Cut in Tennessee dependent allowances delayed

Cut in Tennessee dependent allowances delayed

July 3rd, 2013 by Associated Press in Business Around the Region

NASHVILLE - Tennesseans facing a cut in their unemployment benefits are getting a reprieve - thanks to the federal government.

The elimination of dependent allowances of up to $50 a week was supposed to take effect July 1 with the enactment of the state law.

Jeff Hentschel, a spokesman for the state Department of Labor and Workforce Development, said the cuts did not take effect because federal officials warned the action could cause a loss of federal funding for other benefits. He said federal officials initially told the state the benefits could be eliminated, but reversed that decision last week.

"The federal government has now advised the Tennessee Department of Labor and Workforce Development to delay removing the dependent allowance until the end of the year or the federal government will not reimburse the state for benefits paid from the Federal Emergency Unemployment Compensation program," Hentschel wrote in an email to The Associated Press on Tuesday.

Even though the benefits cut was written into the bill enacted by the Legislature, Hentschel said the state is not violating the law by not complying because a provision of the measures states, "This act shall not apply to the extent that compliance with such provision would violate federal law or cause a loss of federal funding."

For now, he said the benefits will continue until the department has had a chance to clarify the U.S. Department of Labor's "guidance and collect data on the fiscal impacts."

"We will notify the public once a decision has been made on the matter," Hentschel said.

The measure's main sponsor, Sen. Jack Johnson, said his office is talking with state officials to get more details on the reason for the delay.

"Obviously as the sponsor of the bill, I want to get an answer to where the breakdown was," the Franklin Republican said.

Under the program, those collecting unemployment can receive an additional $15 per child up to a $50 maximum each week.

According to the department's projections, ending the allowance in the budget year that began July 1 would save the state $40 million per year.

Lawmakers created the child allowance in 2009 in order to qualify for a nearly $142 million federal stimulus grant. Now that that money had been spent, the Republican-controlled Legislature earlier this year passed a bill to end the program. It was approved 66-23 in the House and 24-5 in the Senate.

North Carolina on Sunday became the first state in the nation to disqualify itself from collecting extended unemployment benefits to help repay a debt to the federal government faster. About 70,000 people lost their benefits, with another 100,000 to be cut off in the coming months, according to the U.S. Labor Department.