|August 4, 2020 02:59 PM
|Senator Timothy P. Kearney
|All Senate members
|Pandemic UC Relief for Reimbursable Employers
|I will soon introduce legislation to provide financial relief to municipal and non-profit employers who self-insure for unemployment compensation (UC) by creating a retroactive window for them to pay their UC Fund solvency fee.
Unfortunately, many municipalities and non-profits did not elect to pay the solvency fee because they had no reason to expect they would need to make layoffs at historic levels or in response to a global pandemic. Most municipalities and non-profits are “reimbursable employers” – instead of paying a tax based on a contribution rate and wages, they pay the UC Fund dollar-for-dollar for the UC benefits charged to their accounts. At the end of each calendar year, reimbursable employers are given the option to be relieved of such charges for the subsequent year by paying an elective solvency fee.
Without full reimbursement, local governments and service providers are moving further into financial hardship, and ultimately towards bankruptcy. On top of being a disaster for local communities that they serve, this is especially concerning for the Commonwealth, because the risk of municipal bankruptcies will ultimately affect our own bond rating
Like all employers, non-profit groups and local governments have been financially hit by the COVID-19 pandemic. They lost revenue, faced additional costs for operating safely, and have had to make hard decisions including layoffs and furloughs. Unlike businesses that are UC system contributory employers, most municipalities and non-profit organizations are not automatically guaranteed full reimbursement for UC costs. The CARES Act provides for a federal reimbursement of 50% of COVID-related unemployment claims, and Pennsylvania’s Act 9 provides automatic relief from charges to the UC Fund, but only to reimbursable employers that paid this year’s elective solvency fee, which was due before the pandemic.
I have heard from many local governments and nonprofits that they would be willing to pay the solvency fee if given another chance. This legislation will create a retroactive window for reimbursable employers to pay this year’s solvency fee, allowing them to receive the automatic relief from charges, as provided by Act 9. With further relief for local governments and non-profit service agencies in question, it is imperative that we find ways to ensure their stability during this recession.
This is companion legislation to Rep. Dave Delloso’s HB 2708. Please join me in providing relief to our local governments and non-profit employers.
Introduced as SB1269