FORT WAYNE – State officials on Wednesday called off a plan to temporarily suspend the payment of federal unemployment compensation to at least 30,000 Hoosiers.
The Indiana Department of Workforce Development had announced on its website that beginning Saturday it would halt extended jobless benefits, which average $298 a week, because of federal spending cuts known as sequestration, which begin taking effect Friday.
An agency spokesman confirmed the plan Wednesday. But Wednesday night, after media reports, Workforce Development Commissioner Scott Sanders issued a statement saying that, after receiving guidance from the U.S. Department of Labor, the agency will proceed with full payment of extended unemployment compensation until further notice.
Sanders said a Labor official had informed him that sequestration will not alter next weeks federal unemployment benefits and that additional guidance will be forthcoming.
State unemployment insurance benefits, which can last 26 weeks, would not have been affected by Workforce Developments original decision. In Indiana, federal extended jobless benefits are paid in weeks 27 through 63 of a persons unemployment.
Earlier Wednesday, when the plan to suspend federal benefits remained in effect, agency spokesman Joe Frank said: We thought it was the best course of action to give people certainty in advance. We can turn it around quickly as soon as the federal government gives us more guidance.
A Labor Department spokesman referred questions to Workforce Development but said the federal department had asked the Indiana agency to remove from its website the announcement that benefits were being suspended.
First posted late Saturday, the announcement remained on the website until it was replaced by Sanders statement Wednesday night.
Maurice Emsellem, policy co-director for the National Employment Law Project, said suspending unemployment insurance benefits would have been both cruel and illegal. NELP advocates for a strong unemployment insurance program,
By suspending the check, they are delaying payment of benefits, which is in direct violation of the federal law, Emsellem said.
The Labor Department spokesman declined to comment on the legality of suspending benefits.
Under sequestration, the federal government would be reducing unemployment compensation grants to states by almost 11 percent.
Most states are likewise trimming federal benefit amounts, Emsellem said, and Indiana was the only state to announce it would suspend benefits.
Workforce Developments Frank said the state was trying to avoid overpaying Hoosiers and then having to recoup the money.
This is also a Congressional issue. If there is a deal that includes ending federal benefits, well have to ask for the ENTIRE amount back, Frank said in an email.
Sequestration rules for unemployment compensation say that a state may reduce the (extended benefit) amount by a percentage that does not exceed the percentage by which the federal share of EB has been reduced, according to the Congressional Research Service.
Emsellem said Indianas original plan to stop extended benefits is as unfair as you can get to an unemployed family, to withhold their only limited source of income when there are other options available, including reducing the check, like most states are doing incrementally.
Federal unemployment benefits are paid to about 30,000 Hoosiers, according to Workforce Development, although Emsellem put the number at roughly 40,000 for December.