May 3, 2022
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.
UWC – Strategic Services on Unemployment & Workers’ Compensation (UWC)
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.
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.
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.
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!
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.
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.
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.
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!