Governor Susana Martinez announced today that she has signed an executive order to activate an unemployment fund advisory council in order to formulate policies that will help to ensure the long-term stability and solvency of the state's unemployment insurance trust fund. The council, which was created by law in 1959, has been inactive for roughly 30 years as the management of the state's unemployment insurance fund -- including the setting and changing of contribution rates paid by businesses - has been dictated solely through the legislative process.
In particular, decisions by the Legislature and Governor in 2004 and 2007 to create artificially low contribution rates and expand benefits beyond what is offered in other states quickly depleted what had been a robust, $500 million fund. Currently, the unemployment insurance fund is projected to be solvent through March of 2013.
"A sound unemployment insurance fund should be operated with two long-term goals in mind -- to provide adequately for those who lose a job through no fault of their own, and to keep contribution rates by businesses stable and predictable over time," said Governor Martinez. "The management of this fund, including the changing of rate schedules, should be driven by actuarial and economic data -- not by politicians in Santa Fe. A panel of experts charged with recommending reforms and enacting changes to the fund over time will allow us to better support unemployed workers and New Mexico job creators at the same time."
The unemployment fund advisory council will be tasked with formulating regulatory and statutory changes that will present a long-term solution to provide for the solvency and stability of the unemployment fund, including examining certain reforms such as:
Implementing a floor and ceiling for the fund to prevent it both from nearing insolvency and growing too large
Overhauling the contribution rate structure and potentially adding schedules and experience rating bands to ensure more gradual, equitable and predictable rate changes
Setting a target fund balance or ratio, and
Enacting measures to prevent fraudulent claims and overpayments.
Per the Governor's executive order, the advisory council will be comprised of individuals who demonstrate experience in the following fields: actuarial science, payroll administration, finance, management, and human resources. The advisory council will also include representation from the Legislative Finance Committee, the Department of Finance and Administration, the Department of Workforce Solutions, small business (30 employees or fewer), large business (more than 30 employees), labor, and the U.S. Department of Labor. The council will recommend changes that can be enacted by the Department of Workforce Solutions, as well as any reforms that would need legislative approval.
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