FISCAL NOTE TO

ASSEMBLY COMMITTEE SUBSTITUTE FOR

ASSEMBLY, No. 1971

STATE OF NEW JERSEY

DATED: JULY 9, 1997

      Assembly Committee Substitute for Assembly Bill No. 1971 of 1997 provides that no employer's account will be charged for unemployment insurance benefits paid to a claimant if the claimant's employment by that employer was ended in any way which would have disqualified the claimant for benefits if the claimant had applied for benefits at the time when that employment ended. Such claimants include those who voluntarily quit their job without good cause connected with the work or who are terminated from their job because of misconduct or gross (criminal) misconduct. However, the provisions of the bill do not apply to workers who have been laid off and receive remuneration in lieu of notice and workers involved in a labor dispute.

      The bill further provides that the department's administrative expenditures be paid from the Unemployment Compensation Auxiliary Fund and imposes penalties on employers who knowingly make false statements, or knowingly fail to disclose a material fact, in order to reduce their unemployment charges pursuant to the provisions of the bill.

      The Department of Labor estimates that the bill would increase the nonmonetary workloads of its field offices, requiring 24 additional claims examiner positions at a cost of $1.2 million in the first year following enactment and $1.1 million in each of years two and three. The department's estimate is based upon 1995 workload data which indicates that approximately 50,062 claims would require adjudication under the bill. However, while currently, all administrative expenditures related to unemployment compensation are fully funded with federal revenues, the department states that the cost associated with this bill would be a State rather than federal expenditure, since issues relating to employer charges are not considered determinations of eligibility, and are thus not reimbursable by the U.S. Department of Labor.

      The Office of Legislative Services notes that, while the department's estimate appears to be reasonable, consultation with the U.S. Department of Labor indicates that administrative expenditures incurred as a result of this legislation would be reimbursable with federal funds, an assessment with which the Office of Management and Budget concurs. Hence, it appears that the department would have no need to utilize the revenues of the Unemployment Compensation Auxiliary Fund (UCAF) for the purposes of the bill. Moreover, given that the Governor's FY 1998 Budget Recommendation projects that this fund is expected to have a $2.8 million fund deficit by the end of the current fiscal year, FY 1997, and a $44,000 fund balance by the end of FY 1998, it is unlikely that the fund could provide the anticipated level of support this bill requires.

This fiscal note has been prepared pursuant to P.L.1980, c.67.