Unemployment Insurance Advisory Council Meeting Minutes

Tuesday, September 22, 2009 – 9:30 A.M.

Wisconsin Department of Administration
St. Croix Room
101 East Wilson Street
Madison, Wisconsin

Members Present

Management: James Buchen, Dan Petersen, Susan Haine, Ed Lump, and Earl Gustafson

Labor: Phil Neuenfeldt, Dennis Penkalski, Anthony Rainey, and Sally Feistel

Chair: Daniel LaRocque

Department staff present: Hal Bergan, Andy Reid, Tracey Schwalbe, Tom McHugh, Troy Sterr, Pam James, Amy Banicki, Carla Breber, Jason Schunk, Dick Tillema, Mary Pronschinske, John Zwickey, Jess Erickson.

Others present: Jason Vick (Representative Mark Honadel), John Metcalf (WI Manufacturers and Commerce), Xiaochun Ye (WMC), Michael Metz (WI Independent Businesses), Tom Fonfara (DeWitt Ross), Tom Howells (Wisconsin Motor Carriers Assoc.), Tony Langenohl (Capital Consultants Inc. for Great Lakes Timber Producers Association).

MINUTES

Mr. LaRocque calls the meeting to order at 9:35 a.m.

1. Opening Remarks – Hal Bergan

Mr. Bergan discusses current federal legislation. HR 3548 to augment EUC benefits for up to 13 weeks will be voted on by the House today. HR 3548 will increase total benefits for some recipients to 92 weeks. The extension will not apply to all states, but to states with a seasonally adjusted total unemployment rate of 8.5%. This includes Wisconsin and about 27 other states. The bill does not remove the EUC sunset at the end of this year; nor does it extend any provisions of the federal Recovery Act. The Recovery Act covers interest charged on money borrowed by states for 2009 and 2010. Also, the Recovery Act provided for Federal Additional Compensation (FAC) of $25 for all claimants through 2009. FAC and other federal extensions and the federal government’s 100% payment of extended benefits will sunset at the end of this year. Mr. Bergan has talked with DOL. To extend all of these provisions through 2010 would cost about $70 billion. Congress might extend these provisions for 6 months, rather than a full year, to limit the cost of the extensions. The federal unemployment trust funds are tapped out and the funding source now is general treasury.

In operations we are keeping up with initial claims. People are getting into the system. For regular UI, last week compared with the same week last year our initial claims were up 74%. At this time last year we started to see the spike in claims. It continues to be an extraordinary level of claims. The 74% is still a high number, as it is compared to a high base of claims last year.

The inquiry line continues to be a challenge. This is a primary focus of our attention. Many calls are from people with pending issues in adjudication. The strategy is two-fold. We want to address the source of the calls so the calls are minimized and improve our capability to respond to the calls. Although the drop rate is higher than we would like, we have many repeat callers. People call 4 or 5 times before getting through. There will be a news story today after the House acts on the benefit extension bill (HR 3548), so our inquiry line will light up tomorrow.

We are in the process of interviewing 39 new adjudicators and 35 new claims specialists to deal with winter workload. They are project positions, but adjudicators will likely longer. We are sending out about 192,000 checks per week and running 5 programs. Basic UI is tracking down a little. EUC benefits are tracking up a little and EB is holding steady. There is no end in sight to the increased workload.

Question (Buchen): Is the decline in numbers for regular UI because people are exhausting benefits or is it because of lower initial claims?

Mr. Bergan responds that the initial claims are down a little, but this is the low season for claims.

Question (Penkalski): Has the average amount of the benefit check gone up or down?

Mr. Bergan responds that with the FAC of $25 check amounts are up, but otherwise the average check is not up or down much. The 2009 benefit increase ($8/week) was modest. Nationally, duration of unemployment is lengthening.

Twenty-two states are borrowing from the federal government. The total borrowed nationwide is about $15 billion. That will increase as we enter the season when claims go up and revenues will be low. DOL projects borrowing will be about $90 billion by the time the recession is over. This does not account for changes states might make in their revenue systems. DOL does not have a strategy yet but they know the circumstances are tough and will get worse through 2013.

