Texas nonprofits should consider a more effective unemployment option

June 26, 2014

Texas nonprofits should consider a more effective unemployment option

Texas has one of the lowest overall unemployment rates in recent years and has been held up by pundits and federal administrators as a good example of a state with high employment. However, the Lone Star state isn't without its problems when it comes to state unemployment insurance tax and payouts. While Texas has paid back the $1.4 billion dollar loan it took from the federal government to cover jobless claims during the Great Recession, it did so by floating a bond in the private market. The state still has to deal with compensation related to the bonds purchased and extra costs are being added to the state unemployment insurance (SUI) tax to cover debt service costs.

The low trust fund balance has led to a large, 131 percent per-employee cost increase to SUI tax from 2009 to 2013. In addition, a change to federal law could increase the unemployment wage base from $9,000 to $15,000 and bring about a change in SUI tax obligation for each employee from $266 to $443. These changes mean more spending for businesses and organizations in Texas, but nonprofits have an alternative option for their unemployment obligations.

Becoming a reimbursing employer
Instead of contributing to the SUI pool, 501(c)(3) employers and governmental groups in Texas can elect to reimburse employees directly for unemployment claims. This approach allows organizations to avoid the uncertainty of state taxes while still fulfilling all their legal obligations. However, this approach can also cause problems if eligible groups aren't prepared for any unexpected spike in overall unemployment or a contested claim from an ex-employee.

By using an Unemployment Savings Program, nonprofits can save money toward possible unemployment costs without simply forfeiting the money to a state fund. This money accrues interest and can be carried as an asset, providing far more benefits to the charitable group using it. Another possibility to consider is Excess Loss Insurance, which provides protection against major, unforeseen events, such as losing a grant and having to lay off staff members. Participants in this program make quarterly deposits and can even receive a credit advance up to the attachment point at which coverage begins.

For information on how your organization can cost-effectively meet its unemployment insurance needs, contact First Nonprofit Group at FNCUI@firstnonprofit.com or visit www.firstnonprofitgroup.com.


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First Nonprofit has saved us so much money over the state’s program. We had one little glitch with the state recently and we contacted FNP immediately. FNP staff called us back immediately and moved to remedy the problem.

WI Council of Religious & Independent Schools (WCRIS), Madison, WI

First Nonprofit has been a great partner. They have helped us saved hundreds of thousands of dollars! They have awesome resources for our nonprofit organization. Thanks for the partnership.

Community Care Inc., Milwaukee, WI

Life is certainly busy these days but having business partners like First Nonprofit has made some of the process hassle free. We have worked with this team for years. When we changed payroll systems, they outlined every step. I think this team is terrific and I know they get the job done! Thank you, Cruz, to all the team at FNP.

Gulfside Healthcare Services, New Port Richey, FL

FNP has helped our agency to save thousands of dollars every year on our unemployment coverage. The service is phenomenal, and we are thankful to their team as our partner. My experience working with Marshall on the advocacy around UE for nonprofits was also a highlight as someone who teaches advocacy and lobbying for nonprofits. Really, your whole team is top shelf, so thank YOU!

Advancing Academics, Turtle Creek, PA

Chicago Children’s Theatre has greatly benefited from our partnership with First Nonprofit, and I have always enjoyed working with the staff on our filings and any complicated questions. I would not hesitate to recommend First Nonprofit to fellow nonprofits. We’re very happy customers.

Chicago Children’s Theatre, Chicago, IL

FNP is a great resource for Daniel Kids. To have a TPA that we can count on to take point on not only managing our unemployment claims, but to support and guide any protest hearing, is invaluable. All the professional support staff we have worked with have been excellent, very knowledgeable and responsive. We are grateful for the help and support, thank you.

Daniel Kids, Jacksonville, FL

When I first began in my position at my organization, I hadn’t had experience working with a company like FNP. The staff was so patient and helpful in helping to explain the benefits of First Nonprofit. Anytime I reach out with a question I receive a quick, clear, and thorough response. I’m so thankful that we decided to partner with FNP. Their excellence in customer service, coupled with their variety of packages frees us up to truly serve our staff and community with a peace of mind knowing that our organization is protected against unanticipated unemployment insurance expenses.

Homes of Hope, Chicago, IL

First Nonprofit gets an A+ in my book. You are so easy to work with & very knowledgeable! Whether it is my quarterly correspondence with Kim or my random interactions with Dawn about a bond … I am so pleased that I get to work with such a helpful company. Thank you!

Women's Choice Network, Pittsburgh, PA