OPINION-EDITORIAL

November 12, 2003

UI reforms and unaccountable agencies

Jason Mercier | Evergreen Freedom Foundation
When do legislative reforms cease to be reforms? Simple: When a state agency decides it can quietly misinterpret them to advance its own agenda, or when they don’t make it past the governor’s veto pen.

Such is the fate of two important unemployment insurance (UI) reforms passed by the state legislature this year. Namely, requiring claimants to provide proof of identification and reducing the length of time a claimant can collect benefits from 30 weeks to the standard 26 weeks.

The first was vetoed by Governor Locke in the name of “efficiency” (apparently it takes too long to ask for identification), and the second is being misinterpreted and misapplied by our state’s Employment Security Department (ESD).

In a gesture to labor and an attempt to ease the new reforms in gently, legislators decided the four-week reduction in benefit eligibility would be triggered when the state’s unemployment rate dropped to 6.8 percent or less. Early versions of the process were explained clearly by the Washington State Labor Council for the benefit of its members, despite the union’s opposition to the reforms:

New claims filed after Jan. 1, 2004 would be limited to 26 weeks of regular benefits, down from the current maximum of 30 weeks. This would drop Washington from being one of only two states that allow 30 weeks to being one of the majority of states at 26. According to Employment Security estimates, this would save the UI system $160 million over the next four years, or about $40 million a year. In addition, there will be more employer savings associated with this change because as benefit ratios drop, they will be able to drop rate classes faster and thus pay lower taxes.

Sen. Jim Honeyford (R-Sunnyside), a sponsor of the legislation, said its “intent was for the maximum number of weeks to be reduced to 26 weeks in a step process—a permanent reduction to 26 weeks.”

Instead of complying with the legislature’s intent, ESD officials have decided the reduction is fluid and impermanent. The Department spins it this way:

Once the unemployment rate drops to 6.8 percent or less, the maximum claim duration will drop to 26 weeks. If the unemployment rate rises to a rate great than 6.8 percent, the maximum claim duration will increase to 30 weeks. . . Payment of extended benefits ends and begins depending on fluctuating unemployment rates. In the absence of language expressing the legislature’s intent that this change shall be permanent, the Department will adhere to the statute as written.

This was news to Sen. Honeyford, who says he wishes “ESD would have called for clarification” if they were uncertain of the legislature’s intent.

Sen. Tim Sheldon (D-Potlatch) also made his thoughts and intentions clear: “This is another time when an agency makes the final determination on a law because we’ve (legislators) given them too much flexibility. I thought this bill was pretty straightforward. The reduction was to be permanent at 26 weeks.”

He went on: “It’s terribly frustrating for legislators to feel that they’ve negotiated and compromised to pass a law only to find out that it is immediately changed by an agency. Maybe this is something we’ll be able to address in the coming session.”

Unfortunately, when legislators tried to address the problem of out-of-control state agencies this year, they ran up against Governor Locke’s veto pen again. House Bill 1531, approved with overwhelming and bipartisan majorities in both House and Senate, would have required the governor’s signature on all agency rules and regulations.

Fortunately, lawmakers may still have time to rein in ESD officials before final rules and implementation for the UI eligibility requirements are adopted. The Department may also need to be reminded that another of the UI changes legislators made was to strike the directive that UI laws “be liberally construed.” Legislators are making it clear they mean what they say and they expect the law to be enforced and interpreted as written.

And that is when a reform is truly a reform.

Jason Mercier is a budget research analyst for the Olympia-based Evergreen Freedom Foundation, a nonprofit public policy research organization dedicated to individual liberty, free enterprise and accountable government.

Contact: Jason Mercier | Budget Research Analyst | 360.956.3482

Evergreen Freedom Foundation P.O. Box 552, Olympia, WA 98507 Phone: (360) 956-3482, Fax: (360) 352-1874 Email: effwa@effwa.org