Oklahoma works to shore up unemployment fund to avoid automatic business tax increase

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Published Saturday, February 27, 2021
by Sarah Downey | The Center Square

(The Center Square) - Oklahoma is working to ensure its Unemployment Insurance (UI) Trust Fund stays over a certain threshold to avoid tax increases on businesses after jobless claims surged throughout the state, creating payouts in 2020 that were more than the previous 10 years combined.

"Going forward, the agency has a few focuses that come to mind, the first being making sure the fund stays above the $25 million threshold," Oklahoma Employment Security Commission (OESC) Director Shelley Zumwalt told The Center Square. "This past year has been extremely difficult for the business community everywhere and we are doing everything we can to limit impact on our employers."

Oklahoma mandates that if the UI Trust Fund is projected to fall below $25 million for an upcoming quarter, the OESC must enact up to a 33.3% surcharge for employers on top of regular contributions, Zumwalt said.

"The agency has made multiple contingency plans to avoid this scenario as it would be devastating to the state business community," Zumwalt said. "Making sure the fund stays above this threshold is one of our top priorities."

While 22 other states have exhausted their UI Trust Funds and have taken out federal loans, Zumwalt said that is not forecast for Oklahoma.

Before the pandemic, Oklahoma's UI fund was more than $1 billion, but is now below $100 million.

"Making sure Oklahoma manages our fund in a fiscally responsible manner is a constant at the agency," Zumwalt said. "The agency collects employer contributions each quarter to replenish the fund. The first payment for this calendar year will be due April 1st, and at present, we do not anticipate funds will fall below the $25 million threshold between now and March 31, and it is monitored daily. I always offer the caveat that everything I am mentioning is based on current conditions, given the unprecedented year the state and nation has had, if a significant issue arose that dramatically affected claims volumes that projection could change."

The UI Trust Fund has paid out nearly $4.3 billion in benefits since March 1, 2020.

"For perspective, that amount dwarfs the amount paid out in the decade preceding (2010-2019) which was $3 billion," Zumwalt said. "For another snapshot, in February of 2020 [before the pandemic] the agency paid out $23 million in the entire month. In one week in June, we paid out $230 million."

While the agency has been getting benefits to an unprecedented number of unemployed workers, it is also undergoing a $45 million digital transformation that will include upgrading a 40-year-old mainframe.

"It absolutely cripples the agency's ability to operate in a digital environment," Zumwalt said. "Moving off that mainframe could not come fast enough and is scheduled to be complete by the end of this calendar year."

Other improvements have resulted in reducing call wait times from five hours to less than 30 minutes, Zumwalt said, adding that when she arrived, first call resolution numbers were below 5% and are now 75%.

Significant changes also have been implemented to stop fraud and recover funds paid out on fraudulent claims, Zumwalt said.

"Every time an issue has come up that negatively impacts claimants, we have figured out the root cause and executed on changes that will positively impact OESC's claimants," Zumwalt said.

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