November 01, 2016
Use It or Lose it: Nonprofit Deadline to Exercise Exemption for 2017
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October 22, 2016
D.C. Behavioral Health Association Joins Forces with the Unemployment Services Trust (UST) to Help Nonprofits Save on Unemployment Costs
The Unemployment Services Trust (UST) is pleased to announce its new affinity partnership with the District of Columbia Behavioral Health Association. The D.C. Behavioral Health Association has chosen to pair up with UST to help their member organizations reduce unemployment costs and direct more funds toward mission advancement objectives.
The D.C. Behavioral Health Association joins 12 other state-based behavioral health associations, becoming the 81st Affinity Partner, in endorsing UST.
This new partnership will allow 501(c)(3) organizations with 10 or more employees in the D.C. community to better take advantage of the federal law that allows nonprofits to opt out of the state unemployment tax system. By paying only the dollar-for-dollar cost of unemployment benefits paid to former employees, nonprofit employers that join UST lower their average claims cost to just $2,287 per claim versus the national average of $5,174 per claim.
“Nonprofits are often faced with smaller budgets and limited resources,” said Donna Groh, Executive Director of UST. “But last year, UST helped members achieve over $32.5 million in unemployment claims savings. We are thrilled to have the D.C. Behavioral Health Association join us as our latest Affinity Partner and look forward to helping their members maintain HR best practices and lower their unemployment costs.”
About D.C. Behavioral Health Association: D.C. Behavioral Health Association aims to expand and improve community-based behavioral health services through policy advocacy and staff development. All 42 members offer extensive services to the D.C. housing supports for adults and children in foster care, including treatments for substance abuse and mental health. For more information, visit www.dcbehavioralhealth.org.
About UST: The Unemployment Services Trust is dedicated to educating 501(c)(3)s about controlling HR and unemployment costs and helping them exercise their federal right to reimburse for unemployment claims, dollar-for-dollar. UST helps nonprofits manage unemployment claims to successfully save thousands of dollars annually. Learn more at www.ChooseUST.org.
August 07, 2014
Spotlight on New Jersey: Reducing Improper Payments and Unemployment Benefit Collection Fraud
For the better part of the past decade, improper and fraudulent unemployment insurance collections have accounted for about 10 percent of all unemployment benefits paid to jobless workers across the U.S. During the most recent Recession, it became abundantly clear why states must cut down on SUI (state unemployment insurance) fraud.
Unfortunately, for many states, the realization came a little too late.
During the height of the Recession, almost 40 states borrowed a combined $50 billion from the Federal Unemployment Trust Administration (FUTA) to continue providing jobless benefits. This much debt required many states to make long-term changes to their unemployment systems by either charging penalties or fees to businesses or by cutting jobless benefits. Many made historic cuts to the number of weeks of aid available, but some—like New Jersey which racked up more than $1.5 billion in debt—took a long, hard look at the administration of their trust.
In New Jersey that long, hard look at the administration of their unemployment trust fund resulted in some spectacular results. Over the past four years New Jersey has identified more than 300,000 people who tried to wrongly collect benefits through identity theft, failure to report a new job, schemes, and honest mistakes. Also:
But what did New Jersey do that set them on the path to successfully rebuild their unemployment trust fund?
They updated their system.
Namely, they began using a strategy referred to as ‘identity proofing.’ With the help of LexisNexis, the state of New Jersey requires applicants to verify a wide range of personal information through a quiz on the state labor department’s website. The questions are specifically developed to be ones that the individual who owns an identity could accurately answer.
Then, using the billions of public records that LexisNexis collects, the answers—which range from what kind of car an applicant has, to who lives at their address—help weed out potential frauds.
Less than a year-and-a-half into the effort, more than $4.4 million in improper payments have already been stopped, and almost 650 instances of identity theft have been avoided.
Want to know how well your state is catching improper payments? The U.S. Department of Labor provides this state-by-state breakdown for 2013.
Read more about how New Jersey is fighting improper payments and unemployment fraud here.
Unfortunately, for many states, the realization came a little too late.
During the height of the Recession, almost 40 states borrowed a combined $50 billion from the Federal Unemployment Trust Administration (FUTA) to continue providing jobless benefits. This much debt required many states to make long-term changes to their unemployment systems by either charging penalties or fees to businesses or by cutting jobless benefits. Many made historic cuts to the number of weeks of aid available, but some—like New Jersey which racked up more than $1.5 billion in debt—took a long, hard look at the administration of their trust.
In New Jersey that long, hard look at the administration of their unemployment trust fund resulted in some spectacular results. Over the past four years New Jersey has identified more than 300,000 people who tried to wrongly collect benefits through identity theft, failure to report a new job, schemes, and honest mistakes. Also:
- The state has stopped borrowing from the federal government to cover its unemployment benefit costs
- Their trust fund is once again considered solvent
- They were able to extend a tax cut to New Jersey businesses because of the trust fund’s solvency
- Just $376 million in debt remains from the height of their borrowing
But what did New Jersey do that set them on the path to successfully rebuild their unemployment trust fund?
They updated their system.
Namely, they began using a strategy referred to as ‘identity proofing.’ With the help of LexisNexis, the state of New Jersey requires applicants to verify a wide range of personal information through a quiz on the state labor department’s website. The questions are specifically developed to be ones that the individual who owns an identity could accurately answer.
Then, using the billions of public records that LexisNexis collects, the answers—which range from what kind of car an applicant has, to who lives at their address—help weed out potential frauds.
Less than a year-and-a-half into the effort, more than $4.4 million in improper payments have already been stopped, and almost 650 instances of identity theft have been avoided.
Want to know how well your state is catching improper payments? The U.S. Department of Labor provides this state-by-state breakdown for 2013.
Read more about how New Jersey is fighting improper payments and unemployment fraud here.
