Amplify Funding by Reducing Unemployment Costs

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This webinar can help nonprofits put money back where it is needed most – toward fulfilling their missions.
There’s a simple way to free up unrestricted funds by lowering unemployment costs. Millions of employers are seeing rising taxes due to prolonged national unemployment – but 501(c)(3)s have an alternative.
During this webinar, you will learn 3 simple steps nonprofits can take to reduce unemployment costs.

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Amplify Funding by Reducing Unemployment Costs

  1. 1. Amplify Funding by Reducing Unemployment Costs Adam Thorn March 14, 2012A Service Of: Sponsored by:
  2. 2. INTEGRATED PLANNING Advising nonprofits in: www.synthesispartnership.com • Strategy • Planning (617) 969-1881 • Organizational Development info@synthesispartnership.comA Service Of: Sponsored by:
  3. 3. Affordable collaborative data management in the cloud.A Service Of: Sponsored by:
  4. 4. Today’s Speaker Adam Thorn Director of Operations Unemployment Services TrustAssisting with chat questions: April Hunt, Hosting:Nonprofit Webinars Sam Frank, Synthesis PartnershipA Service Of: Sponsored by:
  5. 5. Amplify Funding by Reducing Unemployment Costs March 2012Adam Thorn | Athorn@ChooseUST.org
  6. 6. Overview• History & Background of Unemployment Insurance (UI)• Nonprofit Options• Best Practices to Reduce UI Claims & Costs• Determining the Right Option for Your Agency
  7. 7. History & BackgroundHistory & Background of Unemployment Insurance
  8. 8. What is the UI Tax System? • 1935 – Created as part of FDR’s Public Works Program • 1972 – Most nonprofits now required to pay unemployment benefits • Nonprofits can pay through state tax system or by becoming “reimbursing employers”
  9. 9. Unemployment Insurance Today • Unemployment was at highest point since the 1980s • Benefits are lasting longer • States borrowed $39,734,768,310 • 21 States got a FUTA Credit Reduction last year = higher taxes • States paid $50 Billion of 2010-11 unemployment benefits in error
  10. 10. Options for NonprofitsOptions for Nonprofits to Pay UI Costs
  11. 11. Options for Nonprofits Pay state UI taxes - Pay an assigned UI tax rate - Part of the pooled general UI fund
  12. 12. Paying State UI TaxBenefits:  State always pays all claims - If claims are more than taxes, the state UI will still cover the claims (but you can probably expect a tax increase in subsequent years).  Best for small agencies
  13. 13. Paying State UI TaxChallenges:  Tax rates and taxable wage bases rising  16% average rate hike for US in 2011  You’re helping to subsidize:  High claims employers  State mistakes  State funding problems
  14. 14. Paying State UI TaxOn average, employers pay $2.00 intaxes for ever $1.00 in benefits paid
  15. 15. Options for Nonprofits Become a Reimbursing Employer - Reimburse the state for unemployment claims $1.00/$1.00
  16. 16. Self ReimburseBenefits: Only pay for actual claims Can directly impact your operating costs by reducing claims You get to keep the money you no longer pay into a tax
  17. 17. Self ReimburseRisks/Challenges: Unexpected claims Budget planning Managing and protesting claims is time consuming Costly professional assistance Can’t protest “base period claims”
  18. 18. Case Study: Paying State Tax Cozy Homes Retirement Community  140 FTEs  Annual Claims average: $3,645  Annual Taxes average: $12,740
  19. 19. Case Study: Self ReimbursingCozy Homes Retirement Community Annual Claims average $3,645 Claims $10,000.00 $5,000.00 $0.00 Year 4 Year 3 Year 2 Year 1
  20. 20. Best PracticesBest Practices to Reduce UI Claims & Costs
  21. 21. Best PracticesCritical Ways to Reduce UI Costs1. Hiring Practices2. Proper Documentation3. Monitoring Claims4. Working with a Trust
  22. 22. Best Practices1.Hiring Practices• Vet hires - Background and reference checks vital• Use assessment tools during hiring to evaluate: - Personality and Behavior - Aptitude and Skills - Ethics - Critical Thinking - Teamwork - Etc.
  23. 23. Best Practices2. Proper Documentation• Written, publicized Company Policy: - Easy to understand, explains what expected - Outlines disciplinary process - Employee sign-off for receipt of Policy• Document infractions immediately (oral warnings too)• Warnings need supervisor and employee signature• Record details of final incident causing separation
  24. 24. Best Practices3. Monitoring Claims• Look for state errors and improper claims• Protest all improper claims• A Claims Monitor can help: - Audit charge statements - Protest claims - Provide training - Record claims activity - Provide hearing assistance
  25. 25. Best Practices4. Working with a Trust • Pays state on your behalf • Establishes a reserve for claims charges • Evens out volatility of claims costs • Predetermined quarterly deposits eliminate budgetary problems • Claims Monitor works to lower claims liability and provide support
  26. 26. Working with a Trust Taxpayer vs. Trust Member
  27. 27. How It Works Deposits are used:  To reimburse the state for claims  For stop-loss reserve protection  For bond premiums  For Trust operating expenses  To establish a reserve for future claims
  28. 28. How It Works Year 1-2: Guaranteed rate lower than tax rate Year 3+: Rates based only on your claims experience Reserve is an asset held in your name Trust assets conservatively invested to offset expenses
  29. 29. How It Works The Trust Claims Monitor provides:  Audits of claims from state  Protests and appeals  Online training for supervisors  Dedicated representative  Claims hearing support  Telephone consultation  Online access to your account/reports  Online performance assessment tools for hiring
  30. 30. How It Works$38.5 Million Saved Through Claims Management Credits found in audits of state charges: Paid Claims: $1.9 million $71.6 million Liability Removed: $36.3 million
  31. 31. Determining the Best SolutionDetermining the Right Option for Your Agency
  32. 32. Determining the Best SolutionFactors to consider: 10+ FTEs Unemployment claims history Your current position on state tax rate scale Any planned staff growth/reductions Whether currently a reimbursing employer
  33. 33. Where to Learn More Call: 888-249-4668 E-mail: info@ChooseUST.org Visit: www.ChooseUST.org Opt-Out Deadline: Nov 30 Request a Savings Evaluation to find out if opting out is right for you
  34. 34. Find listings for our current season of webinars and register at: NonprofitWebinars.comA Service Of: Sponsored by:

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