2. UI Treasurer’s Financial Statements

Tom McHugh, Treasurer of the UI Reserve Trust Fund, handed out the financial statements with line items identified. Page 1 is the balance sheet. Letter A shows the trust fund federal loan balance is $569 million. We did not have to borrow for a while because we had second quarter receipts and received the UI modernization money. Letter B shows the reserve fund balance with $154 million being the balance of all employer accounts. Page 2 shows receipts and disbursements. Letter A shows receipts year-to-date of $541 million. It is less than last year of $542 million; despite the change in the taxable wage base, we took in less money. Gross wages are down about 8% compared to last year. Taxable payroll is up 2.28%.

Question (Buchen): If taxable payroll is up, but collections are down, does this mean people are going down in the rate schedule?

Mr. Tillema indicates that this may be a shift in which employers are paying. Total payroll has dropped by about $2 billion and 85% of that is in manufacturing, construction and that segment of support that provides (temporary help to manufacturing). Those were generally higher taxable payrolls. Those were employers that would pay at higher rates and typically are employers that would have payroll at or above wage base. We may get more collections from lower wage employers in the third quarter.

Comment (Buchen): It sounds like there are disproportionately larger reductions in workforce in people at higher end of the tax schedule.

Question (Petersen): Is this also affected by the tax deferral?

Mr. McHugh indicates that for the first quarter there were only 500 accounts that deferred about $9.6 million. Deferrals as of August 31 were $3.4 million for 304 accounts. We liberalized who can take deferrals so we expected this number to be bigger. Federal program receipts on page 2 are $768 million, compared to $47 million in the prior year. The footnote B shows that we did get the modernization funds of $134 million in June and August. Overpayment collections are up because benefits payments are up. Letter D shows the federal loans taken to date which are $805 million, but we paid back $236 million of that with first quarter contributions. Letter E shows that charges to taxable employers this year have been $1.2 billion, compared to $567 million the prior year. Charges to the balancing account for quits is shown on Letter F of $128 million. This is up quite a bit. Letter G shows the various federal extended benefit programs of EUC of $201 million, the $25 FAC of $26 million, and the Extended Benefits of $381 million. The Extended Benefit amount is the one that employers would have to pay 50% of if not for the full federal funding through 2009. Mr. Bergan indicates that the figures identified by Letter A show the shift from the regular tax rate to the solvency tax made in the last bill.

Comment (Buchen): In the long-term that shift will produce higher taxes because employers are not getting as much in their accounts.

Question (Rainey): Why are TRA payments down compared to last year?

Jason Schunk, Bureau of Benefits, indicates that this is because TRA is being paid after all other benefit extensions are paid.

Question (Buchen): Which type of payments ordinarily would be paid 50% by the states?

Hal indicates it is extended benefits.

Question (Haine): If Congress passes the benefit extension in the bill, would it be a sixth benefit program that the department would have to run?

Mr. Bergan responds affirmatively. Because it is an extension, it is a little easier to do. But generally, shifting from one program to another is difficult administratively.

Mr. McHugh indicates that page 3 shows the UI modernization funds we received in June and August. Letter B shows the negative balance in the balancing account. In October we will run the new rates and do the 10% write off. Usually the write off is about $198 million; this year we anticipate that the write off will be $404 million. When the October tax rates come out, there will be another $400 million on the negative balance figure, so that will be a negative $1 billion in the balancing account. Last year there were 37,832 employers with a rate increase. This year the number of employers with an increase will be more than double last year’s number.

3. Unemployment Reserve Fund

Mr. Bergan refers to handouts containing a forecast for the reserve fund. Our closing balance at for 2009 is projected to be a negative $984 million, and in 2010 a negative $2.2 billion. The negative balance continues to grow in 2011 to $2.7 billion. It is projected to go down in 2012. In 2013, the fund is projected to have a negative $2.3 billion. In 2013, the projected taxes and revenues will be going up and our benefit payments will be going down. These projections are based on the most recent DOR forecast in June. The further out the projection, the less dependable are the numbers. Overall, the projection is helpful to understand the problem. When 2013 comes, some of the reduction comes from reducing the FUTA tax credit. That will cause taxes paid by employers to repay the loan. Page 2 shows how data has changed with the different forecasts. We are at our worst in 2011, but it is not a dramatic recovery from there.

