On May 13th the U.S. Department of Labor (DOL) released its UI Solvency Report, which reports on the relative solvency of each state UI trust fund in comparison to other states based on suggested standards.
An analysis by UWC- Strategic Services on Unemployment & Workers’ Compensation reveals that a number of states have state UI trust funds that are so insolvent they are unlikely to recover before the next recession. For employers in these states (listed below) it can be expected that state and/or FUTA tax rates will continue to rise with longer term restrictions being imposed on benefit increases alongside enhanced integrity efforts.
While some states have elected not to maintain a large trust fund balance and are relying on “just in time” supplemental funds to assure their solvency, many are using bonds to supplement UI taxes and remain strained.
States not meeting the 0.5 Average High Cost Multiple threshold as of December 31, 2013 include:
Alabama, Arkansas, Arizona, California, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Massachusetts, Missouri, North Carolina, New Jersey, Nevada, New York, Ohio, Pennsylvania, Rhode Island, South Carolina, Texas, Virgin Islands, Virginia, Wisconsin, West Virginia
States that do not meet the DOL recommended levels but have average High Cost Multiples of 0.5 or more include:
Colorado, DC, Hawaii, Maryland, Maine, Michigan, Minnesota, Puerto Rico, Vermont
States that have solvent UI trust fund balances according to the US DOL 1.0 Average High Cost Multiple formula include:
Alaska, Iowa, Idaho, Louisiana, Mississippi, Montana, North Dakota, Nebraska, New Hampshire, Oklahoma, Oregon, South Dakota, Utah, Washington, Wyoming
Read the full report here.