August 04, 2014
4 Things Your Nonprofit Must Know About Unemployment Insurance
As an unemployment tax alternative for nonprofit organizations, UST fields a wide variety of questions about unemployment claims and unemployment tax options from members and non-members alike. Stemming from this, we have compiled a list of the top 4 things that every nonprofit must know about their unemployment insurance taxes to ensure that the organization is not wasting money.
What is the Unemployment Tax? And how does the unemployment insurance program work?
The Department of Labor (DOL) provides a short overview of the program on their website, and summarizes it by saying: "Unemployment Insurance is a federal-state program jointly financed through Federal and state employer payroll taxes. Generally, employers must pay both state and Federal unemployment taxes...However, some state laws differ from the Federal law and employers should contact their state workforce organizations to learn the exact requirements."
The program itself works to provide jobless workers who have lost their job through no fault of their own with temporary, partial wages while they search for a new position. For more information on how unemployment insurance works, read our more complete overview on the state program.
Is Your Nonprofit Liable?
501(c)(3) nonprofits are exempt from federal unemployment taxes, but may be liable for state contributions if they meet something called the “4 for 20″ provision. This provision is triggered when four or more individuals are employed on the same day for 20 weeks in a calendar year, though not necessarily for consecutive weeks. It is important to note that who is considered “employed” for these purposes is not always straightforward – see Independent Contractors below.
Why Independent Contractors May Still Be Considered Employees
There are different rules and tests used by government organizations to determine independent contractor status, because different organizations are responsible for separate aspects of law. For the purposes of unemployment insurance, the Department of Labor uses something called the “ABC test”, which makes it sound simple, but is more complicated when applied to real situations.
The ABC Test establishes criteria that an work relationship must meet in order to for the services of that individual to not be considered employment. The three parts of the ABC Test relate to employer control/direction of the worker, place(s) of business or courses of business, and proof that the worker is independently established in the trade. A nonprofit may have to pay unemployment taxes even if the IRS or their state revenue services determine that, for income tax purposes, individuals may be independent contractors.
Cost-Saving Alternatives
The Unemployment Services Trust (UST) provides an alternative to paying into the state unemployment tax system, and can be a cost-saving option for nonprofits with more than 10 employees. Through UST, organizations directly reimburse the state only for the claims of their former employees, rather than paying the state unemployment insurance tax which covers all employers throughout the states.
And, because keeping unemployment costs low is vital to so many organizations across the U.S., we've added state-by-state information for taxable wage bases from the Department of Labor so you can see where your organization falls on the tax scale.
We encourage nonprofits to be proactive in learning what their options are, and what types of unemployment tax alternatives best suit their needs. Complete a complimentary Savings Evaluation to see if your organization could save money on its unemployment costs.
This post does not constitute official or legal advice. A version of this article originally appeared on blog.nonprofitmaine.org by Molly O'Connell.
What is the Unemployment Tax? And how does the unemployment insurance program work?
The Department of Labor (DOL) provides a short overview of the program on their website, and summarizes it by saying: "Unemployment Insurance is a federal-state program jointly financed through Federal and state employer payroll taxes. Generally, employers must pay both state and Federal unemployment taxes...However, some state laws differ from the Federal law and employers should contact their state workforce organizations to learn the exact requirements."
The program itself works to provide jobless workers who have lost their job through no fault of their own with temporary, partial wages while they search for a new position. For more information on how unemployment insurance works, read our more complete overview on the state program.
Is Your Nonprofit Liable?
501(c)(3) nonprofits are exempt from federal unemployment taxes, but may be liable for state contributions if they meet something called the “4 for 20″ provision. This provision is triggered when four or more individuals are employed on the same day for 20 weeks in a calendar year, though not necessarily for consecutive weeks. It is important to note that who is considered “employed” for these purposes is not always straightforward – see Independent Contractors below.
Why Independent Contractors May Still Be Considered Employees
There are different rules and tests used by government organizations to determine independent contractor status, because different organizations are responsible for separate aspects of law. For the purposes of unemployment insurance, the Department of Labor uses something called the “ABC test”, which makes it sound simple, but is more complicated when applied to real situations.
The ABC Test establishes criteria that an work relationship must meet in order to for the services of that individual to not be considered employment. The three parts of the ABC Test relate to employer control/direction of the worker, place(s) of business or courses of business, and proof that the worker is independently established in the trade. A nonprofit may have to pay unemployment taxes even if the IRS or their state revenue services determine that, for income tax purposes, individuals may be independent contractors.
Cost-Saving Alternatives
The Unemployment Services Trust (UST) provides an alternative to paying into the state unemployment tax system, and can be a cost-saving option for nonprofits with more than 10 employees. Through UST, organizations directly reimburse the state only for the claims of their former employees, rather than paying the state unemployment insurance tax which covers all employers throughout the states.
And, because keeping unemployment costs low is vital to so many organizations across the U.S., we've added state-by-state information for taxable wage bases from the Department of Labor so you can see where your organization falls on the tax scale.
We encourage nonprofits to be proactive in learning what their options are, and what types of unemployment tax alternatives best suit their needs. Complete a complimentary Savings Evaluation to see if your organization could save money on its unemployment costs.
This post does not constitute official or legal advice. A version of this article originally appeared on blog.nonprofitmaine.org by Molly O'Connell.
July 08, 2014
Nonprofits Slated to Receive More than $8.7M in Cash Back this Year from UST
Over the next several weeks 521 current participants in the Unemployment Services Trust (UST) will receive a combined $8,762,873 in cash back.
Over the next several weeks 521 nonprofit members of the Unemployment Services Trust (UST) will receive a combined $8,762,873 in cash back. In total this brings participant savings over the past year to more than $43 million in claims savings, audited state returns, and cash back.“One of the most exciting times of the year at UST is when we get to tell members that they will be receiving money back,” said Donna Groh, Executive Director of UST. “For members that elect to take the cash back as a check this money often helps them expand important initiatives. And, learning the exact impact that each dollar we’re able to save, and return, to nonprofit employers helps motivate us to find even more ways to lower unemployment costs across the board for our members.”
