Indicates Matter Stricken

Indicates New Matter

Amended

February 07, 2024

H. 4710

Introduced by Reps. West, G. M. Smith, Bannister, Davis, Guest, Forrest, Hewitt, M. M. Smith, Long, B. Newton, Thayer, Hager, Leber, Mitchell, Brittain, Gatch, Hixon, Pope, Chapman, Murphy, Brewer, Robbins, Caskey, T. Moore, Hardee, Erickson, Bradley and Blackwell

S. Printed 02/07/24--H.                                                                         [SEC 2/8/2024 11:45 AM]

Read the first time January 09, 2024

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statement of estimated fiscal impact

Explanation of Fiscal Impact

State Expenditure

This bill amends Section 41-35-50 and 41-35-120, relating to the maximum unemployment insurance benefits that beneficiaries can receive. Currently, maximum benefits in a benefit year are the lessor of one third of the wages for insured work from the beneficiary's base period or twenty times his weekly calculated benefit. This bill changes the calculation of the maximum benefits to depend upon the seasonal adjusted statewide unemployment rate for the most recent six-month period. This bill sets the maximum benefits as follows:

Seasonal Adjusted Unemployment Rate   Number of Weeks

Less than or equal to 5.5%                       12 weeks

Greater than 5.5% up to 6%                     13 weeks

Greater than 6% up to 6.5%                     14 weeks

Greater than 6.5% up to 7%                     15 weeks

Greater than 7% up to 7.5%                     16 weeks

Greater than 7.5% up to 8%                     17 weeks

Greater than 8% up to 8.5%                     18 weeks

Greater than 8.5% up to 9%                     19 weeks

Greater than 9%                                      20 weeks

This will result in fewer benefits paid when the unemployment rate is lower. The formula rate is the average of the preceding July, August, and September seasonally adjusted unemployment rates for the first six month of a calendar year and the average of the seasonally adjusted unemployment rate of January, February, and March of the year for the last six month of a calendar year. Based on the current

unemployment rate, which is below 5.5 percent, this bill will result in lowering the maximum benefits. This bill will impact unemployment insurance claims beginning October 1, 2024.

Department of Employment and Workforce. DEW is responsible for managing South Carolina's unemployment insurance system, including the UITF. DEW anticipates this bill will result in approximately $30,000 in non-recurring expenses to upgrade software and ensure that employers, claimants, and the public have materials related to the change in the maximum benefits due to this bill The agency indicates these expenses can be managed using existing Federal Funds.

Additionally, DEW indicates this bill may result in an undetermined savings in Other Funds expenditures beginning in FY 2024-25 due to the lower aggregate unemployment insurance benefits paid from the UITF. For reference, in FY 2022-23, there was a total of $135,600,000 in benefits paid from the UITF. As the unemployment rate was below 5.5 percent over this time period, this bill would have capped benefits at twelve weeks, resulting in a potential savings of $34,600,000 or approximately 25 percent of the benefits paid. If the unemployment rate were higher, then the expenditure savings would be lower.

State Revenue

The UITF is funded through the unemployment insurance tax on businesses. DEW calculates the tax rates annually to maintain solvency for the UITF. The solvency of the UITF is determined by the Average High-Cost Multiple (AHCM). The AHCM is the estimated ratio of the fund balance to total taxable wages divided by average ratio of unemployment benefits paid to total taxable wages of the three highest calendar years in the last twenty years or in the last three recessions.

DEW anticipates this bill will not modify the solvency of the UITF. Also, DEW indicates the 2024 tax rates have been assigned already. However, beginning in tax year 2025, this bill may result in a decrease in Other Funds revenue as the tax rates may be set at lower rates while still maintaining the fund's solvency, due to a potential decrease in the total payouts from the UITF.

State Expenditure

This bill amends Section 41-35-50, relating to the maximum unemployment insurance benefits that beneficiaries can receive. Currently, maximum benefits in a benefit year are the lessor of one third of the wages for insured work from the beneficiary's base period or twenty times his weekly calculated benefit. This bill