Generosity in America: Driven by Location, Gender, and Income

For the 59th month in a row, the Georgia Department of Labor has announced that the unemployment rate, at 9.3 percent, remains higher than the national average. Only 7 states, including Washington D.C., have a higher unemployment rate.

For nonprofits, this isn’t the worst of the news.

After falling below 9 percent in April for the first time in more than 3 years, the rate has begun a steady climb upward again, negatively affecting nonprofit employers throughout Georgia by simultaneously increasing cost and need. Compounded by the state’s depleted unemployment insurance trust fund and an outstanding loan balance of more than $742 million that is still owed to the federal government, nonprofits are facing a higher possibility increased unemployment taxes in 2013.

Because Georgia quickly depleted its unemployment insurance (UI) trust fund, the struggle to provide benefits has hurt employers and jobless workers as the state has made large cuts to benefits and steeply increased the overall unemployment costs paid by employers.

Further adding to the coming financial strain, the interest on the federal unemployment trust fund loan cannot be paid from the unemployment tax fund and must instead be paid from other state revenues, causing further financial stress for legislators.

To pay it, the Georgia legislature passed SB 347 earlier this year, which, in addition to cutting jobless benefits and increasing unemployment benefits paid out by employers, includes provisions to:

  • Assess employers an unemployment insurance tax on the first $9,500 of each employee’s wages, up from the current $8,500, beginning January 1, 2013.
  • Assess employers a solvency tax, called the Statewide Reserve Ratio surcharge, whenever the balance in the state’s unemployment fund falls below a specified level.
  • Reduce the number of weeks jobless workers can collect unemployment benefits from 26 to a period ranging from 14-20 weeks depending on how high the statewide unemployment rate is.

While this legislation makes Georgia one of 11 states that have cut jobless benefits in the past year by reducing the duration and level of payouts and by restricting eligibility, the legislation may ultimately harm nonprofits specifically as it forces unemployed workers to turn to nonprofits for aid, while also increasing the amount that agencies must set aside to pay for unemployment costs of their own.

For nonprofit organizations still in the state tax system, there are other options available though. Since 1972 nonprofit employers have had the exclusive ability to opt out of the state system and reimburse directly the dollar-for-dollar costs of only their own unemployment costs.

By safely leaving the state’s pooled liability system and paying only for their own unemployment costs, many nonprofits- particularly those with 10 or more employees- can save up to 50 percent off of their UI taxes and gain greater predictive control over yearly budgeting. In fact, Georgia nonprofits that leave the state system and join UST save an average of $14,321 a year.

Learn more about your nonprofits money saving alternatives, or sign up for an upcoming webinar to learn how UST can help your nonprofit reduce SUI costs.

Read the original Savannah Morning News article.

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09/09/12 10:23 PM

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