Unemployment Insurance Advisory Council
Thursday, November 7, 2002, 1:00 p.m.
Quality Inn South
4916 E. Broadway
Management: Robert Oyler, Earl Gustafson, James Buchen,
Labor: Phil Neuenfeldt, Red Platz, Bob Lyons, Dennis Penkalski
Chair: Greg Frigo
Department staff present: Bruce Hagen, Al Jaloviar, Richard Tillema, Carol Laudenbach, Mary Anderson, Teresa Wojick, Tom Smith, Michelle Kho, Frances Healy, Tim Haering
Others present: DOR Sec. Richard Chandler, DOR Admin. Dee Trutlin, Jason Rostan of Rep. Hundertmark’s office, WCCF’s Bob Anderson, WMC’s John Metcalf
1:00 p.m. – Frigo called the meeting to order, introduced council member AL Peck’s letter of resignation, explained Peck’s health problems, proposed having a tribute luncheon for him in Green Lake, or in Madison if he feels he can make the trip. Buchen suggested a corresponding Council meeting could be held in Green Lake.
Frigo introduced DOR Sec. Chandler and administrator Dee Trutlin. Chandler pitched DOR’s joint reporting proposal. Hagen overviewed the history of DWD-DOR joint services proposals, commented on the current data collection plan, predicted cost savings for both agencies and taxpayers.
Chandler supplemented Hagen’s introduction, expanded on electronic data collection, now cost-effectively enabled by SUITES (State Unemployment Insurance Tax Enterprise System), commented on further cost-savings required by the Legislature and Governor in the most recent budget. Chandler laid out his desired timeline for needed approvals and law changes for implementing joint reporting.
Anderson commented on the technology upgrades needed at UI. Oyler asked about differing gross wage reporting standards for income tax and UI purposes. Anderson said employers would differentiate. Oyler noted employers still have to create W-2’s for employees, so no work is saved. Petersen said some software changes may be needed, but some saving would arise from printing fewer copies on W-2’s.
Oyler anticipated problems for employers differentiating wages. Chandler noted the plan includes training to ameliorate such problems. Buchen asked about, Trutlin commented on quarterly withholding calculations.
Petersen noted the federal difference between taxable income wages and Social Security wages, asked about compliance check procedures. Penkalski asked who enforces the reporting requirements and where the penalties go. Anderson said DOR would do their own compliance checking, UI keeps their penalties, asked Chandler to comment on the up-front costs.
Chandler commented on DOR’s integrated tax system. Penkalski asked about labor savings. Frigo said there may be labor savings down the road. Hagen echoed Frigo’s uncertainty. Buchen asked about labor difficulties at DOR. Chandler noted state budget cuts had forced staff cuts, leaving DOR to do their job with smaller workforce.
Penkalski asked about reimbursable employers. Buchen said 40,000 employers who currently do not file with UI would now be required to file. Chandler commented on reporting differences between agencies.
Frigo asked about quarterly or annual reporting. Trutlin said the employe details would be new reporting for some employers. Jaloviar asked, Trutlin commented on employee details in payment reporting. Buchen, Frigo asked about who makes quarterly vs. annual payments. Chandler promised to provide that information.
Buchen said he needed time to survey his members on the proposal. Peterson asked about, Frigo commented on electronic reporting requirement threshold, Frigo noted UI employer agents would be required to file. Gustafson noted that government savings and paperwork reduction would coincide.
Frigo moved for approval of May 23, 2002 Council minutes, which were approved without objection. Frigo summed the UI public hearing comments, promised written summary for next meeting.
Hagen summed the UI-ES (economic support) reform bill moving through Congress, noted that it short-funds Wisconsin about $1 million, eliminates all but .02% FUTA tax then requires states to raise taxes to compensate, said the plan shortchanges states by underestimating what states must levy to continue the UI program, noted things like postal reimbursement and IT upgrades are unfunded by the federal plan.
Hagen said the plan is disguised as a tax cut, but would leave the UI program at the mercy of state legislatures for operating budgets, noted Ohio is the only state supporting the plan, though it is likely to pass because it looks like a tax cut.
Jaloviar commented on the Ohio perspective, noted their UI program wins $millions under the federal program. Hagen hoped for a full fiscal analysis by the next meeting. Frigo, Jaloviar noted ES services would also be funded by the new state UI tax.
Gustafson asked if other state has publicly announced their opposition to the bill. Hagen commented on other states’ actions. Frigo, Tillema discussed revenues from a 1936 surtax authority. Neuenfeldt asked about, Hagen reiterated that the federal UI-ES bill is likely to pass. Frigo noted the Nov. 5 elections made the bill more likely to pass.
Hagen added that above-base workload would not be funded by the bill, short-funding the UI program during peak unemployment periods. Hagen, Frigo noted the federal reporting requirements would remain the same.
Buchen asked about forming a Council policy recommendation on the UI-ES bill to pass along to Congress. Neuenfeldt was agreeable to the idea of a letter to Congress from the Council. Jaloviar suggested the bill was not expected to get action until the end of 2003. Frigo noted the Nov. 5 election could change that.
Buchen moved the Council retire to closed caucuses. Neuenfeldt seconded. Frigo noted closed caucuses are authorized under state statute 19.85(1). Oyler, Gustafson, Buchen, Petersen, Neuenfeldt, Platz, Lyons, Penkalski approved the motion to close caucus. Frigo noted the Council would return to open session after the closed caucus.
(2:45 PM) The Council returned to open session. Neuenfeldt moved, Buchen seconded drafting a letter from the Council to Gov.-elect Doyle urging that Hagen be re-appointed to division administrator. Hagen expressed his thanks.