The UST program, which helps nonprofits with 10 or more employees control unemployment-related HR costs, includes an annual review of its 2,000+ nonprofit accounts–using an advanced actuarial model. Unlike the state unemployment tax system or some private insurance where taxes and premiums cannot be refunded (even when benefits paid out are far below what the employer paid in), UST instead allows for cash back when an organization has a positive unemployment claim experience.
UST members whose claims were lower than anticipated, and that are well-funded for future claims, will receive a direct refund or credit to their nonprofit organization.
“Hearing the individual stories about what members plan to do with their cash back is extremely rewarding, and allows us to better emphasize the mission-driven impact of becoming part of the UST program,” seconded Adam Thorn, Director of Operations.
By aiming to ensure that a nonprofit is properly reserved for unemployment claims costs, but not holding excess funds beyond the necessary cushion for future claims, UST helps serve its mission of “Saving money for nonprofits in order to advance their missions.”
To learn more about the UST program for 501(c)(3) employers, visit www.ChooseUST.org or call (888) 249-4788 to speak with an Unemployment Cost Advisor.
About UST: Founded by nonprofits, for nonprofits, UST is the largest unemployment trust in the nation, providing nonprofit organizations with 10 or more employees a safe, cost-effective alternative to paying state unemployment taxes. UST has partnered with 80 state and national nonprofit-based associations to teach their members about their unemployment insurance alternatives. Visit www.ChooseUST.org to learn more.
June 18, 2014
UST and Alliance for Children and Families help Members Save Money on UI Costs
The Unemployment Services Trust (UST) is pleased to announce its newest affinity partnership with the Alliance for Children and Families (the Alliance). The Alliance, a national nonprofit organization, has chosen to join forces with UST in order to help its members reduce operating costs and direct more unrestricted funding toward realizing their missions.
This newest partnership will allow U.S. based organizations with a 501(c)(3) tax designation to more effectively take advantage of the federal law that allows nonprofits to opt out of the state unemployment tax system. By paying only the dollar-for-dollar cost of unemployment benefits paid to former employees, organizations that join UST lower their average claims cost to just $2,287 per claim versus the national average of $5,174 per claim.
“The ultimate goal of each and every nonprofit association that we work with is to provide their members with the best opportunities to advance their missions. By combining the power of hundreds, and sometimes even thousands, of smaller nonprofits, associations are able to get better money saving tools customized for their members,” said Donna Groh, Executive Director of UST.
“Last year we found more than $3.5 million in tax savings for nonprofits that came to us through our association partnerships. This year we want to double that and find at least $7 million in tax savings for our affinity partners’ member organizations.”
About the Alliance for Children and Families: The Alliance is a national organization dedicated to achieving a vision of a healthy society and strong communities for all children, adults, and families. The Alliance works for transformational change by representing and supporting its network of hundreds of nonprofit human serving organizations across North America as they translate knowledge into best practices that improve their communities. Working with and through its member network on leadership and advocacy, the Alliance strives to achieve high impact by reducing the number of people living in poverty; increasing the number of people with opportunities to live healthy lives; and increasing the number of people with access to educational and employment success. For more information, visit Alliance1.org. About UST: Founded by nonprofits, for nonprofits, UST is the largest unemployment trust in the nation, providing nonprofit organizations with 10 or more employees a safe, cost-effective alternative to paying state unemployment taxes. UST has partnered with 80 state and national nonprofit-based associations to teach their members about their unemployment insurance alternatives. Visit www.ChooseUST.org to learn more.
This newest partnership will allow U.S. based organizations with a 501(c)(3) tax designation to more effectively take advantage of the federal law that allows nonprofits to opt out of the state unemployment tax system. By paying only the dollar-for-dollar cost of unemployment benefits paid to former employees, organizations that join UST lower their average claims cost to just $2,287 per claim versus the national average of $5,174 per claim.
“The ultimate goal of each and every nonprofit association that we work with is to provide their members with the best opportunities to advance their missions. By combining the power of hundreds, and sometimes even thousands, of smaller nonprofits, associations are able to get better money saving tools customized for their members,” said Donna Groh, Executive Director of UST.
“Last year we found more than $3.5 million in tax savings for nonprofits that came to us through our association partnerships. This year we want to double that and find at least $7 million in tax savings for our affinity partners’ member organizations.”
About the Alliance for Children and Families: The Alliance is a national organization dedicated to achieving a vision of a healthy society and strong communities for all children, adults, and families. The Alliance works for transformational change by representing and supporting its network of hundreds of nonprofit human serving organizations across North America as they translate knowledge into best practices that improve their communities. Working with and through its member network on leadership and advocacy, the Alliance strives to achieve high impact by reducing the number of people living in poverty; increasing the number of people with opportunities to live healthy lives; and increasing the number of people with access to educational and employment success. For more information, visit Alliance1.org. About UST: Founded by nonprofits, for nonprofits, UST is the largest unemployment trust in the nation, providing nonprofit organizations with 10 or more employees a safe, cost-effective alternative to paying state unemployment taxes. UST has partnered with 80 state and national nonprofit-based associations to teach their members about their unemployment insurance alternatives. Visit www.ChooseUST.org to learn more.
June 05, 2014
96% of Members Would Recommend the UST Program to their Nonprofit Peers as a Valuable Cost-Saving Opportunity
In a recent member-wide survey, it was revealed that 96 percent of UST participants would recommend the Unemployment Services Trust to their peers as a cost and time saving opportunity.
