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Iowans Miss Out On Unemployment Benefit Extension

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A decision by the Culver administration last year not to seek a change in the state's unemployment law has resulted in 13 fewer weeks of benefits being available to out-of-work Iowans, according to data from the U.S. Department of Labor.

Those benefits would have been fully funded by the federal government, too.

The governor's office says it passed because the state wasn't eligible at the time for the additional weeks and the program was scheduled to end in March, anyway.

Instead, the program was extended.

Unemployment benefits have become a controversial political issue this year, with more people out of work and for a longer period of time than normal.

The issue came to a head last week, when Senate Democrats overcame Republican opposition to renew benefits for 2.5 million Americans who had seen payments stop in early June.

That number included 16,000 Iowans.

Senate Republicans complained the $34 billion extension should have been paid for with money from the federal stimulus program. But Democrats objected, saying the money is needed to assist the still-struggling economy.

U.S. Sen. Chuck Grassley, R-Iowa, was roundly criticized by Democrats for opposing the extension. But a Grassley spokesperson said this week that Gov. Chet Culver's failure to act may have had an effect on thousands of Iowans.

"The Iowa governor did not pursue a federal program for which Iowa qualified in September 2009," said Jill Kozeny, a Grassley spokeswoman. "As a result, potentially 18,000 Iowans missed out on extended unemployment benefits for private-sector workers that were funded by the federal government at no cost to the states."

About 18,000 Iowans exhausted their unemployment benefits between November 2009 and June 2010, according to Labor Department figures.

Iowans currently can get 73 weeks of unemployment benefits.

The additional 13 weeks would have come from the Federal-State Extended Benefits program, which Congress created in 1970.

Normally, the program's cost is shared equally by states and the federal government, but the federal stimulus law, approved in February 2009, included a provision that had the federal government pick up the state portion.

To get access to it, however, states must change their own unemployment law.

Culver spokeswoman Polly Carver-Kimm said Iowa Workforce Development had considered the matter last fall, but it didn't add it to its legislative agenda because the state didn't qualify for the program and it was scheduled to end in March.

"We worried that participating in the 50/50 version of the EB program would have put more pressure on the trust fund," she said.

Iowa's unemployment trust fund is, relative to other states, strong. But business taxes are tied to how much money is maintained there, Carver-Kimm said.

By not joining the program, "the business community has been protected from potential tax increases," she said.

Iowa would have qualified for the program last Sept. 20 based on the state's unemployment rate, according to a trigger notice issued by the U.S. Department of Labor.

The program is triggered when a state's three-month average total unemployment rate reaches at least 6.5 percent and is 110 percent or more of the previous year's average.

The benefits would have come in handy, both for the unemployed and the state's economy, according to Dave Swenson, an economics researcher at Iowa State University.

"Having those extra weeks and those extra people on unemployment would have had a discernible effect on the economy," Swenson said.

Nationwide, 4.5 percent of the work force has been out of work for more than half a year.

That's far higher than normal, Swenson said.

"Iowa's numbers aren't that high, but they do follow the same sort of trend," he said.

The state did change its unemployment law in 2008 to provide for an additional 26 weeks of unemployment for people who are in approved training programs.

That would give some Iowans 99 weeks of unemployment benefits, but to qualify, they must be in training programs and in high-growth, high-demand fields.

Critics of unemployment programs, especially at the federal level, have said the government has been too generous with unemployment benefits.

In some states, including Illinois, 99 weeks of unemployment benefits are available. Illinois accesses the Federal-State Extended Benefits program.

Some Republicans have complained that getting benefits for that long have been a disincentive for jobless people to look for work. Democrats have dismissed that idea, saying jobs are scarce.

Swenson said he doesn't think it's a disincentive, either.

The Iowa Workforce Development has released the following information in response:

In light of recent, misleading information regarding Iowa's unemployment benefits system, Iowa Workforce Development is setting the record straight.

"Iowa has one of the strongest unemployment insurance systems in the country for both workers and businesses," stated Deputy Director Joe Walsh. "The U.S. Department of Labor, the regulating body for the program, has commended the state as having one of the most effective programs for Emergency Unemployment Compensation." Actually, Iowa has enacted legislation which provides benefits for the unemployed which far exceed the federal Extended Benefits program.

Iowa has a generous benefits system developed through a detailed and delicate compromise between business and labor which provides the maximum benefits to unemployed Iowans while keeping employer taxes low and protecting the solvency of the Unemployment Insurance Trust Fund.

Currently, Iowans can receive up to 26 weeks of regular state benefits, followed by an additional 47 weeks of federal Emergency Unemployment Compensation (EUC) benefits known as Tier 1, Tier 2 and Tier 3. Nationally, a Tier 4 is available for states with an unemployment rate of 10 percent or greater. Iowa's unemployment rate is 6.8 percent.

Governor Culver presided over the largest extension of unemployment benefits in the state's history which went into effect in 2009. By passing Iowa's Unemployment Insurance Modernization Act, Iowans who enter a high growth/high demand training program are eligible for 26 weeks of additional benefits. To date, over 4,300 Iowans have taken advantage of the program. "This was the largest expansion of unemployment benefits in the state's history," Walsh said. "It was great public policy for both workers and business. No other state in the country is as forward thinking as Iowa in this regard."

Iowa is also one of the only states in the nation to offer plant closing benefits which provide an additional 13 weeks to qualified individuals. Furthermore in Iowa, unlike other states, unemployed workers can easily qualify for a second benefit year meaning that workers who exhaust all their EUC are likely eligible for other types of benefits. "They can re-qualify for benefits either under the training extension, plant closure benefits or a second benefit year. It is simply not true that 18,000 people were kicked off benefits because we do not have Extended Benefits," Walsh said. Many, if not most of those folks qualified for a different type of benefits."

Iowa has an additional program called Extended Benefits which is activated when the unemployment rate reaches 8 percent. The federal government recently made changes that would have allowed Iowa to receive the benefits if laws were changed during the 2009 legislative session, however the program was set to expire prior to the end of the session. By changing the law and leaving it on the books after the expiration of the federal program, Iowa's Trust Fund would have stood a likely chance of going bankrupt. Thirty-two states have seen their trust funds go broke while Iowa's has remained solvent and healthy.

"If we would have changed our system to accommodate the 6.5 percent threshold and then Congress would have failed to extend the program, our Trust Fund could have gone broke very quickly. It was far too risky and I do not think that any of the stakeholder groups would have been willing to accept that risk," Walsh stated. "Because of the reliance on Congress the program is highly unpredictable. This makes long-term planning next to impossible."

"It is silly to argue about this issue now," Walsh said. "Congress finally passed EUC and that is a good thing. We are very glad that Sen. Grassley and his staff are expressing concern about the unemployed. I think Iowans expect us to all come together to figure out how to make our system work and not try to blame one another for what has happened in the past. We look forward to working with Sen. Grassley and his staff to continue to improve Iowa's unemployment insurance system."

There are several unemployed workers out there who have exhausted benefits and not qualified for other types of benefits. Those workers should seek assistance at an IowaWORKs center to see what programs they may be eligible.

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