August 20, 2012
State Unemployment Funds Could Have Been Better Managed Says Report
Perhaps thanks to a tough economy in which job-seekers are often unqualified for the few jobs that are actually available, nonprofits are gaining recognition for being ahead of the pack in their move to retrain employees for new positions. Actively teaching job seekers skills that will help them move into new industries, across many sectors of the economy, nonprofits with job retraining programs are helping to lower unemployment related costs.
Placing even more workers than many government-funded programs, as found in this article by The NonProfit Times, the ongoing trend is more than promising to the unemployed.
Instead of being set back by the economy and their lack of government funding, many nonprofits are helping more and more workers, both with and without successful employment histories, find gainful employment by offering high-class workforce readiness programs, new employment training, mock interviews, and resume coaching. Teaching out-of-work job seekers to translate and hone their already established skills into skills for their new positions, the programs are highly successful in getting applicants placed in long-term jobs.
Providing courses and training to applicants of all ages and most backgrounds, the push to re-employ America is strengthening the economy and lowering unemployment insurance taxes for employers
Bridgestar, an initiative of The Bridgespan Group, has created a Hiring Toolkit to help nonprofits better enhance their internal effectiveness and more quickly fill new and recently opened employee positions.
After a study conducted by Nonprofit HR Solutions reported that43% of nonprofits are expecting to add to their staff in 2012, as reported in our March 26th post, it is becoming increasingly important that nonprofit hiring teams are thoughtful and proactive in developing their own hiring toolkit.
Hiring toolkits help nonprofit hiring teams draft the strongest job descriptions, write the most compelling job ad, and outline how to select the best candidate. But, most importantly, they strengthen agencies abilities to compete with for-profit companies who are offering similar positions at typically higher pay rates.
Because the findings of the Nonprofit HR Solutions study “suggest that the nonprofit sector should be more focused on retention practices than it is currently,” it is even more vital that hiring teams know exactly who and what they are looking for when reading through stacks of resumes and applications.
Bridgestar suggests that hiring teams create a system for reviewing resumes to improve the chances of including “the most relevant candidates” and “uncovering those hidden gems.” To do this, they’ve offered 4 reviewing steps:
Step 1: Agree on your resume review process and how each team member is going to be involved before looking at any application packets.
Step 2: Organize the cover letters and resumes you receive in order of receipt to speed the reviewing process. Let the candidates know that you have received their resume and will be beginning your review process shortly.
Step 3: Review each resume packet thoughtfully and objectively. Knowing what core criteria are most important for you, and where you are willing to bring a candidate up to speed helps process resumes; similarly providing the review team with key questions to keep in mind when reading each resume helps sort through applicants who aren’t adequately qualified or don’t fit your mission.
Step 4: Make the interview decision and let applicants who are not selected down easy. For applicants the hiring team wants to speak with further, discuss what more should be learned about them in phone, and eventually, in-person interviews.
As the nonprofit job market grows stronger and more job opportunities are being created across all sectors, agencies must be more competitive in selecting and retaining qualified applicants. Read more about Bridgestar’s suggestions for Processing Applications and Screening Resumes.
According to the analysis, had each of the states forced to borrow from federal funds enacted more responsible financing of their funds leading up to the Great Recession, fewer states would have had to slash the safety net created for jobless workers through unemployment insurance benefits. The report further details how excessive tax giveaways and breaks for many employers left many states with depleted unemployment trust funds that were unprepared for even a modest downturn.
Citing evidence from 1995 to 2005 in which 31 states reduced employer contribution rates by at least 1/5, the report reveals that while employer tax rates fell to a historic low in the decade leading up to the recession, the combined balance in all state trust funds was half the amount experts recommend.
Funds were so abominably low, Michigan and New York even had to begin borrowing from federal funds before the recession had even officially begun.
The trend continues today. As of yet, few states have made significant changes to the structure of their unemployment insurance funds which would prevent another mass borrowing or would allow them to reinstate a fully funded unemployment trust fund in the next few years. Only Alabama has done enough to predictively repay the federal loan within the next few years.
For employers that have paid increasingly high unemployment taxes the news can come as a shock.
Although tax rates for employers within the state unemployment insurance system have increased substantially since 2009, the higher payments have done little to cover the increased benefits payments and the high level of interest being charged on federal loans, much less build up the level of reserves available.
To combat the continued depletion of funds, many states have even shifted the blame onto those found jobless by reducing benefits and eligibility across the board. Not surprisingly, each cut has severely jeopardized the capacity of unemployment funds to insure families and stabilize the economy during swift downturns, which has led to further increases in tax payments made by employers in the state system.
Thankfully, nonprofits with 10 or more employees have the exclusive ability to opt out of the state UI tax system and reimburse the state only for the benefits paid out to their former employees. This protects the benefits paid out to nonprofit employees, while simultaneously reducing the operational costs of unemployment, which allows nonprofits to do more for their mission.
For a complimentary overview of how UST could help your nonprofit reduce unemployment expenses and lower improper payment rates, please sign up for an upcoming webinar, or fill out a Savings Evaluation today.