Unemployment Insurance Advisory Council Meeting Minutes

Wednesday, June 2, 2010

GEF-1, Room H-306
201 East Washington Avenue
Madison, Wisconsin

Members Present

Management: James Buchen, Earl Gustafson, Susan Haine (via telephone), Dan Petersen

Labor: Phil Neuenfeldt, Dennis Penkalski, Patty Yunk (via telephone), Anthony Rainey (via telephone)

Chair: Daniel LaRocque

Department staff present: Hal Bergan, Lutfi Shahrani, Amy Banicki, Jason Schunk, Tom McHugh, Pam James, Dick Tillema, Tracey Schwalbe, Shannon Ballhorn, Robin Gallagher

Others present: Bob Andersen (Legal Action of Wisconsin), Mike Metz (WI Independent Business), Brad Boycks (Wisconsin Builders Association), John Metcalf (WMC)

MINUTES

01:30 p.m.

1. Opening Remarks – Hal Bergan

The current federal extensions end today. There will not be any legislative action until next week at the earliest. The cost of extending the benefits through November is about $40 billion. The political debate is not about UI, but how the benefits are funded. The current extension proposal is part of a larger bill. No one knows how this will unfold. Each week that goes by becomes more difficult for claimants and more problematic from an administrative standpoint. We have now gone through this a few times so we are better at it than we were the first time. If Congress delays more than 2 weeks, it starts to affect a significant number of claimants.

The fraud report is on the agenda. He has made an executive decision to reformat it. The report on the fiscal situation was done the same way for several years and we made a decision last time to simplify it and provide more explanatory narratives. He would like to do this with the fraud report as well. He will send it out when it is reformatted.

The reserve fund situation is improving from our projection from earlier this year. It looks like benefit payments will be down $300+ million. Tax collections are a little higher than projected. In total, the improvement is about $350 million. That is a snapshot and it can change, but it is a trend in a good direction. We still will have to think about acting soon in 2011 to address it, but the hole is a little smaller than we thought it was going to be about 5 months ago.

Finally, the UI bill passed the Senate before it adjourned. The misclassification bill passed the same day. He appreciates the help from those on the Council to get the bills passed.

Question (Penkalski): Did the Governor sign the misclassification bill?

Mr. Bergan responds affirmatively.

2. UI Treasurer’s Financial Statements

Mr. LaRocque indicates that the department did not plan a presentation on the financial statements but will answer any questions the Council may have.

Question (Buchen): On the Receipts and Disbursement Statement for April 30, 2010, it shows an increase of about $58 million in tax receipts over the prior year, and with the increase in solvency receipts, we are up about $120 million over the previous year-to-date; is that correct?

Thomas McHugh responds affirmatives and indicates that it is somewhat odd, but receipts are $120 million greater than at the same time last year. Taxable payroll is actually down. We went to the new rate schedule and employers have been charged a lot of benefits. So employers moved to higher rates and we are using a higher rate table, but taxable wages were actually down.

Comment (Buchen): It is perhaps a hopeful sign.

Mr. Bergan indicates that the tax increases are pretty much as we expected. It is encouraging that given the steps the Council took in 2008, a lot of the increased revenue came in on the solvency side.

Comment (Buchen): Charges are down almost $100 million to taxable employers.

McHugh indicates that if we look at the first quarter of gross wages from 2010 compared to 2009, the gross wages are down 4.9% and the taxable payroll is down 5.7%. For 2010 compared to 2008, in the first quarter the gross wages are down 12.8% and taxable payroll is down 6.2%. Payroll is down, but we are bringing in more money than last year.

Comment (Buchen): That is because people were laid off and not because of wage reductions.

Question (Penkalski): Does the “UCX” refer to people in the military collecting unemployment?

Mr. McHugh indicates that they are ex-military.

3. Minutes of the Meeting March 4, 2010

Motion (Neuenfeldt), second (Yunk), to approve the minutes of March 4, 2010, approved unanimously by roll call vote.

4. Department proposed rule changes

Mr. LaRocque indicates that the department has two sets of proposals. The first set of proposals is to amend DWD 128 and DWD 129. These are rules that were approved by the Council before. They went to a public hearing and there were no comments. There were no substantive changes made to the rules and they are back to the Council for approval to submit to the Legislature.

Motion (Neuenfeldt), second (Buchen), to approve the proposed changes to DWD 128 and DWD 129 as proposed. Motion passes by roll call vote 8-0-0.

The second set of proposals is before the Council for the first time. Ms. Schwalbe indicates that these rules are before the Council for initial approval of the proposals to send them to the Legislative Council for their review and to go ahead with public hearings. DWD 110 and DWD 111 deal with wage reports and contribution reports that employers have to file. The department proposes to bring the language in the rules in sync with statutory changes that were made in 2007 Wis. Act 59 regarding website filing of reports, timely filing of reports, penalties, and the changes to the taxable wage base. We are also trying to eliminate rule provisions that duplicate statutory provisions.