Question (Buchen): The projections show that the worst situation is 2011. This must be based on the expectation that unemployment will rise though 2010, correct?

Mr. Bergan indicates that it is less that than that we will start 2010 at a higher level than 2009. We hope that unemployment will start to level out. The consensus of the forecasters seems to be that unemployment will improve slowly. The difference between 2009 and 2010 is really a reflection of where we start in deficit in 2010. The difference in the unemployment rate from 6% to 9% is really a 50% increase for us in what we pay out in benefits. We can hope things get better, but we need to plan with these figures in mind.

Question (Neuenfeldt): Are you tracking the numbers of people that “leave” unemployment (and thus are not counted among the unemployed) because of obtaining employment rather than just running out of benefits?

Mr. Bergan indicates that we do not know why people stop claiming benefits. Some are no longer eligible. Various circumstances and issues may cause them to become ineligible or to stop claiming. Claimants exhaust their benefits at different points. About 10% of people exhaust at 26 weeks because they are not eligible for the benefit extensions. The department has provided charts in the past to the Council showing how many are participating in each program. Relatively few people go through the full 79 weeks.

Question (Buchen): If a claimant has dropped out because of an eligibility issue, would the department have a record of how many of those people there are?

Mr. Bergan indicates that by far the largest factor from what we can tell is that they are returning to employment. It might not be the same as they had before. They may be returning at a lower rate or to part-time work.

Comment (Neuenfeldt): So these figures show that this is all a result of the jobless economic recovery. There may be a stock market recovery. On the bottom end, however, people are working at the types of jobs left behind. This is a consequence of years of outsourcing. When things are purchased offshore, that’s where jobs are created, not here.

Comment (Buchen): If you look at the output of American manufacturing, it has never declined substantially. We just make more stuff with fewer people all the time. The Federal Reserve analyzed the last few recessions. Each recession seems to produce a slower rebound in employment. The conclusion was that employers tend to downsize and are reluctant to hire back. They use more automation, etc. Each recession seems to have a slower return to previous levels of employment. It is not good news, but it is due in part to efforts to increase productivity.

Comment (Neuenfeldt): You cannot ignore the hundreds of thousands of jobs that have left the country.

Comment (Buchen): Because there are jobs in another country does not necessarily mean that jobs are reduced in America. It is not that no jobs are lost, but we are still the largest exporting country in the world.

Comment (Neuenfeldt): He has reviewed dislocated worker records and the firms certified because the jobs are moved overseas. We have the largest trade deficit in the world.

Comment (Gustafson): Mr. Gustafson would be interested in reading studies about what percentage of jobs have been outsourced, how many workers were retrained, and the net impact of that. He has heard anecdotes. Economists are suggesting a possible “double-dip” recession.

Comment (Neuenfeldt): DWD can give a list of all of the jobs that have been Trade Act certified that have moved. General economic indicators show earning power of working families. If you review those in the broader economy, you can draw your own conclusions.

(Question) Lump: The projections assume there are no changes in law. As a council, we can affect the outcome based on benefits and taxes, correct?

Mr. Bergan indicates that this is correct. He refers to his handout showing Employer Accounts – Revenue and Expenditures and Solvency Taxes and Charges. Since 2001, there has been a pattern that in most years we ran a deficit when subtracting net charges from the taxes received. In a recession it is a substantial deficit. The number through 7-31-09 will change because we know what the write-off will be ($404 million). Over the long term, both elements of our system, i.e., the basic and solvency taxes have been out of balance over the last 7 or 8 years. It is important for us to come up with some phased steps over the next couple of years that would put both of these systems in balance. We would be able to cover charges to the balancing account and basic taxes to cover benefits paid by those employers. It is a two-pronged task. DOL experts on revenue have a good perspective of state systems and the factors in maintaining solvency. Solvency is a greater challenge in some states. We should consider those things. We need to get the charging in balance and develop a strategy to pay off a deficit.