The Unemployment Services Trust (UST) is proud to announce that 96 percent of current participants would recommend the program as a valuable cost-saving opportunity for nonprofits. UST credits the improvement over last year’s 93 percent recommendation rate to an intense focus on the overall member experience and greater attentiveness to members’ needs.
“From the very beginning, the UST program was designed to support nonprofits by reducing the time and cost associated with managing an unemployment claim,” said Donna Groh, Executive Director. “To have found that our members would overwhelmingly recommend our service to other nonprofits is extremely rewarding.”
“We’ve worked hard to improve our customer service model and increase the quality of interactions that our customer service team has with our current members over the past year,” said Adam Thorn, Director of Operations. “By incorporating best practices and higher customer service standards, we have been able to support more in-depth interactions with our members, whether that means providing more detailed responses to questions or better educating organizations about the benefits of reimbursing for unemployment claims versus paying taxes.”
“On the heels of this increase in customer service standards was the increase in direct savings that our members experienced last year as well,” said Groh in reference to mitigated unemployment claims costs and cash back to participants.
Last year, UST was able to help members mitigate $32,598,054 in unemployment claims through best-in-class claims management. The same claims management services allowed UST to return an additional $1.7 million of charges made in error by state unemployment offices, which were audited by UST and credited back to the individual organizations.
Select participants also received $11,041,738 in cash back after their reserve accounts were reviewed for positive claims experience.
May 27, 2014
Meet US(T) Mondays- Laurie
Having recently joined UST as an Account Manager, Laurie is thrilled about working with nonprofits and helping them save money.
Her drive and passion to spread awareness within the community makes her a great fit for the UST team. Laurie explains, “I am not doing any volunteer work currently, but when my father passed away from cancer 10 years ago, one of the ways I got through it was to get involved with the American Cancer Society’s Relay for Life fundraisers in Ventura.”
Outside of the office, Laurie and her husband are adjusting to life as newfound puppy parents. They’re rescue puppy, Watson, is a Dachshund/Corgi mix and makes a wonderful addition to their household.
When given the opportunity, Laurie can’t resist the tranquility of nature. “Camping is probably my favorite thing to do and my husband and I go at least twice a year – sometimes more,” she says. “My favorite camping trip was years ago with my sister and some friends and we went on a 50 mile (2 ½ day) river rafting trip on the Colorado River from Grand Junction, CO to Moab, UT…definitely one of the best trips I’ve ever been on!”
In addition to being a dog lover and camping enthusiast, Laurie likes to let loose with a little help from her buddy, Bruce. If her life was a TV show, Laurie would select Growin’ Up by Bruce Springsteen as a theme song that played every time she walked into a room. “This represents the music I grew up with and sometimes I don’t think I’m finished growing up.”
Are you a fan of Bruce Springsteen too? Tell Laurie about it @USTTrust with the hashtag #MeetUSTMondays!
Her drive and passion to spread awareness within the community makes her a great fit for the UST team. Laurie explains, “I am not doing any volunteer work currently, but when my father passed away from cancer 10 years ago, one of the ways I got through it was to get involved with the American Cancer Society’s Relay for Life fundraisers in Ventura.”
Outside of the office, Laurie and her husband are adjusting to life as newfound puppy parents. They’re rescue puppy, Watson, is a Dachshund/Corgi mix and makes a wonderful addition to their household.
When given the opportunity, Laurie can’t resist the tranquility of nature. “Camping is probably my favorite thing to do and my husband and I go at least twice a year – sometimes more,” she says. “My favorite camping trip was years ago with my sister and some friends and we went on a 50 mile (2 ½ day) river rafting trip on the Colorado River from Grand Junction, CO to Moab, UT…definitely one of the best trips I’ve ever been on!”
In addition to being a dog lover and camping enthusiast, Laurie likes to let loose with a little help from her buddy, Bruce. If her life was a TV show, Laurie would select Growin’ Up by Bruce Springsteen as a theme song that played every time she walked into a room. “This represents the music I grew up with and sometimes I don’t think I’m finished growing up.”
Are you a fan of Bruce Springsteen too? Tell Laurie about it @USTTrust with the hashtag #MeetUSTMondays!
May 21, 2014
How the State Unemployment Trust Fund Debt is Affecting Your Organization
With unemployment across the nation leveling out compared to recent years, you might be wondering, why would it matter for employers now?
Since the Great Recession took its initial toll on the state unemployment insurance (UI) funds, states across the U.S. have gone into considerable debt in order to provide benefits for millions of unemployed. Trying to combat unemployment costs while restoring their debt with the federal government, many states look towards alternative measures to repair their financial foundations.
In 2011, states accumulated a debt of over $47 billion owed to the federal government– the peak of the United States’ economic deficit. While the federal debt has since decreased, with 16 states still owing over $21 billion at the beginning of 2014, a lot of states took out private loans to avoid an automatic increase in their federal unemployment tax on employers.
With a low UI trust fund balance, many states have been forced to cut their unemployment benefits, rather than borrowing additional money from the government. Other alternative methods used to reach state solvency include:
While the states have steadily reduced the debts triggered by the Great Recession, the U.S. has a long way to go before they achieve full economic restoration. And employers will continue to see their overall cost of unemployment steadily rising, if their state is to both recover and prepare for the next downturn.
To see how your state unemployment insurance trust fund debt compares to other states, view Stateline’s chart here.
Learn more about how the U.S. is affected by the unemployment trust fund debt here.
Since the Great Recession took its initial toll on the state unemployment insurance (UI) funds, states across the U.S. have gone into considerable debt in order to provide benefits for millions of unemployed. Trying to combat unemployment costs while restoring their debt with the federal government, many states look towards alternative measures to repair their financial foundations.
In 2011, states accumulated a debt of over $47 billion owed to the federal government– the peak of the United States’ economic deficit. While the federal debt has since decreased, with 16 states still owing over $21 billion at the beginning of 2014, a lot of states took out private loans to avoid an automatic increase in their federal unemployment tax on employers.