Buchen said consideration of a Council letter to Congress concerning the UI-ES reform bill needed to wait until next meeting, he needed time to get more information.
Laudenbach gave a caseload update, summarized the fact sheet in some detail. Jaloviar clarified some claims statistics. Laudenbach noted, Frigo clarified, TSB and TEUC benefits stop at the end of 2002.
Laudenbach overviewed WSB and the possibility it could trigger ON in early 2003, noted a 5% claims increase year-over-year in 2-year rolling average could pull trigger in Week 4. Matzat commented on eligibility. Buchen asked about the possibility of reaching the 5% trigger. Laudenbach noted traditional post-holiday, hunting season claims increases.
Neuenfeldt asked about claim exhaustion, wanted to know how much of the claim decrease was due to claim exhaustion. Laudenbach noted 75,000 claims exhausted this year. Jaloviar noted the need to know how many exchaustions were regular benefits and how many were extended benefits (TEUC).
Buchen asked if everyone who exhausts regular benefits is eligible for TEUC, suggested TEUC exhaustees is the most pertinent statistic. Laudenbach said the TEUC exhaustion number could be derived.
Laudenbach continued on who would be eligible for WSB under the hypothetical scenario. Penkalski asked to see regular UI and TEUC exhaustees from 2001 and 2002.
Hagen highlighted the incongruities between the UI-ES reform bill, federal EB (extended benefits) and WSB.
Frigo asked about meeting dates in December, proposed the 19th. Neuenfeldt suggested the 11th. Most members agreed to Dec. 11, 1 pm. Frigo commented on the financial report for the next meeting.
Anderson updates SUITES (State Unemployment Insurance Tax Enterprise System), noted progress in consult with Accenture, useful data elements created in design phase, summed progress in some detail, explained delays in enterprise-wide implementation, detailed internal and external costs.
Hagen commented on the cost, timeliness of Accenture.
Anderson commented on the 1Q UI tax deferral proposal, noted SUITES will enable the deferral by 1Q04, noted the cost efficiency of designing it into SUITES rather than retrofitting into the old system.
Frigo returned to the issue of dates for the December Council meeting. Dec. 11 was changed to Dec. 17.
Smith commented on letters to the Council, noted programming problems with proportional charging of benefits for part-time volunteer firefighters and EMTs, noted benefits are being charged to government units which should not be liable and the problems are being corrected manually as needed, said federal compliance is an issue with some solutions. Frigo said wait and see what feds say about proposed solutions. Lyons asked about notifying all volunteer fire departments about eligibility for non-charge of benefits, noted many FF-EMTs are not strictly volunteers, but more like casual employees.
Hagen asked about eliminating the 5% factor. Tillema said that would be a legal issue, commented on the complexity of who is covered by 5% rule. Buchen noted the recurring problem with proportional charging.
Frigo asked if the problem was the 5% factor or part-time non-charge (PTNC) issue. Matzat noted PTNC is a problem because PTNC is only applicable where you know the weekly wage, and volunteer FF-EMTs don’t have their wages reported.
Hagen said the issue is accommodating the small fire departments. Frigo noted small fire departments would have to file weekly wage reports to be eligible for PTNC. Frigo, Laudenbach commented on the individual attention needed to solve problems, suggested waiting for the feds to respond to DWD’s inquiry.
Smith continued with letter regarding employees given a choice of taking a day off without pay or taking vacation on July 5 – those taking off w/o pay got partial UI benefits, employer peeved. Buchen, Frigo, Hagen, Matzat, Lyons commented on prior notice of the July 5 day off. Frigo suggested a response and the Council agreed.
Smith commented on the Rep. Schooff-Ruth Ginzberg letter. Matzat offered to examine the case. Lyons, Frigo discussed the case. Frigo agreed it should be looked at.
Smith summed the Rep. Albers letter. Hagen commented on Albers’ complaint about training wages not be accounted for in the COED labor market analysis system., said Albers want COED to break sales job category into different types. Buchen noted most sales positions are paid commissions, which aren’t reported like wages for UI purposes.
Hagen commented on the complexities of designing Albers’ desired system. Tillema suggested pulling commission sales jobs out of the database. Laudenbach agreed, suggested other changes. Hagen noted Albers also wants county and UI rate factored in the job-specific data.
Buchen suggested spending more time on the issue, told commission sales anecdotes. Hagen suggested preparing a brief for the Council on the COED system.
Frigo outlined the work search issue, noted the 2-contact weekly minimum sunsetted but got one-year extension while the rule was under development, noted the desire to examine the impact of the extra work search, but no data is currently available. Buchen noted the tight economy makes work search difficult. Laudenbach suggested linking the work search rule to economic conditions.
Hagen outlined the proposed rule to exclude the first $50 paid to non-profit volunteers as expense reimbursements, discussed the result of a survey to set a bench mark for exclusions. Smith noted federal wage definition covers expenses NOT accompanied by federally accepted expense reports, summarized the rule to get around the federal definition.
Buchen asked about per diem. Frigo, Matzat agreed per diem require expense reports. Peterson, Anderson discussed employer audits. Peterson, Lyons discussed federal standards. Buchen commented on private sector standards for per diem.
Anderson, Frigo noted filling out expense reports would solve the problem, but non-profits don't want to fill out the reports. Hagen said the rule would give auditors a way to make definitive rulings. Hagen, Oyler discussed potential abuse of the rule. Buchen worried about opening door for abuse. Oyler hypothesized abuse scenarios.
Frigo suggested making $50 exempt for tax purposes, not benefit purposes. Oyler said the rule unfairly exempts only non-profits. Frigo suggested further study then return the issue to the Council.
Frigo carried over the remaining agenda items and adjourned.
END OF MEETING