Question (Buchen): Are these just clean up changes?

Ms. Schwalbe responds affirmatively.

Comment (Neuenfeldt): There have been questions on the remaining issues, so at this time we are not prepared to move on any of them.

Mr. LaRocque indicates that we could defer these to another meeting, but encourages any Council members with questions to communicate those to the department.

Ms. Schwalbe asks if there are questions on DWD 110 and DWD 111 or if we can move forward with those rules regarding employer reports and defer the other rules to a future meeting. Mr. Bergan indicates that the department is aware of which rules Labor has concerns regarding and it is not these two rules.

Motion (Buchen), second Penkalski, to approve DWD 110 and DWD 111 as proposed to send to the Legislative Council and to hold a public hearing. Motion passes by roll call vote 8-0-0.

Mr. LaRocque indicates that we will defer consideration of DWD 127, 132 and 135 for another meeting.

5. Annual Report on Detection and Prosecution of Fraud

Mr. LaRocque indicates that we will reformat the report as indicated by Mr. Bergan and bring it back to the Council at a future meeting.

6. Schedule Public Hearings and future business meetings

Mr. LaRocque indicates that the department has been considering ways to make public hearings more productive. In the past we have spent a lot of time and energy fanning out to several locations in the state and rarely do we have a large attendance. There are ways we can more efficiently reach employers. We could solicit comments and take feedback through email or letters. Mr. Bergan indicates that we could do something similar with claimants with an interest in the program and solicit comments.

We could provide the comments to the Council, which might help to shape a public hearing. The idea is to try to get more and better information.

Comment (Buchen): When we got better turnouts, it was because we put proposals out that people thought we wanted to do, such as providing benefits during a period of family leave. If we get feedback and then we put some proposals out there we may get better feedback at a hearing than if we just have an open-ended hearing. People don’t seem to respond to that.

Comment (Gustafson): We appreciate the input when people have come to public hearings, but it is not cost-effective. Some of the department communications can be legalistic and bureaucratic. It would be nice if the invitation for comments was more open and welcoming. The idea of having some seed ideas for a hearing is good.

Mr. Bergan indicates that the department will be attentive to that.

Comment (Neuenfeldt): We could also solicit comments through other mechanisms, such as labor networks. We could tell them to forward comments to an address. They would get it from an organization that they are more familiar with. The request for comments can come through other means but the comments can come back to a central point. Requesting comments electronically is intriguing and a good idea. We can see what the level of response is before we figure out where we go with future plans for public hearings. We can think about a number of avenues to put the word out. We can ask what has been your experience, etc. People will feel a lot safer responding than if it came from DWD. They may worry that their response would affect their benefits.

Comment (Buchen): We can ask what they would like to see done with UI. Employers may also be worried they will be audited.

Ms. Haine, Mr. Rainey and Ms. Yunk concur.

Question (Penkalski): How many public hearings around the state might we be looking at?

Mr. Bergan indicates that we usually would do 3 or 4. We can seek comments, see what we get and then make a decision as to how many and where.

Comment (Petersen): We could see where the responses come from and maybe hold a hearing in that area. We had surprisingly good results in Spooner last time and Green Bay before that.

Comment (Buchen): It depends on the issue whether you get a crowd.

Comment (Haine): In general, there have been changes implemented recently and changes that are coming. We may get better response because of the economy and employers are more sensitive to the costs. She likes the idea of presenting public hearings around certain topics.

Question (Buchen): How many checks do we send out; is it possible to send something with checks?

Mr. Bergan indicates that we sent out 210,000 checks last week. It is possible to send something out with checks. It is a relatively simple thing to do. We may want to get responses from Council members’ contacts first before the department sends anything out to all claimants.

Mr. LaRocque indicates that the department will draft something not too formal and using plain language. We will send it to the Council members and they can decide if they want to use it and send it to their contacts.

Question (Gustafson): When would we have hearings then?

Comment (Buchen): Usually we did them in the summer and fall.

Comment (Gustafson): We will have to consider what is good for the employed, the unemployed, employers, when school in session, time of day, etc. The Public Service Commission has public hearings for rate cases in afternoons and evenings. Tremendous resources are wasted of lawyers, PSC staff, and then no one shows up.

Comment (Petersen): We may also want to consider publishing a 2-line summary of the suggestions that come in and see if people have other responses to those so we get both sides.

Comment (Buchen): Soliciting comments this way would also be a way to show the Legislature that we get public comments.

Motion (Neuenfeldt), second (Yunk), to adjourn, approved unanimously.