Interim Joint Committee on Labor and Industry


Minutes of the<MeetNo1> 1st Meeting

of the 2004 Interim


<MeetMDY1> June 17, 2004


The<MeetNo2> 1st meeting of the Interim Joint Committee on Labor and Industry was held on<Day> Thursday,<MeetMDY2> June 17, 2004, at<MeetTime> 10:00 AM, in<Room> Room 149 of the Capitol Annex. Senator Katie Stine, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Katie Stine, Co-Chair; Representative J. R. Gray, Co-Chair; Senators Brett Guthrie, Vernie McGaha, Richard Roeding, and Damon Thayer; Representatives Denver Butler, C.B. Embry Jr, Charlie Hoffman, Dennis Horlander, Joni Jenkins, Russ Mobley, Rick Nelson, and Jim Stewart.


Guests:  Dr. Penny Smith, Commissioner, Department for Employment Services; Ann Rose, Deputy Commissioner, Department of Workforce Investment; Janet Givens, Director, Division of Unemployment Insurance; Dal Barrett, Assistant Director, Unemployment Insurance Tax Branch; Larry Moore, Internal Policy Analyst, Department for Employment Services; Charles Bell, Assistant Director, Unemployment Insurance Benefits Branch; Phillip Anderson, Commissioner, and Tracey Thurman, Deputy Commissioner, Department of Labor.


LRC Staff:  Linda Bussell, Betty Davis, Adanna Hydes, Melvin LeCompte, and Reni Krey.


Co-Chair Stine welcomed the members and asked Senator McGaha to offer a prayer for the family and loved ones of the late Senator Paul Herron. Co-Chair Gray noted that Representative Yonts was unable to attend the meeting because of a scheduling conflict.


Co-Chair Stine introduced the first item on the agenda, an update on Kentucky's Unemployment Insurance (UI) program. Janet Givens, Director of the Division of Unemployment Insurance, presented a brief history of the program and its trust fund.  Ms. Givens directed the members to a handout of her presentation which was included in the members' folders. Ms. Givens informed the members that employers are paying higher unemployment insurance taxes under schedule "B" which became effective in January. The UI trust fund balance on December 31 of each year determines the UI tax schedule that will be effective for the following year. The tax schedule is set out in KRS 341.270. The trust fund balance at the end of 2003 fell below $350 million which triggered schedule "B" for 2004. The current balance in the trust fund is $347.9 million.  The statute requires that when there is a tax increase for employers there is also a freeze imposed on the benefit level. Consequently the 2004 maximum weekly UI benefit level for a claimant was frozen at $365. Ms Givens said that in 1998 and in that legislation was enacted that give employers a tax reduction and increased benefits for claimants. Ms. Givens noted that the 1998 General Assembly also created the Service Capacity Upgrade Fund (SCUF) which allowed development of Kentucky's Electronic Workplace for Employment Services (KEWES).  KEWES allows a claimant to file a claim by remote via the internet or at the call centers throughout Kentucky. KEWES handled almost 14,000 of the 16,648 claims that were filed in May 2004. Ms. Givens informed the members that all 5 phases of KEWES are fully operational.


Responding to a question from Rep. Mobley, Ms. Rose said that based on the past 12 months, the division has seen a decline in the number of UI claims, however it's too early to say that Kentucky's trust fund is recovering. Ms Givens added that triggering into a higher tax schedule has caused a higher contribution to the UI trust fund, but reminded the members that the current trust fund balance includes $102 million from the federal Reed Act distribution. She said another infusion of Reed Act distribution dollars would make a positive difference in the trust fund balance.  Ms. Givens stated that even though Kentucky is seeing a downward trend in factors that negatively impact the trust fund, any change in these trends, however, could cause Kentucky to face a trust fund crisis because the trust fund is still experiencing a downward trend.  Ms. Rose added that the $18 million increase in the UI trust fund for the first quarter in 2004 can partially be attributed to the increase in higher taxes on employers, and an increase in payroll dollars due to more employees working. Co-Chair Stine added that as Kentucky improves its economic picture with more employers and employees in the state, then Kentucky will be able to work toward lower unemployment insurance taxes for employers.


The next item on the agenda was the introduction of Commissioner Phillip Anderson and Tracey Thruman, Deputy Commissioner, Department of Labor. Commissioner Anderson presented a brief overview of his background and addressed areas that will be the focus of the Department of Labor. Those areas included improving workplace safety, improving and increasing company volunteer partnership programs, and strengthening Kentucky's apprenticeship program. Commissioner Anderson said he would like to look for areas of opportunity where apprenticeship can be advanced in other industries, besides manufacturing and construction, that can be enhanced in Kentucky.  Commissioner Anderson said he would like the department to reach out to more workers and businesses and be more helpful in reaching out with a helpful hand to correct problems rather than punish them.  The final area Commissioner Anderson wants to develop is an outreach program for Hispanic and other non-English speaking workers so these groups will know their rights, educational opportunities that are available, and that they also understand workplace safety issues. Co-Chair Gray said he is pleased that the commissioner is eager to address the language barrier, and extremely pleased that the commissioner is interested in building stronger apprenticeship programs to help fill the void for individuals coming right out of high school. Senator Roeding urged Commissioner Anderson to look into the vocational technology schools, and to see that their equipment is updated so we can encourage individuals to look into this avenue of education as well. Representative Hoffman asked about the commissioner's plan to encourage workplace ergonomics.  Commissioner Anderson said the department is offering training to businesses and industries that want to be trained to set up an ergonomically safe workplace. Co-Chair Gray noted that Ford Motor plant, UPS and Toyota have made many changes to improve workplace safety issues.  Representative Jenkins noted that studies indicate a continuing pay gap between men and women workers, and asked if there are steps the department can take to further close that gap and whether the legislature can assist the department in those steps. Commissioner Anderson said he would have no problem looking into the issue and working with the legislature to make that happen.


There being no further business, the meeting was adjourned.