Question (Neuenfeldt): Are the states that are borrowing going to look to the federal government for some relief? Are there discussions going on and who is talking to the feds?

Mr. Bergan indicates that there are other states similarly situated. They are at an early stage. Debts are similarly large compared to their economies. Federal relief is possible down the road, which likely would depend on the solvency of the individual state’s system.

4. Minutes of Meeting September 1, 2009

Motion (Lump), seconded (Penkalski), to approve minutes of September 1, 2009, passes 9-0.

5. Advisory Council Committee Recommendations Regarding Definition of “Employee”

  1.  Improve seven-of-ten test for “employee”
  2. Repeal DWD 105 (Truckers)
  3. Repeal DWD 107 (Loggers)

and

6. Advisory Council Committee Recommendations Regarding Definition of “Employment”

  1.  Exclude from “employment” personal care services for family
  2. Review mystery shoppers
  3. Review writers and news reporters

Mr. LaRocque indicates that the “employee” and “employment” definitions are on the agenda for discussion and action by the Council.

Agenda item number 5.a. (Improve seven-of-ten test for “employee”) is fundamental to the UI program. The UI Advisory Council’s Committee made the proposal to improve the definition. For items 5.b. (Repeal DWD 105, the rules to determine whether a trucker is an employee) and item 5.c. (Repeal DWD 107, the rules to determine whether a logger is an employee), industry representatives wish to have more input on the Committee’s recommendations. We can accommodate that input.

Agenda item 6.a. (Exclude from “employment” personal care services for family members) is a recommendation by the Committee.

Item 6.b. (Review mystery shoppers) is a topic for Council consideration. Prior to the September 1 meeting, the department provided a two-page summary of the department’s view of the proposal by the mystery shopper industry. A mystery shopper is someone hired to go into a retail business and report back as to service and quality without the staff in the store knowing.

Regarding item 6.c. (Review writers and news reporters), Mr. LaRocque spoke with Jeff Mayers of Wispolitics.com regarding writers and news reporters. The meeting packet delivered to the Council for today’s meeting includes an exchange of email with Mr. Mayers regarding the conversation.

Question (Lump): Since the Committee met and made recommendations regarding the regulations applying to truckers and loggers, there has been some testimony received by the Council and some conversations. What is the status of this in the department’s eyes? This may be more complicated than the Committee originally thought.

Mr. LaRocque indicates that it is the department’s perspective that rules DWD 105 and DWD 107 are flawed and should be changed. The trucking and logging industry associations have made the point that we ought to have more input from them before repealing the rules. He is willing to schedule meetings to get their input.

Comment (Gustafson): He has been in contact with the loggers’ association. They would like to see action on DWD 107 tabled and have the opportunity to work on it. They understand the department’s perspective, but there are also unique aspects of the work in that sector. If we move forward on other aspects now, it would be helpful not to move forward on DWD 107.

Mr. LaRocque indicates that it is up to the Council to decide how to proceed. Improving the seven-of-ten test is more fundamental and important than the other items and could be separated.

Comment (Lump): As long as the door is open to discuss this with other industries, the department should meet with industries before we meet again in couple of weeks and see if any progress has been made. He is hesitant to approve these items with the possibility of negotiations going on. For items 5.b. and 5.c., the Committee tried to reach out to people, but could have been more aggressive in doing that.

Question (Neuenfeldt): What is the legislative strategy for the bill, one bill or two bills? What is the timeline?

Mr. LaRocque indicates that there is a bill draft done by the LRB. That has been distributed to the Council. The legislative floor period ends November 5. The department asked the LRB to draft all of the provisions presented to the Council, including those not yet approved. The department is prepared to go ahead with the bill.

Comment (Neuenfeldt): Questions whether the Council should put a bill forward that has some changes but does not deal with solvency and other issues. Would the Council be better off waiting for total package?

