May 28, 2014
The state of Georgia has paid off the principle of a loan from the federal government to cover a surge in unemployment costs during the Great Recession, although it still has to make a final interest accrual remains to be paid.
The payment of approximately $62.5 million was sent from Georgia to the federal government on May 14, according to the Atlanta Business Chronicle. A payment of about $2 million in interest remains and will be sent in September. The payoff is good news for the state, as it no longer has the debt on its books. However, the early reimbursement was partially due to an increase in the state unemployment insurance (SUI) tax rate that came into effect in 2013, because the total unemployment Trust Fund balance was below $1 billion. Employers were charged 50 percent more on their SUI payments at the beginning of that year. The fund was running a deficit of approximately $650 million at the start of 2013.
An alternative to the unpredictable SUI tax
While Georgia's state government has paid off its loan from the federal government, the SUI rate increase will not be removed until its fund reaches a positive balance of $1 billion. The amount in the fund currently stands at approximately $355 million. Employers will be dealing with high SUI tax payments for the foreseeable future.
Luckily, nonprofits have an alternative method of handling their unemployment obligation. By electing to become reimbursing employers – and paying any unemployment claims on a dollar-for-dollar basis – eligible entities can opt out of the state fund and reduce payments. However, nonprofit employers still need to be able to deal with spikes in unemployment claims. This is where savings programs such as the Bonded Service Program, the only first and last dollar coverage program in the country, can help. These programs allow nonprofits to save on SUI costs while still maintaining financial stability and reducing risk.
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.
Working with Marshal Whittey at First Nonprofit has been a great experience. He handles our request as a priority and goes above and beyond to resolve any issues we have in a timely manner. Marshall follows through to the end and ensures our needs are met. He has been a great resource for LSC and our “go to” for any tax questions we may have. With LSC transitioning several facilities into one federal tax identification number, First Nonprofit was able to assist and provide guidance with best practices resolving claims to each entity. Additionally First Nonprofit provided knowledge (information materials) and one on one training to HRS group with best practices to handle claims state adjudicated, fraudulent claims, and appeals. And processing information in the First Nonprofit [unemployment claims] system allows for timely information can be collected.
My experience with FNP has been wonderful. Unemployment in general is quite confusing and FNP has simplified the process for us. Everyone we have reached out to or worked with has been very helpful and follows up to be sure we understand the information. I am so happy we made the switch to FNP!
First Nonprofit smoothed the unemployment perils for our organization during Covid. Without the ability to cap our UI exposure, we would not have been able to weather the storm. The program worked perfectly and we have come out of the pandemic ready to forge on. Thanks FNP!
My experience with the FNP has been fantastic. The idea of setting funds aside for the unemployment tax liability is a bedrock for nonprofit organizations like mine, namely ASHBA; what is even more advantageous is having the FNP as a custodian of those funds. 100% recommended!
I would like to comment on my experience with FNP….to date our District has saved $1,000’s of dollars by being enrolled in the First Nonprofit program. My only regret is that we did not know about this method of paying unemployment tax years ago….as I had figured about five years
ago, had we enrolled 15-20 years ago, we could have saved our small school district upwards of $500,000 in payments to IDES. Also we would have had a pretty hefty sum of money in our Reserve Account. Thankfully I attended a workshop hosted by First Nonprofit back in 2015 which got the ball rolling!
I have worked with the First Non-Profit Team for many years, and I appreciate the quick response and care that Cecilia and the team provides anytime I have questions. While there are other providers that may provide like services, First Nonprofit will always be my first choice! I appreciate you!
First Nonprofit has been easy to work with and makes the administrative process easier and smoother. We enjoy working with you.
Luckily for us, our interactions regarding any issues with staffing has been very minimal! I can say that all other interactions with regards to billing, 941 reporting, etc. have been extremely pleasant, accommodating and easy to work with. Kim Ghanayem is always prompt, professional and friendly. Thank you so much!