Senator Eliot Shapleigh - El Paso, Texas

The federal stimulus bill expected to be signed today by the president has $555.7  million on the table for the Texas unemployment system, but only if the state makes it easier for more out-of-work residents to become eligible.

Some business and political leaders are concerned that taking the money would exchange short-term gain for long-term pain.

Advocates for the changes, however, say adopting the new guidelines would modernize the state’s unemployment system, allowing more low-wage workers to collect benefits.

The debate comes at a time when the state’s unemployment trust fund is facing an October deficit of $749.5 million that’s been projected by the Texas Workforce Commission.

“It’s a bad deal,” said Bill Hammond, president of the Texas Association of Business in Austin.

For Texas to get its share of the $7 billion in federal unemployment funds, the Lone Star State would have to change several state laws, which he estimates would cost employers at least $100  million more a year in payroll taxes.

Larry Temple, executive director of the Texas Workforce Commission, said officials will study the pros and cons.

“Part of that analysis will be if, when and how much taxes would have to be raised to continue these expansions once the initial funding is gone,” according to Temple. “As to ‘modernization,’ these are really not new ideas. These very issues have been debated in the Texas Legislature for many years.”

Texas would immediately get one-third of the money if it changes the way it calculates unemployment benefits.

Currently, the state bases benefits on wages paid more than a year before a job loss. The new federal rules would base benefits on more recent work history, according to the National Employment Law Project.

That would make more low-wage workers who cycle in and out of the work force eligible for benefits.
Two of four options

To get the remaining two-thirds, the state would have to choose two out of four options:

• Allow recipients to look for part-time work, which would change the full-time job-search requirement currently in place.

• Speed up benefits to “trailing spouses,” or those who quit because a husband or wife had to move for work. Now the spouse has to wait six weeks to become eligible.

• Pay workers who have already exhausted their unemployment benefits but are attending training programs, something the state doesn’t currently do.

• Pay a weekly stipend to workers who support dependents — again, something the state doesn’t currently do.

Rick Levy, legal director for the Texas AFL-CIO in Austin, said such changes would bring the modern-day workplace to Texas’ rules.

Allison Castle, a spokeswoman for Texas Gov. Rick Perry, said the office hadn’t seen a final copy of the American Recovery and Reinvestment Act as of Monday.

“We’ll look at it line by line, and we will make a decision on the best interests of Texas,” she said.
Seven years of costs

Levy calculates the extra money from the federal government will cover seven years of the extra cost facing Texas and said it’s money well spent.

“It’s not like we’re running an ATM machine here,” he said. “With the economy in crisis, the one thing we should be doing is paying attention to the people who have lost their jobs and the communities in which they live.”

People spend their benefits at the corner gas station and the grocery store, and that circulates throughout the community, he said. They don’t save it for their kids’ college fund.

U.S. Labor Department data from the second quarter of 2008 showed only 20  percent of out-of-work Texans were eligible to collect benefits. Only South Dakota, at 18 percent, has less on the rolls. The national average is 37 percent.
Others due for change

However, Texas isn’t alone when it comes to having to make changes to get a slice of stimulus pie: The National Employment Law Project said only four states — Maine, New Jersey, New Mexico and New York — would qualify for the full amount as their rules stand today.

Texas House Speaker Pro Tem Craig Eiland, D-Galveston, suggested that Texas might enact reforms just long enough to qualify, then revert to the status quo.

“We could perhaps put that into legislation that’s required to accept the money: We take the money for two years and then it sunsets,” he said.