With a low UI trust fund balance, many states have been forced to cut their unemployment benefits, rather than borrowing additional money from the government. Other alternative methods used to reach state solvency include:
- higher tax rates on employers,
- a short-term unemployment benefits system,
- and private bond market loans
While the states have steadily reduced the debts triggered by the Great Recession, the U.S. has a long way to go before they achieve full economic restoration. And employers will continue to see their overall cost of unemployment steadily rising, if their state is to both recover and prepare for the next downturn.
To see how your state unemployment insurance trust fund debt compares to other states, view Stateline’s chart here.
Learn more about how the U.S. is affected by the unemployment trust fund debt here.
May 16, 2014
U.S. DOL Releases UI Solvency Report
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
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
May 05, 2014
The Human Services Council of New York endorses the Unemployment Services Trust
The Human Services Council of New York has endorsed the Unemployment Services Trust (UST) to all of its members as a new member benefit. HSC, which is recognized as the voice of the human services community in New York, has chosen to partner with UST in alignment with their mission to “strengthen the not-for-profit human services sector’s ability to improve the lives of New Yorkers in need.”
The relationship between HSC and UST will allow many more 501(c)(3) organizations to learn how to lower the cost of unemployment at their organization by opting out of the state unemployment insurance tax system and implementing best practices. By paying only the dollar-for-dollar cost of unemployment benefits awarded to former employees, organizations that join UST lower their average claims cost to just $2,287 per claim versus the national average of $5,174 per claim.
“Not only will this new partnership result in potential savings for HSC members,” explained Judy Zangwill, Executive Director of Sunnyside Community Services, who sits on the Board of Directors at HSC and is also a UST Trustee, “but there are also additional benefits in terms of gaining access to the ThinkHR hotline and training, and getting 100% representation at all unemployment claim hearings when an organization joins UST.”
“As a Trust member I knew that UST helps nonprofit organizations from the time an employee initially files for unemployment benefits to the end of the claims experience. But as a UST Trustee I have even greater insight into the program and can see that it’s not only efficient for members, it’s also a well-run organization that provides increased value for its 80 Affinity Partners.”
About the Human Services Council: HSC strengthens the not-for-profit human services sector’s ability to improve the lives of New Yorkers in need through networking, advocacy, research, media education and by acting collectively to establish greater balance between organizations and government. As a membership association HSC has long been at the forefront of enacting positive changes to outdated, bureaucratic governmental systems that human services providers must navigate to help those in need. In service to their members, HSC seeks to reduce regulatory burdens while strengthening accountability—with the overall goal of producing better outcomes for clients. Their efforts enhance public recognition of the sector, improve its financial stability, and have a long-term positive impact on the well-being of New Yorkers in need. For more information, visit humanservicescouncil.org.
About UST: Founded by nonprofits, for nonprofits, UST is the largest unemployment trust in the nation, providing nonprofit organizations with 10 or more employees a safe, cost-effective alternative to paying state unemployment taxes. UST has partnered with 80 state and national nonprofit-based associations to teach their members about their unemployment insurance alternatives. Visit www.ChooseUST.org to learn more.
The relationship between HSC and UST will allow many more 501(c)(3) organizations to learn how to lower the cost of unemployment at their organization by opting out of the state unemployment insurance tax system and implementing best practices. By paying only the dollar-for-dollar cost of unemployment benefits awarded to former employees, organizations that join UST lower their average claims cost to just $2,287 per claim versus the national average of $5,174 per claim.
“Not only will this new partnership result in potential savings for HSC members,” explained Judy Zangwill, Executive Director of Sunnyside Community Services, who sits on the Board of Directors at HSC and is also a UST Trustee, “but there are also additional benefits in terms of gaining access to the ThinkHR hotline and training, and getting 100% representation at all unemployment claim hearings when an organization joins UST.”
“As a Trust member I knew that UST helps nonprofit organizations from the time an employee initially files for unemployment benefits to the end of the claims experience. But as a UST Trustee I have even greater insight into the program and can see that it’s not only efficient for members, it’s also a well-run organization that provides increased value for its 80 Affinity Partners.”
About the Human Services Council: HSC strengthens the not-for-profit human services sector’s ability to improve the lives of New Yorkers in need through networking, advocacy, research, media education and by acting collectively to establish greater balance between organizations and government. As a membership association HSC has long been at the forefront of enacting positive changes to outdated, bureaucratic governmental systems that human services providers must navigate to help those in need. In service to their members, HSC seeks to reduce regulatory burdens while strengthening accountability—with the overall goal of producing better outcomes for clients. Their efforts enhance public recognition of the sector, improve its financial stability, and have a long-term positive impact on the well-being of New Yorkers in need. For more information, visit humanservicescouncil.org.
About UST: Founded by nonprofits, for nonprofits, UST is the largest unemployment trust in the nation, providing nonprofit organizations with 10 or more employees a safe, cost-effective alternative to paying state unemployment taxes. UST has partnered with 80 state and national nonprofit-based associations to teach their members about their unemployment insurance alternatives. Visit www.ChooseUST.org to learn more.
April 21, 2014
UST Helps Members Make Their Unemployment Claims Experience More Eco-Friendly with E-Filings
Every day is Earth Day for nonprofit members of the Unemployment Services Trust (UST) who are reducing their paper trail. More than 91% of the organizations that participate in the UST program now handle the details and filing of their unemployment claims online. 68% of UST members are participating in the online unemployment claim dashboard that allows them to view claims detail related to their organization and process information requests from the state. And an additional 23% of UST members have elected secure email channels as their method of claims response, further eliminating paper waste and increasing the speed of communication.
Having managed more than 21,000 unemployment claims and pulled 12,800 claims reports online for nonprofits last year, UST calculated that 253,000 pieces of paper –equivalent to about 30.4 trees–were saved by UST’s 2,000 members.
