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Phase in change in Ohio benefits

While presidents and Congresses for many years have refused to deal with entitlement reform, states have no choice. Deficit spending is off-limits for them, so they must find ways to curb growth in government spending.

Ohio may be about to become a leader in that regard.

Buckeye State taxpayers still are paying for a period of several years in which Ohio’s unemployment compensation fund was paying out far more than it took in through premiums companies paid for their workers. In 2010, the state was forced to borrow $2.6 billion from the federal government to keep the fund afloat.

A bill in the state House of Representatives would ease unemployment compensation spending a bit, giving both employers and the state a break.

It would cut or eliminate entirely unemployment compensation benefits for Ohioans who collect Social Security benefits. An offset system would be used, reducing unemployment checks $1 for each $1 in Social Security payments.

As proponents of such changes have pointed out, unemployment compensation was intended to help working-age people – not those who reach retirement age and can collect Social Security.

If legislators proceed with the change, Ohio would become the only state in the union deducting the full amount of Social Security benefits from unemployment compensation. Minnesota has a similar initiative, but it withholds unemployment checks only up to 50 percent of Social Security benefits.

Clearly, states need to make such changes to get their own fiscal houses in order, even if Washington will not.

But the change envisioned in Columbus could have severe effects on many older Ohioans. Overnight, some could lose $1,000 or more in monthly income.

Many of those who collect Social Security while remaining in the workforce do so to make ends meet or to become more secure when they decide on full retirement. Making the change effective immediately could be seriously harmful to them.

For that reason, state officials should consider phasing in the change, over a period of a few years. Perhaps a 25 percent offset the first year, moving to 50 percent in year two, 75 percent in year four and 100 percent after that could be considered.

Lawmakers may well decide they have no choice but to make the change, in the interest of fiscal responsibility. But in doing so, they should blunt the impact on older Ohioans.

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