April 30, 2015
Making the election to opt out of paying the state unemployment tax in favor of reimbursing the state for future benefits paid to former employees may complicate the budget process, upset typical cash flow, and create uncertainty about potential risks. But the best and safest options for managing the perils are very clear.
THE PROBLEM: Attaining maximum use of every dollar of revenue requires a rigorous and strategic effort from nonprofit organizations, governmental entities and tribal enterprises, EVERY YEAR! The center point for that effort is always the “Annual Budget” formation, which for many fluctuates capriciously often because of:
• Competition for services and funding dollars
• Changing state funding
• Changing federal financial support
• Regulatory compliance issues
• Changing workforce problems and necessities
Yet when those complications threaten the budget process, use of thoughtful, strategic options sustains and supports positive cash flow, sustained compliance and reliable protection.
BEST AND SAFEST PRACTICES: Employers successfully transfer risk and manage a variety of diverse liabilities (property & liability, auto, workers’ compensation, umbrella, D&O, etc.) by engaging specific insurance products. It is indisputable that an insured risk by a reliable, reputable insurance company is the safest solution for defending against unknown future liabilities. Accordingly, liability such as State Unemployment Insurance is similarly effective. Here are five of the best and safest solutions available for managing the State Unemployment Insurance (SUI) cost:
1. Bonded Service Program: Risk free, first and last-dollar coverage with claims administration
2. Unemployment Savings Program: Proprietary interest-bearing reserve with claims administration and stop-loss insurance
3. Excess Loss Insurance: “Working Excess Coverage” fits level of risk retention that works best for the employing entity
4. Surety Bonds: Required in many states for “reimbursing employers”
5. Group Program Management: Program formation, consultation, risk transfer design and administration for nonprofit entities, governmental entities and tribal enterprises
Source: First Nonprofit Group’s “Financial Mechanics of Funding SUTA” series
Ready to chat? Get in touch today to request a no-obligation savings evaluation.
We’ve been a member of First Nonprofit’s Unemployment Savings Program since 2011 and highly recommend joining. The program is terrific and allows us to earn interest on our own funds while still meeting the state’s requirements on unemployment payments. In addition, the staff are great and always helpful sorting out any questions we may have. Thank you all!
CCSCT was approached by First NonProfit to discuss its Unemployment Savings Program and ways the program could significantly reduce the amount of unemployment taxes we were paying. At the time, our agency was paying approximately $80,000 per year. First NonProfit conducted an analysis to determine if making the switch would be in our best interest, and it clearly was based on our circumstances. The first year on the program, CCSCT saw a 70% reduction in its unemployment costs and each year, continues to experience further reductions as a result of having minimal claims. Some additional benefits of the program including having a fixed annual cost, an interest-baring reserve account, professional unemployment claims management and representation at all unemployment hearings. This has been one of the best decisions we have made.
We first started using First Nonprofit’s Unemployment Savings Program when we were a small startup nonprofit. We didn’t have an HR department and needed expertise in the event that an unemployment claim was made. We knew we were eligible to be a reimbursing employer, but weren’t sure how to navigate that process. They made it easy to set things up, plan for, and then manage claims when they came at a very reasonable cost. The amount of time and stress they’ve saved us dealing with all this has been worth way more than the cost. We’ve now grown to a large nonprofit and do have an HR department but have no plans to stop using their services. I highly recommend them to every nonprofit I come into contact with!
Throughout our membership in the Unemployment Savings Program, First Nonprofit understood our demands, community dynamics, and the importance of seamless services; that allowed us to serve our constituents better.
Because INCS advocates for the operating conditions that allow charter public schools to provide high quality public education, partnering with First Nonprofit was an easy decision. First Nonprofit’s unemployment programs provide our member schools two operating elements crucial to their ability to provide high quality public education: savings and budget certainty. Capable, committed teachers are the key to student success. By participating in the unemployment insurance savings plan, charter public schools gain peace of mind and are able to invest more money in their teachers.
It has been our sincere pleasure to maintain a strong, vibrant business partnership with First Nonprofit. We greatly admire their strong industry knowledge, technical expertise, constant professionalism, knowledgeable and dedicated staff. They are always extremely responsive, personable and provide us with the necessary guidance and recommendations on a numerous variety of employment scenarios.
NYCON members who use First Nonprofit’s programs enjoy enduring savings and improved efficiency. Our association knows that success, because from the beginning, we achieved the same great benefits. Great savings, seamless technology, and responsive service. NYCON highly recommends First Nonprofit’s remarkable unemployment solutions.
Visually Impaired Preschool Services has been a client of First Non-Profit since it was first offered as a benefit of VisionServe Alliance. We completed a thorough evaluation of cash savings to our agency before taking advantage of this wonderful benefit and it has been a very wise decision. Our experience with the processes from accounting to claims have been professional, expeditious and easy.