“This green initiative is our small way of contributing toward reducing our carbon footprint, and also making life easier for our nonprofit members,” says Adam Thorn, UST’s Director of Operations.
Thorn explains, “Last year the federal government mandated that state penalties should be imposed if an employer does not respond in a timely manner to the state’s request for information on an unemployment claim. The response window is often a week or less, so being able to e-file claims information helps mitigate the risk of non-compliance and helps us be a more eco-friendly program. It’s a win-win.”
About UST: Founded by nonprofits, for nonprofits, UST is the largest unemployment trust in the nation, providing nonprofit organizations with 10 or more employees a safe, cost-effective alternative to paying state unemployment taxes. UST has partnered with 80 state and national nonprofit-based associations to teach their members about their unemployment insurance alternatives. Visit www.ChooseUST.org to learn more.
April 06, 2014
UST Found More than $3.5 Million in Savings for Nonprofits
Last year the Unemployment Services Trust (UST) identified $3,532,485.26 in unemployment tax savings opportunities for more than 200 nonprofits that requested a Savings Evaluation. Additionally, UST found $1.7 million in state errors that were credited back to current participants in the UST program after state charges were carefully audited by the claims administrator.
“When you file your own personal taxes with the IRS, you make sure you’ve identified every savings opportunity. At UST we help nonprofit organizations with 10 or more employees identify whether their 501(c)(3) is overpaying for its unemployment taxes,” explained Donna Groh, UST’s Executive Director.
Based on research conducted by the UST Division of Nonprofit Research last year, 1 in 4 nonprofits is unaware of the legislation that allows 501(c)(3)s to opt out of paying state unemployment taxes and instead directly reimburse the state for the dollar-for-dollar cost of benefits paid to their former employees. UST helps nonprofits determine if this alternative will save them money by analyzing their past few years of unemployment claims. Savings can be as much as 60 percent.
“This year our goal is to find more than $7 million in potential savings for nonprofits that ask us to compare UST to their state unemployment tax rate or current supported reimbursing program. Too many organizations are overpaying for their unemployment costs, and we hope to help change that by putting more unrestricted funding back into their budgets when they take advantage of the UST Program.”
For most organizations that join UST, the savings add up quickly. Steve Lepinski, Executive Director of the Washburn Center for Children in Minneapolis and a long-time UST Trustee, said, “The savings generated by UST are like a large foundation has provided millions of dollars to nonprofits across the country.”
His organization estimates that it has saved more than $100,000 on unemployment costs since joining the UST program.
About UST: Founded by nonprofits, for nonprofits, UST is the largest unemployment trust in the nation, providing nonprofit organizations with 10 or more employees a safe, cost-effective alternative to paying state unemployment taxes. UST has partnered with 80 state and national nonprofit-based associations to teach their members about their unemployment insurance alternatives.
February 06, 2014
Long-Term Unemployment Benefits Bill Falls Short
Falling just 2 votes short, the Democratic proposal to extend the federal unemployment benefits program has failed to advance.
On Thursday, February 6th, the Senate’s vote of 58 to 40 marked the end of unemployment insurance payouts for many of the long-term unemployed, including the 1.7 million Americans who had stopped receiving aid when the benefits program had originally expired this past December.
Had the proposal passed, the federal unemployment benefits program would have been extended by an additional three months, amounting to $6.4 billion. But, fearful of creating a disincentive for the long-term jobless, as well as perpetuating the federal financial deficit, the majority of Republicans voted against the bill.
While the proposal was officially dismissed, President Obama continues to search for new ways to promote equal opportunity for the long-term unemployed. In order to create an even playing field for such job candidates, many businesses have started implementing inclusive hiring practices and training programs—all in an effort to end discrimination against long-term unemployed individuals.
After promoting his hiring initiative, Obama has successfully gained the support of many big-wig companies, such as Ford Motor Co. and Apple. And although the extended benefits program has since expired, these new hiring practices can become a new symbol of hope for the long-term unemployed.
Read more about the Senate’s vote on the Democratic proposal here.
On Thursday, February 6th, the Senate’s vote of 58 to 40 marked the end of unemployment insurance payouts for many of the long-term unemployed, including the 1.7 million Americans who had stopped receiving aid when the benefits program had originally expired this past December.
Had the proposal passed, the federal unemployment benefits program would have been extended by an additional three months, amounting to $6.4 billion. But, fearful of creating a disincentive for the long-term jobless, as well as perpetuating the federal financial deficit, the majority of Republicans voted against the bill.
While the proposal was officially dismissed, President Obama continues to search for new ways to promote equal opportunity for the long-term unemployed. In order to create an even playing field for such job candidates, many businesses have started implementing inclusive hiring practices and training programs—all in an effort to end discrimination against long-term unemployed individuals.
After promoting his hiring initiative, Obama has successfully gained the support of many big-wig companies, such as Ford Motor Co. and Apple. And although the extended benefits program has since expired, these new hiring practices can become a new symbol of hope for the long-term unemployed.
Read more about the Senate’s vote on the Democratic proposal here.
January 12, 2014
Pictures, Pizza and Philanthrophy
More than thirty years ago, the Unemployment Services Trust was established with the core mission to help nonprofits save money and do more for their mission. As the years have passed and UST has grown to more than 2,000 member nonprofits nationwide, the scope of the organizations that we partner with has also expanded into a broad spectrum of charitable functions, including every major nonprofit sector.
For those of us who help run the day-to-day operations of the UST program, there is a special thrill in hearing how each of our members is able to make an impact in their community through after school programs, health and human services, meal delivery programs, arts, literacy advancement efforts, animal advocacy, and so much more! We wanted to reach into our local community and get help illustrating (literally) all of the types of nonprofits UST serves. So we asked the children that participate in our local Girls, Inc. and Boys & Girls Club programs to help us by entering a calendar contest. And within a month, we received more than 100 incredible drawings!
