Wisconsin Governor Scott Walker today announced that Wisconsin’s Unemployment Insurance (UI) Trust Fund reached a positive balance surpassing $1.65 billion in May, representing a near-reversal from the fund’s lowest point of $1.68 billion in the red several years ago. This follows the March release of the UI Fraud Report, which showed the percent of UI benefits obtained fraudulently declined by 42 percent while total benefit payments declined by 11 percent when comparing 2017 to 2016. The UI Trust Fund is administered by the Wisconsin Department of Workforce Development (DWD) and is solely used to pay UI benefits to eligible workers and completely financed by Wisconsin employers that are covered under the program.
“We understand how important this safety net is to workers who lose work through no fault of their own,” Governor Walker said in a press release. “By strengthening our economy and implementing policies that combat waste, fraud and abuse in the UI system, we are ensuring that the UI program remains cost-effective and available to those most in need.”
The condition of Wisconsin UI Trust Fund deteriorated during the Great Recession, triggering borrowing from the federal government starting in 2009. Through the combination of reforms to boost UI program integrity and accountability, as well as a vastly improved state economy, Wisconsin rebuilt its Trust Fund, triggering three declines in the UI tax schedule since tax year 2016 and saving the state’s approximately 140,000 covered employers a combined $165 million.
One of the reforms passed was a reduction in the maximum benefits for unemployed workers. Much of those savings were passed back to employers in the form of reduced unemployment insurance rates.
Wisconsin’s UI Trust Fund still falls below the recommended balance preferred by the U.S. Department of Labor.
Nonprofits Have Other Options
The above applies to all Wisconsin 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 on their unemployment costs 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.