The amount of time Missourians can receive unemployment benefits would be tied to the state's jobless rate under legislation endorsed by the state Senate on Wednesday.
Under current law, Missouri workers can receive state unemployment checks for 20 weeks after losing their jobs. Supporters said reduction in the duration of unemployment benefits could help the state pay back money it borrowed from the federal government for unemployment claims and prevent similar situations in the future.
Missouri's unemployment trust fund became insolvent in 2009, causing the state to borrow more than $1 billion from the federal government since then to continue paying for benefits.
"This is a mechanism that remains in there should we ever hit this problem again," said sponsoring Sen. Mike Kehoe, R-Jefferson City.
The state still owes about $320 million in debt to the federal government. Some Senate Democrats said they were concerned about the measure, because it would reduce benefits and could make it harder for unemployed Missourians to care for their families.
"We may see more circumstances where people's unemployment benefits run out," said Sen. Scott Sifton, D-St. Louis.
Under the Senate bill, a worker could receive unemployment benefits for a maximum of 20 weeks and a minimum of 13 weeks. The full 20-week benefit would only occur if the state unemployment rate is higher than 9 percent, which only happened for two years during the last decade.
If the state's rate is less than 6 percent, then Missouri workers would qualify for the minimum 13-week benefit. For every half-percentage point increase in the jobless rate another week of unemployment insurance would be added to a worker's benefit.
Missouri's current unemployment rate is 6.4 percent, which would carry a 14-week benefit if workers began collecting their benefit this month.
George Wentworth, a senior staff attorney at the National Employment Law Project, said typical jobless benefits last for 26 weeks, but that some states are cutting back. He said nine states currently offer less than that amount, including Missouri, which went down to a 20-week maximum in 2011.
"Most of it has been in response to state unemployment trust funds being stressed by the recession and, in many instances, because they were kind of underfinanced going into the recession," he said.
Wentworth added that some states have chosen to cut benefits rather than force employers to pay higher taxes to pay off the debt. Businesses currently pay a monthly $63 fee for every employee. That number would increase to $83 in 2015 if Missouri still owes the federal government, but state officials expect to avoid that hike by paying off the rest of the debt in November.
The Senate legislation also gives the state unemployment trust fund the authority to issue bonds to help pay off more than $300 million in debt, and it raises the cap on how much money can be in the fund at one time.
The Missouri Chamber of Commerce praised the legislation's passage as a means to pay off the state's debt.
"We owe it to our employers to establish systemic reforms that will better protect the fund so that we don't have this problem arise the next time the economy dips," chamber President and CEO Dan Mehan said in a written statement.
The state's current labor force is about 3 million people and about 60,000 of those currently receive unemployment benefits. The bill needs one more affirmative vote before moving to the House.