Editorials

Texas has earned some boasting rights in having created a highly favorable business climate that has kept the state’s economy floating well above the national level, but there is one persistent problem.

The state’s unemployment insurance is a troubling area that has been the target of several reform efforts in attempts to improve its standards to levels of most other states.

Now business leaders say the integrity of the state’s UI trust fund is being threatened because of a constant drain of funds caused by fraudulent claims and wasteful administration. Those charges can be supported by figures on such losses.

UI in Texas is funded entirely by employer dollars and employers are questioning how their tax dollars are being spent.

Texas’ performance in limiting benefit fraud and overpayments has long been of concern to employers, said Bill Hammond, president of the Texas Association of Business.

After a closer look at the administration of the UI trust fund in Texas, “Employers are shocked at the alarming evidence of fraud and overpayments,” Hammond explained.

The top states nationwide in limiting UI fraud and waste spent on average $51,724,563 in 2006. During the same year, Texas fraud and overpayments drained the UI trust fund $226,899,852.

It is not surprising that the difference has Texas employers frustrated that their tax dollars could have been much better spent.

What Texas could have saved in 2006 compared to the efficiency of other states was $175,197,289, which would have been the equivalent of full-time employment for more than 4,000 Texans, Hammond pointed out.

With $175 million, full health insurance benefits could be provided to more than 23,000 employees.

The TAB is calling for action by the Texas Workforce Commission to immediately clean up the fund and subsequently improve Texas’ standing among other states.

“The TWC should provide responsible stewardship of a fund created by the state’s only payroll-related tax,” Hammond said. “Instead, literally millions of heard-earned employer dollars are being wasted with bureaucratic inaction.”

State-to-state comparisons provide further evidence Texas employers are footing a system “that may be fundamentally broken,” he added.

The latest available report from the U.S. Department of Labor shows Texas ranks 45th among the states in combating fraud and overpayments; 39th in the nation in controlling the problem of fraudulent unemployment claims; 46th in agency errors that pay benefits to claimants who are not entitled; 47th for all overpayments for all causes and 48th in overall rate.

TAB’s call on the Workforce Commission to review the state’s UI fund and take immediate steps to reduce the government waste clearly has solid basis in those figures.

The association also recently called on the TWC to create a drug-testing standard for UI beneficiaries to prove they are drug free. National studies show incidences of drug use occur twice as often while a person is unemployed.

Keeping the state’s healthy business climate on track clearly is important to retaining these commercial operations and attracting new ones, thereby creating better jobs and better pay for more residents.

A more effective and efficient unemployment insurance operation would provide a boost for employers, and their workers as well.

If the TWC just takes a good look at the state’s poor national UI rankings it ought to be ready to take immediate remedial action without being pushed.

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