The only problem is there are only 12 months in a year! So after a difficult selection process, we presented each of the winners with awards, and threw all of the participants a pizza party. Said Tristan from the Boys & Girls Club of Carpinteria to the local newspaper, “I was really excited I won because I never thought I was that good at drawing.” His entry in the Museums category is the winning image for May.
For those of us who help run the day-to-day operations of the UST program, there is a special thrill in hearing how each of our members is able to make an impact in their community through after school programs, health and human services, meal delivery programs, arts, literacy advancement efforts, animal advocacy, and so much more! We wanted to reach into our local community and get help illustrating (literally) all of the types of nonprofits UST serves. So we asked the children that participate in our local Girls, Inc. and Boys & Girls Club programs to help us by entering a calendar contest. And within a month, we received more than 100 incredible drawings!
The only problem is there are only 12 months in a year! So after a difficult selection process, we presented each of the winners with awards, and threw all of the participants a pizza party. Said Tristan from the Boys & Girls Club of Carpinteria to the local newspaper, “I was really excited I won because I never thought I was that good at drawing.” His entry in the Museums category is the winning image for May.
January 08, 2014
Unemployment Services Trust Helps Nonprofits Access Expert HR Hotline and Resources
Unemployment Services Trust (UST) is pleased to announce the addition of ThinkHR Live to its roster of fully integrated services for UST members. This new member benefit is a value-added service that will help UST’s not-for-profit members obtain quick answers and expert second opinions on a wide range of human resource issues.
Founded by nonprofits, for nonprofits, UST is the largest unemployment trust in the nation, providing nonprofit organizations with 10 or more employees a safe, cost-effective alternative to paying state unemployment taxes. Since 501(c)(3) organizations are federally allowed to opt out of paying into the state unemployment tax pool and can instead reimburse the state only as they incur unemployment claims, UST member organizations can take advantage of this savings benefit while also being protected through their UST account reserve and expert claims management. And now through ThinkHR, they will also benefit from live HR advice when they need it.
ThinkHR Live now provides UST members with access to a live phone HR hotline with written follow-up on complex issues or researched matters, usually within 24 hours. All hotline representatives are certified professionals in human resources, and help employers to stay in compliance – an important part of any organization’s human resources practices.
In addition, ThinkHR offers downloadable HR templates with forms, documents, tools and checklists for every HR department; a job description builder and salary benchmarking tools; 200+ online employee training and compliance courses for both management and employees; and bi-weekly legislative and HR e-newsletters.
Over the first 8 weeks of membership, UST members will also receive a weekly email from ThinkHR with account tips and features to help them get the most out of their account.
Every year UST provides its members with new educational content and support. Often focusing on unemployment costs, unemployment claim management methods, HR-related procedures and case studies, UST’s informative materials and dedicated partner services like ThinkHR are designed to help nonprofits save money and build greater resiliency. Visit www.ChooseUST.org/ThinkHR to learn more.
Founded by nonprofits, for nonprofits, UST is the largest unemployment trust in the nation, providing nonprofit organizations with 10 or more employees a safe, cost-effective alternative to paying state unemployment taxes. Since 501(c)(3) organizations are federally allowed to opt out of paying into the state unemployment tax pool and can instead reimburse the state only as they incur unemployment claims, UST member organizations can take advantage of this savings benefit while also being protected through their UST account reserve and expert claims management. And now through ThinkHR, they will also benefit from live HR advice when they need it.
ThinkHR Live now provides UST members with access to a live phone HR hotline with written follow-up on complex issues or researched matters, usually within 24 hours. All hotline representatives are certified professionals in human resources, and help employers to stay in compliance – an important part of any organization’s human resources practices.
In addition, ThinkHR offers downloadable HR templates with forms, documents, tools and checklists for every HR department; a job description builder and salary benchmarking tools; 200+ online employee training and compliance courses for both management and employees; and bi-weekly legislative and HR e-newsletters.
Over the first 8 weeks of membership, UST members will also receive a weekly email from ThinkHR with account tips and features to help them get the most out of their account.
Every year UST provides its members with new educational content and support. Often focusing on unemployment costs, unemployment claim management methods, HR-related procedures and case studies, UST’s informative materials and dedicated partner services like ThinkHR are designed to help nonprofits save money and build greater resiliency. Visit www.ChooseUST.org/ThinkHR to learn more.
January 05, 2014
Case Study: Protection When You Most Need It
The South Central Behavioral Health Network (SCBHN) is made up of 39 mental health and substance abuse programs that are funded by the Connecticut Department of Mental Health and Addiction Services. Focusing on programs that benefit the homeless and addicted populations served by member agencies, SCBHN runs multiple programs that offer addiction counseling and support, job training, and grants for consumer-run projects.
It also operates a very successful program which allows homeless people to move into sober living houses and provides them with case managers.
Each year, the SCBHN houses more than 130 people, and their programs focus on helping people successfully stand on their own two feet. Believing that those who have already experienced the success of conquering addiction and homelessness provide the best examples to those still struggling, SCBHN provides those connections and helps make sure that peer counselors are always available.
A very unique program, SCBHN began as a membership organization for the substance abuse and mental health organizations in the area surrounding New Haven, CT. Now providing direct services to clients of their membership agencies, SCBHN faces a challenge because they have committed themselves to hiring peers to help those they serve. For them, this means that they have committed to hiring two part-time peers for each position, instead of one full-time entry level employee who had never experienced the hardships of homelessness, substance abuse, or mental health concerns. In the last few years, SCBHN has been “hurt around the edges” as donors for their homeless programs dropped out, which forced them to cut back on the number of people they can serve, even as the population grew.
Needing to save money and feeling that self-insuring is far too risky for the majority of nonprofits, SCBHN joined UST and was able to see an immediate decrease in their annual rates.