Comment (Buchen): If you look at the magnitude of the problem, the solutions become daunting and are going to be controversial. On the employer side, there will be tax increases which will be hard in this economy. The situation has to be addressed, but the process and outcome is fuzzy now. We have recently been made aware of the magnitude of the problem. We could take care of uncontroversial issues, and that bill can go through the Legislature. We can be prepared to respond to questions, but we cannot get the other things resolved by the end of the floor period.

Comment (Lump): Suggests that we hold the whole seven-of-ten test for a few weeks. It is not crying out to be fixed. We can see some language from the department regarding mystery shoppers and writers that we could consider.

Mr. LaRocque indicates the department will provide some write up on mystery shoppers. Freelance writers may be more difficult. Mr. Mayers indicated it would be hard to justify on a policy basis excluding writers working for the news media alone.

Question (Penkalski): Does the department have suggestions about what period of time will be needed to pay this off?

Mr. Bergan indicates that he has not done that yet because he needed to hear from the Council what it wants to do. Generally, we should phase something in over 2 or 3 years. The reason to do it sooner is to drive the number down and the overall debt will be lower. There is urgency about it. Then we should deal with the solvency part and see what new numbers would generate on the projections, and then develop a separate strategy for whatever debt is left.

Question (Gustafson): The Council has been speaking about this since last spring when we were trying to make sure we had full access to federal benefits. It should not come as a surprise.

Mr. Bergan notes that people know there are issues to be addressed. The department wanted some guidance from the Council. There is work to do.

Comment (Buchen): If we approve a bill with these changes, we would be in a position to talk with legislators about the other issues and explain that we are working on it.

Comment (Penkalski): It may be more appropriate to at least take a small step forward now.

Comment (Gustafson): They should understand that the Department and the Council have not been dragging our feet. We were waiting for some good numbers.

Comment (Buchen): We need to determine the amount that allows you to declare the system solvent in the long term. Then we need to determine how to share the pain here. There are places in the system where we spend money that is not absolutely essential to the fundamental purpose of keeping people in their homes and feeding families when they are unemployed. It cannot all be on the tax side; it is not going to happen. Whatever the number is, it will primarily come out of higher taxes, but there are other issues on benefits side that need to be examined.

Comment (Neuenfeldt): He is happy to work on two bills, but it would be good to have some feedback about how the Legislature might perceive the issues and introducing two bills. It is a matter of legitimacy of the Council process.

Comment (Haine): We have a bill with some typical UI fixes. The Council is aware of bigger issues and will deal with those in a second bill.

Comment (Lump): He was here in the 1980s. The Council did not come up with a solution and the Legislature had to take charge and made changes that were not popular with anyone.

Comment (Buchen): At that time, the Council’s procedures required unanimity and they could not get it. There were massive tax hikes and benefit cuts. It worked, and got the system back to solvency, but it was modified shortly thereafter because it generated more money than we needed at the time.

Comment (Haine): The Council wants to be out in front. The Council is aware of the trust fund issue, but may not have a solution yet in the bill this year. We could do the other things in a bill.

Comment (Buchen): We need to find out from the legislators if they will be ok with two bills. We do not know yet because we have not asked them yet. It may be premature to set a strategy.

Mr. LaRocque indicates that if the Council wants to do a bill this fall, the bill would need to be done on October 5. The Council has the draft bill. He can take input between meetings to make progress on the bill before then. In the draft, the highlighted language shows the provisions that are not yet approved by the Council.

Comment (Neuenfeldt): They will be letting the legislative leadership know the projected deficits. It would also be helpful to let them know that this is not just Wisconsin, but how many other states are in this position. Also, they should know that it is possible that there may be some relief from feds that would come later rather than sooner; and that we need to deal with solvency. We can tell them there are some issues that can move quickly, and ask if we should do two bills. The leadership may want a total package; we will need to see what they say.

Comment (Gustafson): A further point is that the Council has been on top of this but there was uncertainty of the depth and duration of the recession until we got some strong numbers. Also, there is the possibility of the double dip which adds another twist.

Comment (Buchen): The Council has not been blind to this. The last bill was an attempt to address this with increasing the taxable wage base and adjusting solvency taxes. The situation was not as dire when we were looking at the situation as it is now.

