LEGISLATIVE BUDGET BOARD

Austin, Texas

FISCAL NOTE, 81ST LEGISLATIVE REGULAR SESSION

March 31, 2009

TO:	Honorable Chris Harris, Chair, Senate Committee on Economic Development
FROM:	John S. O'Brien, Director, Legislative Budget Board
IN RE:	SB945 by Zaffirini (Relating to unemployment compensation benefits.), As Introduced

Estimated Two-year Net Impact to General Revenue Related Funds for SB945, As Introduced: an impact of $0 through the biennium ending August 31, 2011.

The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.

General Revenue-Related Funds, Five-Year Impact:

Fiscal Year	Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2010	$0
2011	$0
2012	$0
2013	$0
2014	$0

All Funds, Five-Year Impact:

Fiscal Year	Probable (Cost) from Wrkforce Commission Fed 5026	Change in Number of State Employees from FY 2009
2010	($1,300,010)	15.0
2011	($1,026,417)	13.0
2012	($1,022,345)	13.0
2013	($1,023,830)	13.0
2014	($1,025,383)	13.0

Fiscal Analysis

The bill amends the Labor Code relating to unemployment compensation benefits. The bill amends the Texas Unemployment Compensation Act (TUCA) by adding an alternate base period; allowing individuals to seek only part-time work; and removing the six-to-25 week disqualification period for an individual who leaves work because of a spouse’s employment-related relocation, and the commute is impractical. These amendments address some of the Unemployment Insurance (UI) Modernization provisions of Public Law 111-5.  However, TWC has been notified by the U.S. Department of Labor (DOL) that Section 2 of this bill, relating to part-time work, does not satisfy the provisions of PL 111-5 and would not qualify the state to receive incentive funds included for this purpose.

In addition to the amounts reflected in the table above, an analysis made by the Texas Workforce Commission assumes that implementing the provisions of the bill would result in the following fiscal impacts to the Unemployment Trust Fund:

Estimated costs for the Alternate Base Period section would include $43,767,078 in FY 2010, $43,412,611 in FY 2011, $40,937,516 in FY 2012, $39,711,616 in FY 2013, and $39,388,752 in FY 2014, totaling $207,217,573 for the five-year period, in order to pay the unemployment compensation benefits authorized by this bill.  Included in the recently-enacted American Recovery and Reinvestment Act of 2009, Title II, Section 2003, are amounts appropriated for Special Transfers for Unemployment Compensation Modernization. These amounts include special transfers for FY 2009-11 consisting of incentive payments to be transferred by the Secretary of Labor to state accounts upon certification of various state unemployment compensation law enactments. For such alternative base period legislation as this, it is estimated that Texas would receive an incentive transfer totaling $185,223,781 for the Unemployment Trust Fund.

Estimated costs for the Unemployment Compensation for Part-Time section relating to part-time workers would include $28,036,912 in FY 2010, $28,187,947 in FY 2011, $27,272,474 in FY 2012, $26,876,172 in FY 2013, and $27,006,744 in FY2014, totaling $137,380,248 for the five-year period.

Estimated costs for extending benefits to an individual who moves with a spouse who is not in the military would include $1,814,880 in FY 2010, $1,850,700 in FY2011, $1,886,520 in FY2012, $1,922,340 in FY2013, and $1,964,130 in FY2014, totaling $9,508,570 during the five-year period.

As identified in DOL Workforce Security Research Publication 98-4, it is estimated that employers would experience costs associated with implementing an unemployment compensation alternative base period, by spending an average of 39 minutes in processing a wage request (i.e., in response to mailed requests for lag quarter wages), with an average processing cost by employers of $9.76 per request. Based on information provided from DOL,  estimated costs for employers associated with enactment of this legislation would total $394,587 in FY 2010 and an average of $321,509 each year during FY 2011-14.

Methodology

According to the analysis provided by TWC, under the Alternative Base Period section, there would be an impact to Federal Funds to pay for administrative costs (consisting largely of seven Customer Service Representatives, four Hearings Officers and two Clerks) to handle increased workload for a total of $1,119,636 in FY 2010, $1,016,452 in FY 2011, $1,012,380 in FY 2012, $1,013,865 in FY 2013, and $1,015,418 in FY 2014.

Technology

For the Alternate Base Period, TWC estimates there would be a one-time technology cost of $180,374 in FY 2010 and ongoing costs of $9,965 per year in 2011-14 for TWC to update the UI Benefits System.

Local Government Impact

No fiscal implication to units of local government is anticipated.

Source Agencies:

320 Texas Workforce Commission

LBB Staff:

JOB, JRO, MW, NV, LI