PDT Staff Writer
The state's unemployment trust fund is going broke, and Gov. Ted Strickland is calling for federal help.
That's what Andrew E. Doehrel, president of the Ohio Chamber of Commerce and co-chairman of the state's Unemployment Compensation Advisory Council, said in an exclusive interview with the Portsmouth Daily Times.
"I think he's (Strickland) looking for some direct distributions," Doehrel said. "Employers play a federal unemployment comp(ensation) tax as well that goes into a federal trust fund. We have a trust fund here in the state that's going broke, but there's actually a large trust fund at the federal government as well."
Doehrel said from time to time, depending on how much money is in the federal fund, they (the federal government) have done disbursements in the form of giving back money to the states trust funds.
"So I believe the governor is looking for a direct allotment, if you would, from the federal trust fund to the state for their Unemployment Comp Trust Fund," Doehrel said.
Strickland had said he is asking Congress for aid to replenish Ohio's Unemployment Compensation Trust Fund so the state won't have to borrow the money from the federal government.
Doehrel was asked when he forecasts the Ohio Unemployment Compensation Fund will officially go broke.
"That's anybody's guess. It literally varies day to day depending on how many claims are filed and are continued," Doehrel said. "If you've got a thousand people that pick up jobs this week it could lower how much you (the state fund) are paying out. So right now it appears it could be late December of January of 2009."
So if someone becomes unemployed after January, will it be true that there will be no money in the unemployment fund?
"No, no -- because of the federal trust fund -- and they've already made the proper applications to take a loan," Doehrel said. "There's two different things you can do -- you can always get a loan from this federal trust fund to continue to pay benefits. So there will be no interruption of benefits."
Doehrel said if the latter is the method used, the question then becomes, "are you going to be taking loans out from this federal trust fund that will have to be repaid, and interest has to be paid on those loans, or whether the federal government is going to make a direct disbursement of some of those funds back to the state where it is not a loan but an additional monies for you to use."
Doehrel said the money comes from the same place with the difference being in how it is obtained.
Ohio's unemployment rate is currently at 7.2 percent, higher than the national average, and the state is bracing for more job losses in the auto industry and air-express industry.
"We've continued to see an increase, unfortunately, and we just have not gotten through the whole economic downturn here in the state of Ohio," Doehrel said. "And that has been the problem. We are simply facing such a prolonged downturn in our economic cycle."
Doehrel said the state makes its plans based on the economic cycles of past history, utilizing plans believed to work under the circumstances. That is not working now.
"This cycle has just been so prolonged that the models didn't pick up this type of occurrence," Doehrel said. "So the problem isn't just that we're seeing some spikes right now because of major layoffs in the auto and other industries, but this really started back in 2000-2001, and it has just been a more steady, higher rate of unemployment that the models wouldn't have expected us to have had."
When will Ohio know if the federal government is going to disburse funds to prop up the unemployment compensation fund?
"That's a good question. We just don't know," Doehrel said. "Maybe it happens in the lame duck session. I know they are looking at some further economic stimulus packages. It could be put into that. This may be done separate and it might be early next year. I don't know."
Numbers from the state show as of Nov. 7, the trust fund balance was $325 million, down from $594 million a year ago and far below the state's minimum safe level of $2.5 billion.
The state pays out more than $100 million a month in benefits.
The forecast also calls for more large layoffs including General Motors Corp. plans to close a factory near Dayton in December.
That plant employs about 1,000 people and produces sport-utility vehicles.