STATE UNEMPLOYMENT INSURANCE TRUST FUND SOLVENCY REPORT 2022

May 3, 2022

STATE UNEMPLOYMENT INSURANCE TRUST FUND SOLVENCY REPORT 2022

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The roller coaster economy that started with the mandated economic shut-downs due to the pandemic has been slow to recover despite significant new federal spending. The availability of funds through the CARES and ARP Acts has enabled states to restore some of the lost revenue to state UI trust fund accounts. Yet, many states have not fully taken advantage of the availability of these funds for this purpose and have not addressed measures that would significantly improve solvency. The result is that many state UI trust funds will remain insolvent or at risk of becoming insolvent with an economic downturn. The risk of recession has increased with the dramatic increase in general inflation rates, supply chain issues, and the impact of increasing gas prices.

The U.S. Department of Labor recently released the 2022 UI solvency report showing the status of state UI trust fund accounts and the relative solvency of each. According to the report, as of January 1, 2022, 10 states had an outstanding Title XII advance balance, totaling $39.9 billion. As of April 18th the number of states with outstanding advances had not changed very much. Nine states and the Virgin Islands still have outstanding advances to be repaid: California, Colorado, Connecticut, Illinois, Massachusetts, Minnesota, New Jersey, New York, Pennsylvania, and the Virgin Islands

Additional states with UI trust funds that are particularly at risk of becoming insolvent in the event of another economic downturn include: District of Columbia, Florida, Georgia, Hawaii, Indiana, Kentucky, Louisiana, Michigan, Missouri, Nevada, Ohio, Oklahoma, Rhode Island, Texas, and Washington

Employers are already seeing increases in state UI contribution rates to be paid in 2022 due to claims experience in 2020 and 2021 and reduced state UI trust fund solvency. We expect additional increases on average for 2023 on top of FUTA tax increases for employers with business in states with continued outstanding loans for 2022 and 2023. We are working with business representatives and states to avoid large spikes in contribution rates and FUTA tax increases and the development of long-term solvency measures. An economic downturn at the end of 2022 or in 2023 would result in further UI related state and federal taxes and increase the risk that more state UI trust funds would become insolvent.

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Source: 

https://oui.doleta.gov/unemploy/docs/trustFundSolvReport2022.pdf

UWC – Strategic Services on Unemployment & Workers’ Compensation (UWC) 

 

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