The General Assembly’s Labor and Public Employees Committee has unanimously approved a bill that will help restore solvency to the state’s Unemployment Trust Fund.

The measure will now make its way to the state House for a vote.

Unemployment trust fund reformsHB 6461 is the product of a bipartisan effort of legislators—Rep. Jason Rojas (D-East Hartford), Rep. David Rutigliano (R-Trumbull), and Rep. Chris Davis (R-Ellington)—that continues to gain support from Democrats and Republicans.

The bill makes a number of overdue reforms to the state’s unemployment system, including:

  • Raising the minimum earnings threshold to qualify for unemployment benefits to $2,000. Claimants in Connecticut need only earn $600 in a year to qualify for benefits—the second-lowest earnings requirement in the U.S. For perspective, 32 states and territories require between $2,000 and $5,000 in earnings. Connecticut’s earnings requirement has not changed since the statute went into effect 50 years ago. This is projected to save $5.6 million annually.
  • Prohibiting all claimants from receiving unemployment benefits until they have exhausted their severance pay. According to Connecticut’s Department of Labor, this saves up to $57 million per year.
  • Basing benefits on three quarters of an employee’s earnings rather than two highest quarters, to avoid inequitably rewarding seasonal workers. Under current law, a seasonal worker in Connecticut earning $30,000 over two calendar quarters gets the same unemployment benefits as a full-time worker who earns $60,000 over four quarters. This will save approximately $68 million a year.
  • Freezing the maximum weekly benefit rate any year we have not attained 70% of the fund’s solvency goal. The maximum benefit rate is allowed to increase by $18 every year, and did increase throughout the recession. Foregoing increases in years when the fund is unhealthy would prevent the problem from getting worse. This would save about $1.6 million a year—without reducing anyone’s benefits from current levels.

Restoring the fund to solvency helps ensure stability, and avoid exponentially increasing taxes in the future.
What’s more, these reforms are projected to grow the fund from its current $355 million to more than $750 million over three years. By the state’s own projections, the fund needs to reach around $1 billion to achieve solvency.

‘Do-No-Harm’ Approach

The four reforms in HB 6461 have been described as the “do-no-harm” approach to restoring solvency to the fund.

The savings in the bill are largely derived from individuals who are wealthy enough to receive severance pay, or those who have been unfairly compensated by the system for only partial-year work.

Further, the bill does not rely on increasing taxes on the business community.

This is critical.

The business community was paying the highest federal unemployment taxes in the country, in addition to special assessments each August, to pay back a $1 billion federal loan used to shore up the unemployment trust fund during the recession.

Restoring the unemployment trust fund to solvency helps ensure stability, and avoid exponentially increasing federal tax rates during future recessions.

While the business community concedes the fund may need additional revenues in the future, it is critically important to fix leaks in the system now before we even consider that approach.

HB 6461 is now headed through the legislature’s nonpartisan offices for a plain language summary and a fiscal note.

The note will help determine the true savings impact the bill will have on the fund.

Then it will be ready for action by the state House of Representatives.


For more information, contact CBIA’s Eric Gjede (860.480.1784) | @egjede