Comment (Neuenfeldt): People will understand that the Council has been on top of this, but suggests that they may wonder about how long it will take to come up with solutions.

Mr. Bergan indicates that for the solvency side, most of the potential steps to address this are not that complicated, we just need to decide to do it. In the 1980s we created a tax table that was a little unusual. We should amend that tax table to be more consistent and understandable.

Comment (Neuenfeldt): We should see what the feds are recommending, so we are prepared to take advantage of any federal relief.

Comment (Gustafson): The feds seem to think that states cannot have a large enough rainy day fund; we have seen this from them in the past. When we had $1.6 billion in the account, they still said it was not high enough. It turns out they were right, but not for the right reasons.

Mr. Bergan indicates that he suggested that DOL change their standard as to what is important. The feds have always focused on the balance in the reserve account. He thinks it is wiser to deal with internal solvency of the account than the balance, which is a different thing. They were responsive to that. The kinds of balances they have urged over the years are very high. There are other ways to judge the solvency of your system than the balance in the account.

Comment (Buchen): We may need a program that is more reflective of the unemployment rate and triggers. We need to look at the demands on the system and the lags. There is another way to do this.

Comment (Neuenfeldt): The Council may need to caucus to digest what they have heard. In terms of one or two bills, between now and next week Mr. Bergan should communicate with the legislative leadership so we can make a decision on October 5 whether we have two bills or one. Labor and management can communicate as well. Eventually we need to communicate with the whole Legislature as well.

9. Department proposal D09-22 – Amend Approved Training and Extended Training

Comment (Neuenfeldt): He does not like the limit of “high demand occupation” for approved training. Not everyone is in a position to train for those occupations. There also can be long waiting lists. That term raises concerns because there may be few high demand occupations.

Tracey Schwalbe provides an overview of the department proposal. When workers are in regular approved training (AT), they do not have to meet some of the requirements for benefits that regular claimants have to meet. They do not have to do a work search, they do not have to be able and available for work, and they can refuse suitable work while in the training. Claimants in TRA or dislocated worker programs also can leave unsuitable work to enter training. Claimants are eligible for up to 26 weeks of benefits while in approved training. With Act 11, we added additional benefits while in Extended Training (ET) of up to an additional 26 weeks. Now someone can be eligible for up to 52 weeks of benefits while in AT/ET. The two programs are somewhat different as currently drafted. As the department has been working on the implementation plan and programming for ET, the department came up with ways we could harmonize the laws and make it easier on people to understand the programs and make it a seamless process for claimants in training. We do not want claimants to be frustrated after 26 weeks that they cannot continue to receive benefits because of the changed requirements for ET; and we do not want to have to investigate the claimant’s training again after 26 weeks to see if it meets the ET requirements and slow down or stop benefits while we have to do that investigation. We separated the proposal into different the issues. The harmonizing and synchronizing of AT/ET is one part of the proposal. There are also changes that must be made to the current law that are required for federal conformity purposes. We separated that out so you can see what absolutely has to be changed from what the department is recommending be changed. There are also some changes to ET that DOL requested we make to clarify those provisions. On the summary page, the harmonizing provisions are identified with the first set of bullet points. The fiscal analysis for each change is broken down and provided in each bullet point. Overall, the harmonizing changes have a balanced effect on the trust fund. One proposed change subtracts about $1 million in benefits and several other proposed changes together add about $900,000 in benefits. The total fiscal effect of all of the changes is about $100,000. Dick Tillema prepared the fiscal analyses and is here to answer any questions on that.

