Nonprofit organizations who become direct reimbursers by opting out of their state tax-rated unemployment system and joining UST save 25% on their taxes in the first two years of participation. Historically, member agencies continue to save thousands over the long term. Find out how much you could save today. Request a Savings Evaluation.

Generally, if your organization is a 501(c)(3) with 10 or more employees with a favorable claims history, it will qualify for participation. However, to continue to offer low rates to members, UST’s underwriters accept only organizations with reasonable claims experience. Our number one goal is to make sure this is a program that works for your agency.

UST stands for Unemployment Services Trust. It is a grantor trust created by and for nonprofit organizations. It is the largest of any national nonprofit unemployment trust and was solely created to help 501(c)(3) organizations take advantage of Federal Legislation that allows them to opt out of their state tax-rated unemployment system.

Many organizations that are direct reimbursers join UST to help monitor their claims activity and manage cash flow. Through the expert claims monitoring, UST helps all organizations save money on their claims. In addition to claims savings, your organization also shares in proportion to UST’s investment results through the establishment of their account.

UST engages TALX Employer Services to monitor and process all members’ claim activity. Their vigilant claims expertise saved member organizations over $35 million annually.

In addition, TALX provides annual free training seminars, telephone consultations, ongoing reports of claims activity and online educational tools, which help you prevent and manage your risk.

Further, UST invests funds on behalf of its membership and through participation, your organization shares in proportion to UST’s investment results. Since 1986, UST has returned excess investment return to members in the form of refunds. Refunds total more than $33 million since 1986!

UST provides nonprofits with a safe, cost-effective alternative to paying state unemployment taxes. Organizations opt out of their state tax-rated unemployment system, and create a account through UST. UST then reimburses your state based on your organization’s actual claims experience. Funds from your account are used for reimbursement. UST also monitors and processes all claims on your organization’s behalf which helps manage claim activity and cash flow.

UST members have many advantages. The top 3 include:

• Tax savings of 25% or more by becoming a direct reimbursing employer.
• Claim savings from efficient monitoring, disputing and auditing of your claims. Total claims savings are over $35 million annually.
• Cash flow management by spreading your liability over a full year, rather than paying dollar-for-dollar on your own.

Top 10 list of advantages for joining UST.

The guaranteed rate is provided to new member organizations during the first two years of participation, when they qualify. If you are coming out of the state system UST can typically offer you a rate that is 25% lower than your current state rate for your first two years of participation. If you are currently a direct reimburser we will offer you a rate based on your agency size and past 3 years of claims repayment to the state.

Simply complete a Savings Evaluation online, or download (bottom right corner link) and fax it to UST at 1-805-566-4921 or send it to: UST, PO Box 22657, Santa Barbara, CA 93121.
If you have any questions, please call us at 1-888-249-4788.

In 1972, the Federal Government enacted legislation that required nonprofits to provide unemployment benefits on the same basis as for-profit entities. However, the legislation included a provision that allows a 501(c)(3) corporation to opt out of its state unemployment system to become a direct reimburser (DR). This means that instead of paying a tax to the state, the agency directly reimburses the state dollar-for-dollar for the unemployment claims paid out to their former employees. This allows the nonprofit to avoid subsidizing employers whose maximum tax rate is insufficient to fully cover their claims – an inherent aspect of the tax system. A disadvantage of becoming a direct reimburser is that a nonprofit may experience greater fluctuations in the costs they must cover. For example, an agency might lose funding for a major program and need to lay off employees. This would increase unemployment claims at the same time funding becomes tighter. Trust participation reduces both these risks since participants take advantage of the direct reimburser provision while paying an annual budgetable cost for unemployment benefits.

The Unemployment Services Trust is a grantor trust with a membership of more than 2,100 nonprofit organizations. It began in 1983 and at that time consisted of 58 United Way agencies in Southern California. UST was started as an alternative to the state unemployment system, as well as an alternative for nonprofits who were already directly reimbursing the state. By participating in the Trust, nonprofits pay a quarterly deposit into their own account balance. Participants save 25% in the first two years and generally save thousands long term over what they were paying in taxes to the state.

