South Dakota House Bill HB1011

South Dakota 2023 Regular Session

• Introduced: 1/10/23
• Refer: 1/11/23
• Report Pass: 1/13/23
• Engrossed: 1/18/23
• Refer: 1/19/23
• Report Pass: 1/24/23
• Enrolled: 1/25/23
• Passed: 2/3/23

Caption

Revise employer contribution rates.

Impact

The implementation of HB 1011 is expected to enhance the financial stability of the unemployment compensation fund by ensuring that contribution rates are adjusted based on actual fund performance. Employers will face varying contribution rates determined by a defined schedule based on their reserve ratios, which may lead to fluctuations in their financial obligations toward unemployment insurance. This structured approach is intended to motivate employers to maintain a healthy balance in their experience-rating accounts, potentially reducing dependency on unemployment benefits during economic downturns.

Summary

House Bill 1011 aims to revise employer contribution rates to the unemployment compensation fund in South Dakota. The bill updates the methodology for calculating these rates by incorporating a new average high cost multiplier ratio framework. As of January 1, 2024, contribution rates will reflect changes based on the balance within the unemployment fund and the employers' experience rating accounts over previous years. This shift seeks to ensure a more responsive contribution system that aligns with the changing economic conditions and funding needs.

Sentiment

The sentiment around HB 1011 appears to be generally positive among business organizations, suggesting that the bill provides a fair framework for employers, allowing for more predictable financial planning. However, concerns have been raised about the potential for increased costs to small businesses, which may face greater challenges in maintaining positive balance ratios. While large employers may benefit from reduced contribution rates during favorable economic conditions, this adjustment in rates may present a burden on smaller operations.

Contention

Notable points of contention in the discussions surrounding HB 1011 revolve around the equity of the new contribution structure and the implications it may have for businesses of varying sizes. Critics argue that the approach could disproportionately affect small businesses incapable of maintaining high reserve ratios, potentially leading to higher contributions in times of low fund balances. Proponents defend the model by emphasizing its adaptability to economic changes, which could enhance the fund's sustainability and benefit all stakeholders in the long run.