Carla Breber, Bureau of Benefits, presents the AT/ET harmonizing part of the department proposal. First, the department is proposing to eliminate the cutoff date of October 1, 2003 [in Wis. Stat. §108.04(16)(c)], for approved training that is administered by the department. We do not want the artificial date to prevent us from approving some new and innovative programs that are administered by the department. Second, the department proposes to approve all WIA-funded training for AT. All WIA-funded training is approved training for the ET benefits and we want these automatically approved for AT as well. This would allow a seamless transition from AT to ET for many claimants. Third, there is already a requirement for regular AT that requires the department to evaluate the training program and determine whether it will increase the person’s opportunities to obtain employment. We would like to replace this language with the phrase currently used for ET benefits that the training is for a “high demand” occupation. They are similar concepts. The proposal would make the terms used consistent. The department can define “high demand.” The approved training investigation that the department does today does look at the training. The type of training has to be approved. All Trade Act training and WIA-funded dislocated worker programs are automatically approved training regardless of whether the occupation is “high demand.” Also, all department-administered programs as of the October 1, 2003, date are automatically approved regardless of whether the occupation is “high demand.” If someone is getting training that is not in one of these programs, the department looks at the program to see if it meets certain requirements, such as if the training is a vocational school, is full-time, etc. We do a complete investigation.

Finally, the department proposes to remove the requirement from ET that the separation must have been from a declining occupation or involuntarily separated from employment as a result of a permanent reduction in operations. This would make ET more similar to AT. These three changes would make a seamless transition from AT to ET so we do not have to re-investigate and delay benefits and possibly deny ET when the person is in the same program and it was approved under AT. The proposal also would allow the department to apply the approved training protections without having to conduct a full able and available investigation. A few changes in the statute would allow the department to make a faster investigation of the issues for someone in approved training. Right now we do a complete able and available investigation before we even look at approved training. We want to streamline this so that if the person is in approved training, we do not need to look at whether they are able and available for work. There is really no need to conduct that investigation; if they are in approved training they do not need to be able and available for work. This will save time and speed the payment of benefits.

Comment (Neuenfeldt): There are approved training providers, and people need to meet the criteria for training. A lot of people come into the system through the dislocated worker program. They go through a case management process where they look at they type of training. It is not a unique UI decision.

Ms. Breber indicates that those things will not change. Someone in a dislocated worker program will still automatically be considered to be in approved training. The department is proposing to broaden this to be more than just the dislocated worker programs, but all WIA-funded programs. Anyone in trade training or a program administered by the department is approved.

Question (Neuenfeldt): Who would you be denying then? Who are the people that make up the $1 million in benefits that are being lost?

Ms. Breber indicates that there are still a fair number of people in training that is not through one of these programs. They are approved now if the training meets the requirements in the statute. They all may not fall out of the program. Dick Tillema indicates that the people who represent the $1 million in decreased benefits are those people in the regular approved training, who are not in TRA or WIA dislocated worker or a department-administered program. People in those programs are automatically approved and would not have to meet the “high demand” criterion. The people who would need to show that the training is for a “high demand” occupation for regular AT would be people who are not in those programs. They may be in any kind of training, such as a fork lift operator, which did not come to the person because of participation in TRA or dislocated worker or a department-administered program. The person just decided they would get training as a fork lift operator while they were unemployed. The latter situation is different from one in which large numbers of people are dislocated or unemployed when a plant closes and the Department goes out to find ways to put them back to work.

Question (Neuenfeldt): If someone is in TRA and wants to be trained as a fork lift operator, that would be ok, but someone who is not in TRA or the other automatically approved programs would not be approved for fork lift operator training?

Ms. Breber responds that this is correct, and this is true today for all approved training. If a case worker decides that some college is appropriate for the person in TRA or dislocated worker, we would automatically approve that but we would not approve the college training for someone just seeking training in college on their own. Automatic approval is dependent on the case worker deciding that this is the right training for this person. This is a line that is already drawn in the statutes. That difference in treatment was created long ago.

Mr. LaRocque indicates that the “high demand” concept came into the law this year (Act 11). We put that in the extended training program provisions. It is there now. People will enter the approved training now without having to meet the “high demand” standard and will find out after 26 weeks that they are not entitled to extended benefits. This will focus them on a high demand occupation so they are more likely to be reemployed and provide the term of benefits needed.

Question (Haine): She understands the need to harmonize the programs so claimants are not confused and the department does not have to reinvestigate. The “high demand” piece is a minimum requirement of the ET but the state can define “high demand.” What is the definition?

