We’re in the heat of the final two weeks of legislative session, and in the coming days we’ll see which bills make it through all of the procedural hurdles and which bills stall before the clock runs out.
This week, we’re watching HB 1078, which is scheduled to be heard in the Senate Business, Labor & Technology Committee next week on Tuesday, May 2nd. This bill would further strain the state’s business-funded unemployment insurance system, which is already facing significant solvency issues. If passed, it would create a new benefit for claims under the program to pay a weekly stipend of $35 per week to each child under age 18 whose primary caregiver is receiving unemployment insurance benefits. It would also apply to each adult child of a benefits recipient who is incapable of self-care because of a mental or physical disability.
Unemployment insurance benefits in Colorado are funded by the Unemployment Insurance Trust Fund (UITF), which is solely paid by Colorado employers through insurance premiums. The purpose of the UITF is to support workers who are laid off through no fault of their own.
The UITF became insolvent in August 2020 by more than $1 billion due to thousands of businesses being forced to shut down in response to decisions by state and local government officials during the pandemic. Workers were laid off through no fault of their own and claimed unemployment benefits, causing the fund to become insolvent.
One of the Colorado Chamber’s top priorities in the 2022 session was to secure relief for employers, who were facing historic premium hikes. The Chamber led a powerful coalition bringing attention to the issue and after months of negotiations, reached a bipartisan compromise to help replenish the fund, infusing $600 million into the UITF and preventing substantial rate hikes for businesses.
While the 2022 replenishment helped employers in the short term, the UITF is still not actuarily solvent and more work needs to be done to bring it to full solvency. The Colorado Department of Labor and Employment is still borrowing money to support the fund – the outstanding debt is currently over $100 million in both private and federal dollars.
A recent study projected that HB 1078 would increase the deficit of the unemployment fund by $15.4 million to $56 million annually. While the proposal is well intended, it is simply shortsighted and would further set back our progress to achieve solvency in the UITF, leading to increased costs on the backs of Colorado businesses. Employers will need to pay a solvency surcharge that will cost the average 10 person company an additional $1,400 per year.
The Colorado Chamber remains in an opposed position on HB 1078 due to the costs involved to drain an already-insolvent state unemployment fund.
For more reading on HB 1078 and other proposals impacting the unemployment system, see this recent piece from The Sum & Substance, the Colorado Chamber’s exclusive digital news publication: Two bills revive battle over Colorado unemployment-fund solvency.