The 2017 State Unemployment Insurance Report has been released by the U.S. Department of Labor’s Office of Unemployment Insurance. The publication of the report provides an opportunity for interested parties to evaluate and compare the solvency level of each state’s unemployment insurance trust fund reserves.
As we have written before, (here and here) the nation’s unemployment insurance safety net is not as healthy as it should be. But with every year of a growing economy, it gets better. However, some state, like Ohio, continue to not meet federal recommendations for trust fund health.
According to the Department of Labor (DOL) report as of the beginning of 2017, 21 states have reached what is considered the minimal level of adequate solvency, while one state program and one jurisdiction still have together approximately $3.9 billion in outstanding Federal loans and six states have an additional $7.1 billion in outstanding private borrowing. The amount outstanding in alternative financing is now higher than the amount remaining in outstanding loans from the federal government and will likely remain at a higher total in 2017 and 2018. Only 18 states have state unemployment benefit account balances that equal or exceed the US DOL guideline for solvency. Many states have enacted solvency measures since the 2008-2009 recession; however, many states do not have sufficient balances to avoid borrowing in the event of increased claims load that would come with the next recession.
Nonprofits Have Other Options
The above applies to all employers except 501(c)(3) organizations. 501(c)(3)s do not have to pay state unemployment insurance taxes – high or low. Many nonprofits could save as much as 30 percent more on their unemployment cost by opting out of the unemployment insurance tax system – an advantage provided to them by the IRS. Doing so affords nonprofits unique avenues that allow them to strategically handle unemployment claims administration and unemployment insurance taxes in ways that for-profits can only dream about.
Contact us today for more information concerning your nonprofit unemployment insurance tax advantages.