“What’s the downside of joining UST?” asked Executive Director Edward Mattison. “I certainly confess that I didn’t pay any attention to unemployment before it became important, but the Trust is less expensive than staying with the state and it’s far less risky than trying to self- insure.”
Mattison’s sentiment proved to be extremely true when SCBHN was forced to dismiss an employee who clients alleged was stealing money from them. After dismissal, the employee filed for unemployment benefits claiming she deserved them for her work at the agency, but SCBHN felt that she had harmed clients and should not receive benefits. “The claims staff has [always] been very helpful for us in prepping us for claims interviews and hearings,” said Mattison.
Solution
Working with their claim monitor and hearing representative to figure out how to best approach the situation, what documentation to provide for the hearing, and who should be interviewed, SCBHN was able to win the claim early on.
“I’m not a person who wants to deny people their rights, but the idea that someone who was allegedly stealing from clients should receive benefits made me very angry,” said Mattison.
Summary
Looking to save on operational expenses, SCBHN learned about UST and the benefits of joining a Trust. Being offered substantial savings which allowed them to put more money back into their homeless programs, SCBHN finds UST to be important to their mission because, in part, they are protected from high state rates and can get help in defending themselves against fraudulent or inappropriate unemployment claims.
In the case of the fraudulent claim, claims representatives were able to help SCBHN collect all the necessary information for the unemployment hearing they had requested. Organizing statements, testimony, and the evidence, their representative was able to help SCBHN successfully defend themselves against the claim and save their homeless clients from being offered fewer services. UST's claims administrator then went on to help SCBHN set up stronger documentation systems to prevent any future issues with employees who harm clients.
January 10, 2011
Nonprofits Should Examine Unemployment Tax Alternatives
Summary: According to a white paper released by the Unemployment Services Trust, employers face increased unemployment tax burdens over the next decade. However, federal law provides nonprofits with cost-saving alternatives.
While employers across the nation are expected to see rising state unemployment taxes over the next five to ten years, not-for-profit organizations have a unique choice that could save them from bearing much of the same burden.
While the recession is said to be over, unemployment still hovers around 9% nationally, further straining already thin state budgets. Nearly all state unemployment insurance funds are facing some kind of jeopardy due to the high payout of unemployment benefits. Thirty-one state unemployment funds have already become insolvent, and thirty-five states are borrowing from the federal government to pay unemployed workers, notes a white paper released by the Unemployment Services Trust (UST) entitled “Rising Unemployment Costs and 501(c)(3) Strategies.”
“In order to pay back these loans… most states will be raising either the UI [Unemployment Insurance] tax rate or the taxable wage base, which both effectively raise the taxes employers pay,” cites the UST report.
For nonprofit employers however, there is an alternative.
501(c)(3) tax exempt organizations are allowed under federal law to leave the state unemployment tax system and only reimburse the state in the event they have an unemployment claim. This can benefit them in two ways:
1. Reimbursing nonprofits no longer pay a tax rate adjusted to cover state borrowing and the high claims of other employers.
2. They are typically not subject to state surcharges like Federal Loan Interest assessments, Workforce Development (Enhancement) Fees and other similar assessments from the state.
For nonprofits with low to average unemployment activity this can provide substantial savings, especially given that “It is expected that [tax] rates will double or triple over the coming few years, and then remain there for at least a decade or more,” according to Douglas Holmes, President of the Strategic Services on Unemployment & Workers’ Compensation (UWC).
This does, however, place more liability on an organization to accurately track unemployment claims and protest improper claims if needed. In addition, there is the risk that sudden increases in claims could impair cash flow, as each claim must be paid out as it occurs. These risks must be weighed against the savings benefits.
One strategy to reduce these potential risks is to join an unemployment trust. The UST white paper explores how nonprofits can be protected from unexpected claims with a trust’s stop-loss protection, in addition to preserving cash flow by building a reserve account out of which all claims are paid. The services provided by a trust can simplify administration and budgeting for a nonprofit, and also provide the necessary claims monitoring needed to detect inaccurate unemployment claims and support court hearings.
There is no single approach that’s right for every nonprofit organization. But a thorough evaluation of the options - becoming a reimbursing employer, joining an unemployment trust, or staying with the state - is indeed warranted, as “the obligation on nonprofits to make every dollar count has never been greater.”
To receive a full copy of the “Rising Unemployment Costs and 501(c)(3) Strategies”white paper, email info@chooseUST.org.
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What does that mean? Well, by federal law, 501(c)(3)s are allowed to opt-out of paying taxes into their state unemployment tax fund, and instead only reimburse the state if and when they have an actual unemployment claim, dollar-for-dollar.
It can be a savings opportunity for many nonprofits who have lower claims than what they pay in state unemployment taxes—which are often driven up by for-profits and other companies that go out of business, as well as state fund deficits and improper payments made in error.
The Unemployment Services Trust (UST) performed more than 200 free unemployment tax savings evaluations for nonprofits with 10 or more employees in 2013, finding a total of $3,532,485.26 potential unemployment tax savings if they were to exercise their exemption and join the UST program instead.
This year, UST is aiming to identify more than $7 million in unemployment tax savings for nonprofits through free savings evaluations. But time is running out. Most states have a December 1 opt-out deadline, so UST needs all savings evaluation forms submitted before November 15th at the latest in order to meet the state deadline.
You can view your state's unemployment tax exemption deadline here: www.chooseust.org/state-unemployment-tax-opt-out-deadlines-for-nonprofits
Unfortunately, if a nonprofit misses the state deadline, they have to wait until the following year to exercise their exemption and join the Unemployment Services Trust. So if you or a nonprofit you know has not exercised their exemption, be sure to share the free savings evaluation before the November 15th deadline: www.chooseust.org/request-a-savings-quote