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Commission on Unemployment Compensation Sam Lupica, Acting Commissioner December 9, 2014 Status of the Unemployment Trust Fund and Related Issues.

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Presentation on theme: "Commission on Unemployment Compensation Sam Lupica, Acting Commissioner December 9, 2014 Status of the Unemployment Trust Fund and Related Issues."— Presentation transcript:

1 Commission on Unemployment Compensation Sam Lupica, Acting Commissioner December 9, 2014 Status of the Unemployment Trust Fund and Related Issues

2 Basic Benefit Information  Purpose  Min/Max Amount  $60  $378  Min/Max Duration  12 weeks  26 weeks  Qualification  Eligibility  Minimum earnings requirement $3,000 2

3 Trust Fund Data—Standard Forecast (Millions of Dollars) January 1 Balance($34.3)$186.9 Tax Revenue$791.1$745.3 Interest Revenue$4.7$9.0 Benefits$575.8$499.6 December 31 Cash Balance$186.9$442.1 Solvency Level (6/30)24.4%40.3% 3 December 31, 2013 and 2014, balances include $1.2 million and $0.5 million, respectively, from FUTA Credit Reduction paid to IRS.

4 June 30 Trust Fund Balances and Solvency 4 Millions Trust Fund Solvency shown as a percent (%)

5 Average Total State Tax 5 Cost per Employee Calendar Year

6 Pool Taxes 6 Calendar Year Cost per Employee

7 Distribution of 2014 Base Tax Rates (excluding 0.22% pool tax and 0.20% fund builder tax) Computed and Assigned Rates 7 Tax RatesNumber of EmployersPercent of Total Computed 0.10%112, % 0.15%-0.90%9,2234.6% 1.05%-1.95%8,1924.1% 2.10%-2.85%5,5092.8% 3.00%-3.90%5,1672.6% 4.05%-4.95%3,9492.0% 5.10%-5.85%2,7471.4% 6.00%-6.15%8030.4% 6.20%17,5388.8% Assigned New, 2.50%25, % Delinquent, 6.20%7750.4% Foreign Contractor, 6.20%2770.1% Other, 6.20%6,5633.3% Total198, %

8 Claims Filed Calendar YearInitial Claims , , , , , (Jan. – Oct.)182,897* 8 *Annual claims projected to be 222,000.

9 Virginia’s Unemployment Rates (year to date) 9 Percent of Labor Force (not seasonally adjusted)

10 UI Initial Claims (year to date)  Total initial claims through October this year are down 19.8% because of fewer layoffs in manufacturing, administrative and support services, construction, and accommodations and food services.  October 2013 increase includes initial claims from partial federal government shutdown. 10

11 UI Final Payments (year to date)  For the first ten months of 2014, final payments are down 18.9% from 2013 and 27.7% from  The exhaustion rate in October was 44.6%, down from last October’s 47.7%. 11

12 Exhaustion Rates (year to date) 12 Exhaustion Rate

13 Fourth Circuit States 13 Trust Fund Balance (10/31/14) (Millions) Average Tax per Employee (year ending 12/31/13) Average Tax Rate (year ending 12/31/13) Taxable Wage Base Maximum Weekly Benefit 2014 Maximum Weekly Benefit Replacement Rate 2014 State Potential Duration (Weeks) DC $310$ %$9,000$35924%19 – 26 MD $908$ %$8,500$43043%26 NC -$391$ %$21,400$35042%5 – 14 SC -$34$ %$12,000$32643%13 – 20 VA $475$ %$8,000$37839%12 – 26 WV $117$ %$12,000$42456%26 US Avg. $ %$13,259$42345%

14 Short-Time Compensation and Military Trailing Spouse Updates  Short-Time Compensation (STC): U.S. Department of Labor has written that Virginia’s STC law precludes Virginia from qualifying for the STC grant due to sunset provisions in (5) and (6).  Military Trailing Spouse: Since the effective date of July 2014 to present, $235,356 in benefits has been paid to 82 claimants. 14

15 2015 Session: HB 1278 Unemployment Compensation; responsibility for benefit charges  Amends provisions in Virginia's unemployment compensation laws designating the employer responsible for benefit charges. Under current law, the last employer that employed a benefits-eligible individual for 30 days or 240 hours will be assessed benefit charges relating to such individual's benefit claim. The bill increases the amount of employment required before responsibility attaches to 60 days or 480 hours. 15

16 U.S. Department of Labor Rules for Interest-free Cash Flow Loans Cash flow loans are interest-free if:  Repaid by September 30 of the calendar year in which they are made  The State does not receive an additional loan after September 30 of the same calendar year in which the loan is made  The State has met all three of the following funding goals:  A solvency criteria (AHCM) that increases from 2014 to 2019  Two maintenance of tax effort goals, which must be met every year between the last year solvency criteria met and year interest-free loan is taken: − Average tax cannot drop more than 20 percent from previous year − Average tax cannot fall more than 25 percent below the 5-year average of benefits-to-total wages ratio 16

17 U.S. Department of Labor Rules for Interest-free Cash Flow Loans – Continued  Based on historical and current projected data, Virginia will not meet the solvency criteria in any year and will not meet the maintenance of tax effort criteria in some years.  Therefore, the State would not be eligible for interest-free cash flow loans. 17


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