| | The Illinois Department of Employment Security has reviewed House Bill 5861 and has determined that the legislation, as it affects recoupment of unemployment insurance benefits payable under Illinois state law, could have a fiscal impact. The Agency has asked the Unites States Department of Labor (USDOL) for a standard conformity review with federal regulations, which is pending. Non-conformity with federal regulations could result in a loss of Federal Unemployment Tax Credits for Illinois employers, in essence increasing employer taxes, potentially by 900%. 42 U.S.C. §3303-3304. A determination of non-conformity could also result in the loss of federal grant funding for the administration of the unemployment insurance programs in Illinois. 42 U.S.C. §502. Additionally, it is unclear what, if any, actions the federal government may take regarding unemployment insurance programs, and whether there would be restrictions included in any such actions which would discourage states from taking an action that could worsen the health of the unemployment trust fund.
The legislation may also have a fiscal impact on the Illinois Unemployment Insurance Trust Fund. The reported data indicates that for the programs payable under Illinois state law: (1) Fiscal Year 2019, non-fraudulent; recoupments totaled approximately $14,303,046.00; (2) Fiscal Year 2020, non-fraudulent recoupments totaled approximately $16,552,059.00; and (3) First Quarter Fiscal Year 2021, non-fraudulent recoupments totaled approximately $5,527,893.00. Based on the above date, it appears the legislation could forgive $3.3 million to $5.5 million for each quarter the waiver provision remained in effect. While the system is generally designed to replenish the state's Unemployment Trust Fund account by charging employers for benefits paid from the account, employers would not be directly charged for the forgiven overpayments as the bill is currently written. |