November 13, 2013
The situation continues to erode for state unemployment insurance programs as they struggle to meet the demands placed on them since the Great Recession. A report by the National Employment Law Project explains why things are unlikely to improve anytime soon.
State unemployment insurance offices were dealt numerous blows during the past few years:
According to the report, claims in 2010 were 294 percent higher than they were in 2007, but UI administrative funding only rose by 65 percent. In 2012, claims dropped to 155 percent of their 2007 levels, however, funding has also fallen 20 percent since 2010.
SUI offices rely on archaic systems to process claims.
The rise in claims also put added pressure on the outdated systems that many unemployment offices used to process claims. According to the report, the majority of UI operations are performed using software from the 1970s and '80s. As of 2009, Missouri was using a 46-year-old benefit system.
Some states recently attempted to update that software and ran into a new set of problems. Systems installed in Massachusetts and California both encountered glitches that delayed payments, and in some cases unemployed workers were erroneously sent bills instead of checks.
Nonprofit organizations can exit these unstable systems
The pressure on the SUI departments and their computer systems all contribute to a high level of overpaid claims by the state offices. For companies that must pay into SUI tax pools, there is no reimbursement for costs that exceed the employer's claims. Employers in SUI systems may also be covering the claims burden of other companies that did not pay enough UI tax or have gone out of business.
While most companies must put up with expensive SUI tax programs, nonprofits can exit and become reimbursing employers. As a reimbursing employer, nonprofits are only responsible for funding UI costs in the amount of their own claims. However, after opting out of state unemployment programs, options for reimbursement are not all the same. Self-insuring can expose a nonprofit's budget to large, unexpected liabilities if unemployment claims for the organization suddenly increase.
For many nonprofits, the safest option for UI reimbursement is through enrollment in an unemployment savings program or a bonded service program. First Nonprofit Group offers nonprofits membership in both of these programs, and also provides assistance with claims management. UI obligations for nonprofits can be complex and professional consultation can ensure that organizations are making the correct decision when they opt out of state UI tax pools.
The Ensight Skills Center has enjoyed working with First Nonprofit for several years. We are enrolled in their Unemployment Savings Program and although we have not required a lot of intervention, there have been a few times. I know others have dealt with the same problem of unemployment fraud over the last year and in our case, a call to First Nonprofit (they actually answer their phones) cleared up the issue. They also sent us a letter to send to all our employees telling them what they needed to do to prevent this in the future and protect themselves. What a relief! Over the years if I have questions or concerns, they are happy to listen, advise and help if they can. Another BIG advantage of using First Nonprofit is that all the money that is paid into the Unemployment Savings Program lives on my balance sheet as an asset. The money continues to be Ensight’s not the governments. First Nonprofit has certainly given me peace of mind.
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.
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.
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. We are impressed with the accuracy of their employment decisions, integrity of their employees and efficiency of their claim handling. We greatly respect and value the consistent, impressive cost savings from the utilization of their outstanding services.
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.
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.