Not likely. With UST, your organization’s rates are based on your actual claims experience. That means you’ll usually avoid the volatility that often occurs with excessive claims liability in your state. You’ll only pay surcharges if mandated by your state against all employers regardless of reimbursing status.

Your organization’s risks are very minimal. When your organization opts out of your state tax-rated system, you must agree to remain out for a period of time, usually two years. And if you were to withdraw from UST, you would be liable for any deficit balance in your account.

Established in 1983, UST has a solid history and is financially sound. Over the past 10 years, investment results have continued to contribute to offsetting member expenses.

UST has never had to assess its membership or borrow to meet claims obligations. Currently, UST has a secure asset base of more than $93 million.

UST’s assets are invested to preserve participants’ capital. We invest conservatively, with 70% invested in fixed income and 30% in stocks.

Unlike any state unemployment system, UST annually reviews and returns any excess funds from favorable claims and investment experience in the form of refunds. If your organization has a positive claims history and account balance, you organization may share in this special benefit after your third year of participation.

If your organization qualifies, you will have a choice of how you want to use your refund:

• Put it toward future deposits
• Receive a full refund for the amount
• Make a partial deposit and receive a partial refund.

UST is governed by Trustees elected by participating member organizations. Trustees serve staggered three-year terms and oversee the efficient operation of UST.

Executive Director Donna Groh is responsible for the effective management of UST. She manages relationships between UST and its service providers to ensure that they are meeting both contractual obligations and Trustee requirements.

In addition, UST is supported by Strategic Partners who provide expertise and guidance on Trustee decisions.

Each Trustee has extensive experience in investment and major asset management, as well as responsibility for directing nonprofit organizations of significant stature.

UST contracts with several industry leaders for assistance with claims, administration, and financial resources. Because these are independently contracted organizations, UST can maintain the lowest administrative costs for its members. In addition, members can be assured that there is no overarching parent corporation for UST with interest in garnering a profit. UST is owned by its member organizations.

TALX provides claims monitoring services for UST members. TALX is an industry leader and the largest provider of employment and income verifications in the U.S., with over half the Fortune 500 relying on them for this service. TALX is also the largest provider of unemployment tax management services. Their expertise in unemployment claims handling and employment tax matters is unsurpassed in the industry, and they have a proven track record in delivering savings for clients.

If you have fewer than 10 FTEs (full time equivalent employees) we don’t encourage you to leave the state UI system. You’re better served by staying within the state system and accruing the funds you have built up over the years of participation.

Also, if you are an agency that consistently tracks at the higher end of your state’s UI rate we would not encourage you to leave the state system. By consistently paying at the higher state rates it may be that other employers are helping to subsidize your unemployment costs.

Probably. UST’s 2,000+ members are in 47 states and the District of Columbia. Call us at 1-888-249-4788 if you would like to know how other nonprofit organizations in your state are saving money through UST participation.

A group of volunteers known as Strategic Partners are an immediate resource for their expertise in financial, investment, marketing, communication and administrative issues. These partners offer guidance on UST’s strategic matters and are an integral resource during the decision-making process for many aspects of UST’s investments, marketing and administrative processes.

Call Cheryl Jones, UST Account Executive at 1-877-265-2200 or contact her via email at cjones@ChooseUST.org.

95%. Agencies move to UST as a long term solution for the reduction of UI costs. Once an agency leaves their state UI system they are most likely to remain a member of UST.

You can terminate your participation in UST at anytime. However, most states require that you remain a reimbursing employer for two years before you can return to the state UI system. At the time you leave UST you can release UST from further claims obligations and we will return 85% of your account balance at the time of termination. The balance, minus administrative costs, will be returned at the completion of the trust audit for the year in which termination occurred.

We base your rate on the same maximum taxable wage formula used by your state.

UST would still pay the charges. We factor in a rate to cover your claims and if necessary we would increase your annual rate to recover the deficit if it cannot be repaid at the current rate. The account you have with UST is an asset held in your name. If you have a large deficit with us we expect that you will repay it. Each agency in the trust is rated based on their own claims experience and we don’t expect the other members to cover the losses of other participants.