I have been corresponding with David Guenther of the Texas Public Policy Foundation on this issue. He used to work at the Workforce Commission, and he makes a couple of instructive points:
Two alternatives to shore up the trust fund balance without relying on that set of funds (and strings):
* A separate provision of the stimulus package provides zero-interest loans to states that need to shore up their UI trust fund balances.
* In 2003, the Legislature gave TWC the authority to issue bonds to shore up its trust fund balance. It's been a while since I looked at the testimony I wrote for Chair Rath, but I recall the interest rate being below 3%. (1.8% maybe?) Anyway, we prepaid those bonds ahead of schedule and saved $270 million as compared to other alternatives.
A key angle that nobody's talking about (yet) is that benefit projections are just that – projections. The more variables you add to an equation, the more the final results can vary – especially in a very fluid and unpredictable environment as we have now. If we address the trust fund balance by taking the $555 million, we may have a vague idea how much the additional benefits may cost over time but those estimates could wind up being wildly off. (Take a look at how much the October trust fund balance estimates bounce around.) But if we borrow the money through either of the alternatives I mentioned, we have a cost-certain impact on the trust fund and know exactly how employer taxes will be affected.
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