Mr. LaRocque indicates that the department has had to define this for ET purposes. It encompasses a large percentage of jobs in Wisconsin. Jason Schunk, Bureau of Benefits, indicates that the department has a list from the Department’s Office of Economic Advisors with the projections of what occupations Wisconsin will increase in numbers over a ten-year period. The “high demand” jobs are those that have a 10-year projected rate of growth that is greater than average. We took out the jobs that require a bachelor’s degree. There were still several hundred (well over 50% of all) job titles that qualify as “high demand.”

Comment (Haine): The focus seems to be to direct people to training where they will be able to find a job. We do not want to train people for jobs that are declining. If it covers that many occupations, then that is still broad.

Mr. LaRocque indicates that there is a tradeoff in the proposal. On the one hand, some people will not get benefits valued at $1 million (if they are not training for a “high demand” job and not in any of the other categories of approved training). On the other hand there are other people who will get benefits that they are not getting now (valued at $900,000) and there are people who will enter the AT program and not be held up at the stage where they enter the ET benefits.

Mr. Bergan states that are some reductions, but there are also benefits to more claimants. It is close to a wash in terms of fiscal effect on benefits. The idea of harmonizing and making the program more consistent and more manageable is a very important thing. We are going through the experience now where benefits are being held up because we have an endless list of issues we have to adjudicate. This is exactly where this comes from. Someone was eligible for benefits initially and is not now, then we have to deny and we are investigating. People are left in limbo. Any steps we can take to make this program more understandable and less arbitrary to the people we are trying to serve is very important. From an administrative standpoint, as we are running several programs and trying to get people benefits, there is even more urgency.

Comment (Buchen): The fact that there is fiscal balance in the proposal is absolutely critical.

Question (Petersen): Is it possible that some people in AT would be approved in ET?

Ms. Schwalbe indicates that this is correct if the person also met the separate requirements for ET. This would require the department to investigate after the claimant exhausts AT to see whether the claimant originally left a declining occupation and was training in a high demand job. The person may not meet these requirements and then after receiving 26 weeks of training and benefits would be denied further benefits.

Question (Petersen): Is it possible to change the ET portion to be any AT program without the “high demand” requirement?

Ms. Schwalbe indicates that the state can broaden this to provide ET benefits to anyone under the current language in AT. That would be broader than what the department proposed. We thought the policy of focusing on a high demand job for AT was appropriate.

Comment (Haine): She is concerned about the administrative difficulties and that claimants would be completely confused about why their benefits are being cutoff. She also appreciates the fiscal balance in the proposal. She read the analysis and it was good and would make things more understandable. If “high demand” is defined broadly enough, it should work well.

Mr. LaRocque indicates that the proposal provides balance, does not do any radical changes, but streamlines the programs. There is statutory language on D09-22 in the analysis document the Council received today.

8. Department proposal D09-21 – Authorize Spending of Special Administrative Transfers

Mr. LaRocque indicates that this allows the department to spend the $9.6 million the department received for UI administration under the RECOVERY ACT.

Motion to approve D09-21 (Buchen), seconded (Neuenfeldt), passed unanimously 9-0.

10. UI Bill: LRB Draft 3069/5

Mr. LaRocque indicates that D09-22 (Harmonize Approved Training and Extended Training) is not in the bill draft.

Motion to meet in closed session.

Motion (Buchen), seconded (Neuenfeldt), is passed unanimously 9-0 to go into closed session to consider the department proposals for changes to chapter 108 presented at various meetings to date including D09-22 presented today, and to consider the department’s proposals to revise Wisconsin Administrative Code chapters DWD 128 and DWD 129, and to consider the draft bill language in LRB draft 3069/5, pursuant to section 19.85(1)(ee) of the Wisconsin Statutes; and to consider the meeting adjourned without return to open session today. Closed sessions by the management and labor members of the Council, respectively, began at 10:35 p.m.

The next meeting of the Council will be held at the offices of the State of Wisconsin Investment Board (SWIB), 121 East Wilson Street, Madison, WI. Parking is available across the street from SWIB.

The Meeting of the Council adjourned upon the end of closed sessions at 12:45 p.m.