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H4 UI Fund Solvency & Program Changes & Its Impacts on Local Governments
H4 UI Fund Solvency & Program Changes & Its Impacts on Local Governments
H4 UI Fund Solvency & Program Changes & Its Impacts on Local Governments
H4 UI Fund Solvency & Program Changes & Its Impacts on Local Governments
H4 UI Fund Solvency & Program Changes & Its Impacts on Local Governments
H4 UI Fund Solvency & Program Changes & Its Impacts on Local Governments
H4 UI Fund Solvency & Program Changes & Its Impacts on Local Governments
H4 UI Fund Solvency & Program Changes & Its Impacts on Local Governments
H4 UI Fund Solvency & Program Changes & Its Impacts on Local Governments
H4 UI Fund Solvency & Program Changes & Its Impacts on Local Governments
H4 UI Fund Solvency & Program Changes & Its Impacts on Local Governments
H4 UI Fund Solvency & Program Changes & Its Impacts on Local Governments
H4 UI Fund Solvency & Program Changes & Its Impacts on Local Governments
H4 UI Fund Solvency & Program Changes & Its Impacts on Local Governments
H4 UI Fund Solvency & Program Changes & Its Impacts on Local Governments
H4 UI Fund Solvency & Program Changes & Its Impacts on Local Governments
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H4 UI Fund Solvency & Program Changes & Its Impacts on Local Governments

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Presentation on UI Changes during Spring 2013 NCGFOA Conference - H4 UI Fund Solvency & Program Changes & Its Impacts on Local Governments

Presentation on UI Changes during Spring 2013 NCGFOA Conference - H4 UI Fund Solvency & Program Changes & Its Impacts on Local Governments

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  • 1. NC-GFOA 2013 Spring MeetingH4 UI Fund Solvency & ProgramChanges & Its Impacts on Local Governments Rebecca Troutman, NCACC IGR Director Karl Knapp, NCLM Policy & Research Director Ted Brinn, DES Chief of Tax Antwon Keith, DES Director of Unemployment Administration
  • 2. What Is Unemployment Insurance (UI)?Federal-State partnership – Broad federal guidelines – State-designed program – State pays 100% regular benefits, 50/50 extended benefits, feds pay 100% emergency benefitsFunded through – Private employers’ payroll taxes based on experienced rating; also pay federal payroll taxes – Govts, non-profits given option of direct reimbursement of claims or experienced rated; pay no federal payroll taxes 2
  • 3. What is the Problem? Why Does the System Need to Change?• Economic recession & high unemployment costs necessitates $2.5 billion federal loan• Outstanding loan balance triggers escalating private employer federal taxes—from $21/employee 2011 to $189/employee 2019• Benefits package “richer” than in neighboring states – NC = $535 max weekly; SC = $326; VA = $378 3
  • 4. How Will UI Benefits Change?• Maximum weekly reduced from $535 to $350 – Avg. of last 2 qtrs as base, not highest qtr• Maximum duration reduced from 26 weeks to 20 weeks & tied to unemployment rate• Requires waiting week for new claims• Good cause provisions eliminated except domestic violence & military spousal relocation• Suitable work requirements strengthened – Any work after 10 weeks of benefits 4
  • 5. How Will Private Employer Requirements Change?• Eliminates 0% rate & sets minimum at .06%; maximum increased by similar – Formula not tax rate schedule• Sets 20% surcharge on all PRIVATE employers & triggers on and off when UI Fund = $1Billion• Only employers with positive balance eligible for attached claims; limit 1 per employee 5
  • 6. How Will Local Government Requirements Change?• Each local establishes a UI Account to contribute 1% of its quarterly taxable wages paid employees (salaries capped at $20,900 per employee in 2013) – Cap is indexed and adjusts each year – Counties, cities and state agencies treated the same way as non-profits are currently• For each employee earning $20,900 or more per year for 2013, the total local contribution will be $209 per employee per year, until the 1% balance is obtained – $20,900 * 1% * # of employees 6
  • 7. How Will Local Government Requirements Change?• First quarterly payment made in October 2013, for the July-September 2013 (3rd quarter) of taxable wages• 3rd & 4th quarterly payments should be smallest of the four quarterly payments• 1st and 2nd calendar year quarterly payments should be highest payments 7
  • 8. How Will Local Government Requirements Change?• 100% of claims benefits will be deducted against UI Account, rather than direct billed, beginning with Aug-July 2014 claims year• There will no longer be an option to pay 120% of claims with appeal rights• For FY 2014, 1% reserve payment + 2013 claims paid directly = double hit in FY14 8
  • 9. Reserve Implementation ScheduleOct-13 First reserve prepaymentNov-13 Annual claims bill (August-July) sent by DESJan-13 Second reserve prepaymentApr-13 Third reserve prepaymentJul-13 Fourth (and final) reserve prepaymentNov-13 DES calculates the 1% reserve requirement as of August 1, 2014, and the difference between this amount and the prepayments into the reserve. DES also deducts the annual unemployment claims (August- July) from the 1% reserve. DES bills municipalities for the amount needed to replenish their reserves.Jan-15 Replenishment payment dueAfter Jan-15 Annual billing in November to replenish reserve, with payment due in January. 9
  • 10. FT $20,000, Reserve = $200 2013 2014 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Wages Paid to $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000EmployeeTaxable Wages $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000Prepayment to 1% $0 $0 $50 $50 $50 $50 $0 $0Reserve 10
  • 11. FT $40,000, Reserve = $209 2013 2014 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Wages Paid to $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000EmployeeTaxable Wages $10,000 $10,000 $900 $0 $10,000 $10,000 $1,400 $0Prepayment to 1% $0 $0 $9 $0 $100 $100 $0 $0Reserve 11
  • 12. FT $52,000, Reserve = $214 2013 2014 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Wages Paid to $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000 $13,000EmployeeTaxable Wages $13,000 $7,900 $0 $0 $13,000 $8400 $0 $0Prepayment to 1% $0 $0 $0 $0 $130 $84 $0 $0Reserve 12
  • 13. FT $40,000, Vacant Jul-Sep Reserve = $300 2013 2014 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Wages Paid to $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000EmployeeTaxable Wages $10,000 $10,000 $0 $10,000 $10,000 $10,000 $1,400 $0Prepayment to 1% $0 $0 $0 $100 $100 $100 $0 $0Reserve 13
  • 14. Seasonal $6,000, Reserve = $60 2013 2014 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Wages Paid to $0 $2,000 $4,000 $0 $0 $2,000 $4,000 $0EmployeeTaxable Wages $0 $2,000 $4,000 $0 $0 $2,000 $4,000 $0Prepayment to 1% $0 $0 $40 $0 $0 $20 $0 $0Reserve 14
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