Citing sequester, Indiana to stop unemployment benefits

Indiana is stopping 32,000 Hoosiers’ unemployment benefits at the end of this week, citing uncertainty over how the looming “sequester” could affect the federal government’s funding for the program.

The move by Gov. Mike Pence’s administration will pause the Indiana Department of Workforce Development’s payments, which range from $50 to $390 and average $275 per week, to those who have been out of work more than 26 weeks.

So far, Indiana is the only state so far to announce that it will stop payments outright, rather than planning to reduce them by about 9.4 percent – the amount that the U.S. Department of Labor has told states will be cut from unemployment benefits.

The state is doing so because it wants more direction on how to implement those cuts – and is worried that it might wind up having to recoup any overpayments made to benefit recipients in the meantime, said DWD spokeswoman Joe Frank.

He said Indiana officials are also worried as well that federal benefits extensions might be used by Congress as a bargaining chip in negotiating a deal to avert the sequester.

“The best course of action, everyone determined, was to hold off on giving everyone benefits because if we give people too much, then we’re required by the federal government to get that money back,” Frank said.

“The great part about this though is our system is such that folks apply online — we can turn it around really quick; we just need guidance.”

Indiana provides state unemployment benefits for the first 26 weeks that Hoosiers are out of work, but then federal funding kicks in to extend the program through 63 weeks.

A spokesman said the U.S. Department of Labor told Indiana officials Wednesday that more direction on how to implement cuts forced by the sequester is coming soon, and that the state should take down its notice that benefits will be stopped next week.

Frank said the Labor Department arranged a phone call with state officials for Friday – and that until then, the state will continue with its current plan.

“They haven’t given us any guidance yet, so we can’t make any changes,” he said. “We definitely hope that on Friday we’ll hear something concrete from them.”

The Pence administration’s move – which the governor did not mention Wednesday during a news conference in which he discussed how the sequester would affect Indiana – was quickly criticized by labor lawyers who said Indiana might run afoul of federal law.

“We’re not aware of any state that has decided to suspend the benefits, and in our view, doing so flatly contradicts basic federal requirements that states pay federal benefits on time,” said Maurice Emsellem, the policy co-director for the National Employment Law Project.

Frank said the state is “doing our best to hurt people in the least amount possible.” But Emsellem said Indiana’s decision is “paternalistic” and would impose a “cruel hardship” on those who have been out of work for months.

“This has been a struggle, to say the least,” said Sherri Summit, a 48-year-old who lives in Unionville, Ind. and has been out of work for nine months.

Summit is a single mother who has three children – one who’s an adult, but another who she’s helping foot college bills and a third who is 10 years old – and lost her previous job in May 2012, three weeks after starting with a new company.

She said the $368 she’s received each week in unemployment benefits have kept her afloat, although she’s two house payments behind.

“I don’t use any other government assistance – food stamps, anything like that. When I’ve gotten a little bit behind on things, my church has pitched in,” Summit said.

“It just gets really scary. I don’t have any health insurance; I have to pay for my medicine on my own. Where do you cut back when you’ve already cut back? Do you lose your home?”

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