One of the surprising changes to the budget bill was the Joint Finance Committee (JFC) amendment that makes newly unemployed workers ineligible for jobless benefits for the first week of their unemployment. It is expected to reduce benefits paid to unemployment insurance (UI) claimants by between $41 million and $56 million per year, aftr it takes effect in January 2012.

Proponents of the change argue that most states have a waiting period, and they contend the savings are needed to help reduce the deficit of about $1.3 billion in the state’s UI Trust Fund. Opponents of the waiting period argue that it hurts the newly unemployed and removes a disincentive for employers to engage in short-term layoffs, and that any UI policy changes should be reviewed and approved by the UI Advisory Council.

It appeared briefly that the waiting period might be one of the first budget measures to be repealed. As the Wisconsin Budget Project explained in a recent blog post, the state Senate voted on July 19 to add to Senate Bill 147 an amendment repealing the one-week wait. SB 147 makes a minor change needed to qualify Wisconsin for about $88 million for a federally-funded 13-week extension of UI benefits for the long-term unemployed. The amended bill was approved in the Senate by a vote of 30-3, but later in the week when the Assembly took up the bill, a Republican amendment adding back the waiting period was approved on a party-line vote.

The resulting impasse will be resolved when the Senate takes up the bill again on August 1, and Senate Majority Leader Scott Fitzgerald said yesterday that the Senate would concur with the Assembly amendment restoring the waiting period. The Joint Finance Committee’s UI amendment to the budget bill also included a provision denying UI eligibility for people who lose their employment as a result of refusing a drug test or if a job offer is withdrawn or not extended due to a drug test failure. It is estimated to reduce UI benefit payments by $367,000 per year. That change is not part of the SB 147 amendment.

The addition of the two UI changes into the budget bill was surprising for several reasons. At the top of that list is that the unwritten rule in Wisconsin has been that any changes relating to UI benefits or financing have had to be approved by the Advisory Council before they get voted on by the legislature. The Council is evenly divided between members representing organized labor and those representing management, and any legislation that it develops has to be negotiated and agreed upon by both sides. That policymaking process is by no means perfect, but it has generally served Wisconsin well – insulating the UI Trust Fund and benefits from partisan politics and short-term political expediency.

The Governor raised the waiting period issue in mid-May when he recommended to the Advisory Council that it should endorse that policy change and also the federally funded 13-week extension of jobless benefits. The JFC amendment to the budget was surprising because the committee adopted only the waiting period and drug test changes; it didn’t even vote on the extended benefits. Another disappointing aspect of the JFC’s changes is that they were made late in the budget process, without any meaningful opportunity for public input.

The UI Advisory Council held a meeting on June 23 and voted unanimously to recommend approval of the extended benefits and a veto of the waiting period. Although the labor and management members of the Council disagree on the substantive merits of the waiting period, both sides agreed that including it in the budget was the wrong way to handle the issue. The Council’s letter to the Governor states that, “Unilaterally adopting changes that benefit only one side will potentially destroy the successful policy making model.” Despite the Council’s unanimous recommendation, the governor did not veto the waiting period.

When the Senate takes up SB 147 again on August 1, it will be interesting to see if opponents of the waiting period have an opportunity to non-concur in the Assembly amendment, or whether the only way that GOP Senate leaders will allow the extended benefits to move forward is if Democrats agree that they will simply concur in the bill as amended. In either case, it appears from Senator Fitzgerald’s July 25th press release that the waiting period will be restored.

In the coming months we will find out if the decision to bypass the UI Advisory Council has done serious damage to the role of that body in developing consensus legislation. And we may learn whether the key lawmakers who supported bypassing the Council this spring would like to reduce its role going forward, by having the legislature take the lead on developing a plan for closing the $1.3 billion deficit in the UI Trust Fund.

Jon Peacock

Tomorrow—Way #27: Wisconsin Students Who Are Undocumented Immigrants Must Now Pay Three Times the UW Tuition of Their High School Peers

About the series: “31 Ways in 31 Days” is a series of posts to the WCCF blog exploring the recently-passed biennial budget’s impact on children and families in Wisconsin. Each day in July, we are posting a description of one way the budget will affect kids and families, with an eye toward what should be done going forward to help improve outcomes and move us closer to the goal of making Wisconsin a place where every child has the opportunity to grow up, learn, and thrive in a safe, healthy, economically secure home and community.