’s maximum weekly benefits amount payable to an eligible individual by the sum of the previous 5 years’ cost of living adjustments as described in 20 CFR 416.405;
(b) Rounding up the product derived in subparagraph (a) to the next whole dollar; and
(c) Adding the rounded up product in subparagraph (b) to the current year’s maximum weekly benefits amount payable to an eligible individual.
2 Effective Date. This act shall take effect January 1, 2025.
24-3009
Revised 12/28/23
SB 436-FN- FISCAL NOTE
AS INTRODUCED
AN ACT relative to maximum benefits payable in unemployment compensation.
FISCAL IMPACT: [ X ] State [ X ] County [ X ] Local [ ] None
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Estimated State Impact - Increase / (Decrease) | ||||||
| FY 2024 | FY 2025 | FY 2026 | FY 2027 | ||
Revenue | $0 | Indeterminable Increase | Indeterminable Increase | Indeterminable Increase | ||
Revenue Fund(s) | Unemployment Compensation Trust Fund
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Expenditures | $0 | Indeterminable Increase | Indeterminable Increase | Indeterminable Increase | ||
Funding Source(s) | Various Government Funds
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Appropriations | $0 | $0 | $0 | $0 | ||
Funding Source(s) | None
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• Does this bill provide sufficient funding to cover estimated expenditures? [X] N/A • Does this bill authorize new positions to implement this bill? [X] N/A | ||||||
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Estimated Political Subdivision Impact - Increase / (Decrease) | ||||||
| FY 2024 | FY 2025 | FY 2026 | FY 2027 | ||
County Revenue | $0 | $0 | $0 | $0 | ||
County Expenditures | $0 | Indeterminable Increase | Indeterminable Increase | Indeterminable Increase | ||
Local Revenue | $0 | $0 | $0 | $0 | ||
Local Expenditures | $0 | Indeterminable Increase | Indeterminable Increase | Indeterminable Increase | ||
METHODOLOGY:
This bill establishes the minimum and maximum amounts of weekly benefits based upon the statewide average weekly wage and national cost of living adjustments. The Department of Employment Security states under current law, the weekly unemployment benefit payable to an eligible individual is determined by the table contained in RSA 282-A:25. This table contains 52 benefit tiers with each containing an amount for total annual earnings, a corresponding weekly benefit amount (WBA) and a maximum amount of benefits payable. The maximum amount is the weekly benefit amount multiplied by 26 weeks. The Department determines the WBA to be paid to an eligible individual by referencing the amount of wages earned by the individual.
The table provides eligible individuals with a WBA as temporary replacement for wages lost due to the individual being unemployed through no fault of their own. By comparing the wages earned to the WBA, the percentage of wages replaced by unemployment benefits can be determined. The current wage replacement rate ranges from 53% to 60%. An individual’s benefit tier in the table is based upon their wages earned in covered employment during the four quarters of the individual’s base period. The current minimum weekly benefit amount is $32 for an individual earning at least $2,800 but less than $3,100. In calendar year 2023 no individuals were determined eligible for the minimum weekly benefit amount. The current maximum weekly benefit amount is $427 and is paid to individuals earning at least $41,500 in the four quarters of their base period. In calendar year 2023, 4,098 individuals qualified for the maximum weekly benefit amount.
This bill would change the way the minimum weekly benefit amount is calculated. The minimum amount payable under the bill would not be less than 33% of the most recent statewide average weekly wage. This amount, as reported by NH employers, in calendar year 2022 was $1,389. The minimum weekly benefit amount under this bill would be $463 per week and would exceed the current maximum benefit amount. The bill would also change how the maximum weekly benefit is calculated. The maximum would be no more than 150% of the most recent statewide average weekly wage ($1,389 as above). The maximum weekly benefit amount under the bill would be $2,084 per week. The Department states the bill does not contain instructions on how to determine whether someone was eligible for the minimum weekly benefit amount or the maximum weekly benefit amount.
