FOR IMMEDIATE RELEASE

April 28, 2008

STATEMENT OF GOVERNOR HALEY BARBOUR

“Recently, I received official notice from the U.S. Department of Labor that the failure of the Legislature to reauthorize the Mississippi Department of Employment Security (MDES) will severely hurt our state and many citizens. If this indefensible lack of action - caused by some in the House of Representatives pushing an issue which has nothing to do with operations of this vital department of state government – were to stand, unemployed Mississippians can not receive their benefits; businesses will see their unemployment insurance tax rates dramatically multiply; and the State will lose millions of dollars in federal grants.

MDES has an annual budget of $218 million, including approximately $28 million in federal unemployment insurance and Wagner Peyser grants that come through MDES to help our citizens. These funds cover such costs as processing claims, collecting unemployment insurance taxes from employers, and the resolution of appeals. These funds are used at the state’s WIN job centers to help people find jobs. More than 700 employees at MDES work to provide a variety of workforce employment and training services, including the administration of over $48 million in workforce investment dollars this year.

The Legislature’s failure to act hits hardest, first, at the very people least able to take the blow, that is unemployed Mississippians whose benefits would not be paid. Secondly, the state’s employers, most of them small businesses, would be faced with an eight-fold increase in the Federal Unemployment Tax Act rate from .8% to 6.2%. The usual FUTA credit of 5.4% for all Mississippi employers will be denied, resulting in a $409 million tax increase on Mississippi’s employers.

Obviously, this situation is completely unacceptable and must be corrected before June 30. It is absolutely essential that the Department of Employment Security be reauthorized so these important benefits to taxpayers and beneficiaries can continue.

I am including in this message the letter received from the Department of Labor and several questions-and-answers that will help further explain the urgency of situation. I will soon call the Legislature into a Special Session with the hope its members will right this wrong.

To view a copy of the notice from the U.S. Department of Labor, click here.

Frequently Asked Questions

The Mississippi Legislature’s failure to reauthorize the Mississippi Department of Employment Security will result in the U.S. Secretary of Labor not being able to issue the appropriate certifications, which will put Mississippi out of compliance with federal law.

Q. What is the result of a non-conformity finding on the part of the Secretary of the U.S. Department of Labor?

A. Conformity issues ultimately result in the loss of all federal funding for the administration of MDES’ major programs.

Q. What is the impact of Mississippi not having a law certified by the Secretary of Labor?

A. The FUTA tax rate for employers would rise from .8% to 6.2%. The usual FUTA credit of 5.4% for all Mississippi employers will be denied for 2008 and subsequent years.

Q. How much would that loss amount to for Mississippi employers?

A. Based on 2007 taxable wages, the resulting loss would be approximately $409,000,000.

Q. Would MDES be able to continue to collect the Workforce Enhancement Training Fund dollars?

A. No, and the $25 million currently available for workforce enhancement training through Mississippi’s community colleges would disappear.

Q. Could Mississippi continue to pay unemployment benefits?

A. No. Mississippi would not have access to administrative dollars for the purpose of paying these benefits.

Q. Would Mississippi be able to continue to access administrative funds to operate the employment security programs?

A. No. All administrative funding would be cut off.

Q. What about the funds the Mississippi Legislature appropriated to MDES?

A. The appropriation exists but there would be no federal funding to distribute to MDES and the state funding alone will not be enough for the department to perform its mission.

Q. What does the administrative funding include?

A. Unemployment insurance operations, labor exchange operations, labor market information, all overheard costs.

Q. Could the unemployment trust fund be used to pay administrative costs?

A. No.

Q. What would happen to MDES offices across the state?

A. All offices operated or financed by MDES would close.