COALITION FOR EMPLOYMENT SECURITY FINANCING REFORM

For immediate release July 1, 1998

MAJOR EMPLOYER GROUPS ENDORSE SHAW'S EMPLOYMENT SECURITYSYSTEM LEGISLATION--- HEARING HIGHLIGHTS URGENCY OF REFORM EFFORT

The U.S. Chamber of Commerce, the National Association ofManufacturers, theNational Broiler Council, the Food Marketing Institute, andthe Society forHuman Resource Management recently endorsed the "EmploymentSecurity FinancingAct of 1998" (HR 3684). They now join the ranks of theCoalition forEmployment Security Financing Reform which has grown to over75 businessorganizations and 27 states. The number of cosponsors for HR3684 also hasgrown, with the addition of Congressmen Cubin (WY), Gilmor(OH), Oxley (OH),Traficant (OH), to the original list of Congressmen Shaw (FL),Collins (GA),Portman (OH), Pryce (OH), and Sununu (NH), and the number isexpected toincrease following a June 23, 1998 hearing in the House Waysand Means HumanResources Subcommittee.

During the hearing, the urgency of repealing the FUTA surtaxand reforming theadministrative financing of the employment security systemwere highlighted bySubcommittee members Clay Shaw from Florida and Jim McCreryfrom Louisiana,and by witnesses. Those testifying included State SenatorRobert R. Cupp,President Pro Tempore of the Ohio State Senate and Co-Chairmanof the OhioSenate Finance Committee, Joseph Weisenburger, DeputyCommissioner of the NewHampshire Department of Employment Security, Douglas Jamerson,Secretary ofthe Florida Department of Labor and Employment Security, JohnDavidson, StaffAttorney at the Chrysler Corporation, and William Petz,Manager of Payroll andUnemployment Taxes at USX Corporation.

Chairman Shaw used the hearing to emphasize the outrageousnessof continuingto unnecessarily hit the nation's employers with over $1.5billion in FUTAsurtaxes each year. He explained that states are onlyreturned 60 cents ofevery tax dollar paid by employers to support the system, andthat theremainder is held in federal trust funds as part of theunified budget to helpoffset the federal deficit. Responding to frustrations raisedby Chrysler andUSX regarding the burden of the unnecessary surtax and theinadequateoperations of employment services, Shaw exclaimed that "he didnot know anyprogram that is crazier than this," and argued that the use ofFUTA trustfunds to help create a federal surplus was a "total fraud.""If lawyerstreated trust funds the way we did, they would all be injail," protestedChairman Shaw.

Witnesses detailed the inequity of the current financingsystem and to theterrible shortfalls in funding state administration ofUnemployment Insuranceand the Employment Service from the huge untapped balances(over $18 billion)in the federal FUTA trust funds. Mr. Weisenburger argued thatthe U.S.Department of Labor is not meeting its funding responsibilityunder the law,and that because of funding shortfalls less than 15% of thoseusing the PublicEmployment Service are being placed in jobs. Senator Cuppemphasized thatstate legislatures were in the best position to determineappropriate fundinglevels for each state's administration of its unemploymentinsurance system,and assured Subcommittee members that state legislatures wouldact in the bestinterest of workers and employers.

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For more information contact: Eric Oxfeld, 202-682-1515