June 26, 2014
Texas has one of the lowest overall unemployment rates in recent years and has been held up by pundits and federal administrators as a good example of a state with high employment. However, the Lone Star state isn't without its problems when it comes to state unemployment insurance tax and payouts. While Texas has paid back the $1.4 billion dollar loan it took from the federal government to cover jobless claims during the Great Recession, it did so by floating a bond in the private market. The state still has to deal with compensation related to the bonds purchased and extra costs are being added to the state unemployment insurance (SUI) tax to cover debt service costs.
The low trust fund balance has led to a large, 131 percent per-employee cost increase to SUI tax from 2009 to 2013. In addition, a change to federal law could increase the unemployment wage base from $9,000 to $15,000 and bring about a change in SUI tax obligation for each employee from $266 to $443. These changes mean more spending for businesses and organizations in Texas, but nonprofits have an alternative option for their unemployment obligations.
Becoming a reimbursing employer
Instead of contributing to the SUI pool, 501(c)(3) employers and governmental groups in Texas can elect to reimburse employees directly for unemployment claims. This approach allows organizations to avoid the uncertainty of state taxes while still fulfilling all their legal obligations. However, this approach can also cause problems if eligible groups aren't prepared for any unexpected spike in overall unemployment or a contested claim from an ex-employee.
By using an Unemployment Savings Program, nonprofits can save money toward possible unemployment costs without simply forfeiting the money to a state fund. This money accrues interest and can be carried as an asset, providing far more benefits to the charitable group using it. Another possibility to consider is Excess Loss Insurance, which provides protection against major, unforeseen events, such as losing a grant and having to lay off staff members. Participants in this program make quarterly deposits and can even receive a credit advance up to the attachment point at which coverage begins.
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.
Ready to chat? Get in touch today to request a no-obligation savings evaluation.
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.
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!
First Nonprofit has been easy to work with and makes the administrative process easier and smoother. We enjoy working with you.
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.