The bill requires future adjustments to the weekly benefit amounts every 5 years increasing the weekly benefit amount by the sum of the prior five years change in the consumer price index. The consumer price index for the northeast increased by the sum of 16% during 2018-2022. The bill would further automate future adjustments such that the benefit amount would again be adjusted by the same percentages of the average weekly wage.
The Department indicates the unemployment compensation program is an eligibility program governed by federal standards established in the Social Security Act, (SSA), Federal Unemployment Tax Act (FUTA) and Wagner Peyser Act. Participating states must be in conformity with minimum federal requirements in order for employers to continue to take advantage of the credit against their Federal Unemployment Tax Act (FUTA) obligations. The FUTA credit benefits NH employers in the amount of approximately $200 million per year. Given this State-Federal partnership, U.S. Department of Labor (USDOL) review is sought for all proposed legislation concerning the NH Unemployment Compensation Law, RSA 282-A. Accordingly, the Department will seek USDOL review of this bill. Because the bill would eliminate language in the current statute defining how individuals are assigned to specific weekly benefit amounts and removes the current minimum requirement for an individual to have earned at least $1,400 in two separate quarters of the base period to be monetarily eligible, there will likely be questions raised by USDOL when they evaluate the bill.
The Department of Employment Security indicates, if the issues concerning administration and conformity were resolved and the bill increased the minimum and maximum weekly benefits amounts to 33 percent and 150 percent of the statewide average weekly wage respectively, claimants will see a dramatic increase in their UC benefit amounts. The Department provided information on three possible fiscal impacts to employers as a result of the bill:
- The first relates to UC benefits paid to employees of reimbursable employers who reimburse the Trust Fund dollar for dollar for benefits paid. The State, county and municipal entities (except those that choose by election to pay quarterly taxes) are “reimbursable employers.” Instead of paying quarterly taxes, these government entities pay into the fund an amount equal to the UC benefits paid to claimants who during their benefit year have wages in the base period that were paid wages by these political entities. The increase in benefit payments would directly affect these reimbursable entities by each additional dollar of benefits paid.
- The second potential fiscal impact relates to individual employer tax rates. Taxable employers pay quarterly contributions into the Trust Fund based upon an earned tax rate applied against a fixed taxable wage base per employee of $14,000 in annual wages. The earned tax rate is set by statutory tax tables. The determination of where an employer fits within the tax tables is based upon a risk assessment of each employer comparing total taxes paid by the employer to total benefits paid by the Department to the employer’s former employees, all compared against current total annual wages paid. Lower benefits paid to an employer’s former employees and more in taxes previously paid results in a lower earned tax rate. Higher benefits paid to an employer’s former employees result in a higher earned tax rate. Increasing the amount of UC benefits paid could then cause an increase in employer earned tax rates and increase the unemployment taxes paid by taxpaying employers.
- A third fiscal impact involves the statutory solvency triggers that determine when employer tax rates are decreased as the balance in the trust fund reaches certain milestones. Currently, new employers start with an earned tax rate of 2.7%. The statutory solvency triggers cause a reduction of 0.5% to the earned tax rates of positive rated employers if the trust fund balance equals or exceeds $250 million for an entire calendar quarter. If the trust fund balance equals or exceeds $350 million for an entire calendar quarter, positive rated employers receive a reduction of 1.0% to their earned tax rate. Finally, if the trust fund equals or exceeds $400 million for every day of an entire calendar quarter, positive rated employers receive a reduction of 1.5% to their earned tax rate. These reductions are referred to as Fund Balance Reductions (FBRs). The current FBR in effect is 1.0% as the trust fund has equaled or exceeded $350 million but has not equaled or exceeded $400 million. If benefit amounts were increased disbursements from the trust fund would increase accordingly. As disbursements from the trust fund increase, the balance of the trust fund falls, making it less likely to meet the balance thresholds triggering FBRs to reduce employer tax rates. The tax rates would need to be higher in to sustain a balance in the trust fund considered necessary to meet solvency standards.
AGENCIES CONTACTED:
Department of Employment Security