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Workers called ‘sacrificial lambs’ for state’s jobless fund deficit

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If this was supposed to be a vacation, Renissa Pinner was not enjoying it much.

Pinner, a teacher assistant with a pre-school program on the Southwestside of Indianapolis, had been laid off in June. The layoff was a common occurrence during Pinner’s 12 years working for the not-for-profit Head Start provider Family Development Services. The company relies on federal funding that does not allow it to pay all of its employees during the summer months.

But the blow of the layoffs was always softened by Pinner receiving unemployment insurance benefits through the federal-state program that provides a safety net for workers who lose their job through no fault of their own. Pinner’s unemployment checks were a fraction of her usual salary, but they helped. “A couple hundred dollars a week is a lot better than nothing,” she said.

Then, in the summer of 2012, Pinner received a notice from the Indiana Department of Workforce Development. The state had ruled that she was on “unpaid vacation,” and terminated her unemployment benefits. Worse yet, the state agency demanded Pinner pay back the benefits she had received so far that year.

“That was my only source of income,” she says. “It really, really put me in a bad spot.” Pinner fell behind on her utility and car payments and fielded threatening calls from creditors. But Pinner’s church helped her out, and her landlord agreed to be patient on the rent until Pinner was able to be rehired.

Her co-workers were also cut off from unemployment benefits. One colleague, a pregnant mother of three, could not make a rent payment and was evicted from her apartment. Pinner let the family move in with her. The laid-off workers found prospective employers reluctant to hire someone who was hoping to resume their longtime job in just a few weeks. Some of the Family Development Services workers had their cars repossessed and struggled to meet basic needs. “You are talking about three months of groceries people are not able to buy,” says Pinner’s co-worker Lubie Gurnell. Gurnell, who has driven buses for Head Start students for 31 years, was able to avoid foreclosure on her home last summer only by dipping into savings she had set aside for retirement.

Gurnell says she is not sure how long she and her colleagues can endure an annual pattern of multiple months with zero income. “A lot of people left the job this year because of the unemployment issue, and you need qualified people to run these programs,” Gurnell said. “We are all going to be in trouble if this keeps happening.”

Unemployment insurance claims are paid from a federal trust that is funded by employers paying premiums in the form of payroll taxes. When an individual state’s employers’ fund contributions do not cover the amount of unemployment claims coming from that state’s workers, the state government borrows from the federal trust fund to pay the claims. In part due to the recession and resulting job losses, Indiana and many other states have been borrowing heavily from the federal trust fund for several years. As of late December, according to the U.S. Department of Labor, Indiana owes $1.8 billion to the U.S. to reimburse for unemployment insurance claims above its employers’ contributions.

The summer 2012 surprises for Pinner, Gurnell, and hundreds of other Indiana school bus drivers, teacher assistants, and school cafeteria workers were the culmination of events that began in the Indiana General Assembly in 2011. In March of that year, the General Assembly passed and Gov. Mitch Daniels signed a new law that slightly raised some employers’ contributions to the fund and reduced benefits to some laid-off Indiana workers. The new law included a provision that barred Indiana workers from receiving unemployment insurance benefits if they were not being paid because of their employers’ “regular vacation policy and practice.”

The Indiana Department of Workforce Development cites this law as the basis for cutting off Pinner, Gurnell and the others. The workers don’t see the connection. “You can’t call this a vacation when we are not getting paid for it,” says Gurnell. Most of the affected workers have appealed the rulings, which were upheld in late December by the state’s Review Board for unemployment insurance. Attorneys for the workers say they intend to appeal those decisions to the Indiana Court of Appeals.

The workers and their supporters say Indiana lawmakers have knowingly underfunded unemployment insurance for many years, and now are demanding laid-off workers pay the price. Historically, Indiana applied the lowest unemployment tax rate on employers allowed by law, along with setting the amount of employee wages subject to the tax at the lowest allowable level. Insufficient employer contributions were digging Indiana into a hole, and state and federal officials knew it.

Renissa Pinner and Lubie Gurnell are back at work now, but they are worried about what this summer will bring. They consider themselves fortunate to have weathered the unexpected loss of weekly checks last year, but they are not sure what they and their coworkers will do if the state’s decisions are upheld. “I wish they could realize how devastating this was for people, and how it caused a lot of hardship,” Pinner says. “This is people’s livelihood you are messing with.”

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