[QUOTE=lm1883;154589]Good read. What happens when total drawings of the UI exceed deposits / premium payments?Has that ever happened? .[/QUOTE]
I am aware of this happening in California a few years ago when they raised their weekly amount to $450. Keep in mind; Legislative procedures like this one are usually buried on page 30 of your local newspaper. Also keep in mind that California is a very liberal State so their interpretation of Title 22 allows for easier eligibility to funds when other states would disqualify.
Well it was actually a combination of a lot of things (including the fact that California still uses COBOL as a programming language) including economic conditions and an increase in claims file.
This problem lead to Unemployment being paid out of the General Fund. The UI general Fund, not the State General Fund. Unemployment is normally (almost always) paid out of an employer’s reserve account unless that employer can argue to have his reserve account relieved of chargers. Ever wonder whatever happens to years taxes pay by employers with employees that never collect? It goes into this general fund.
Well there was a Senate hearing on the matter. In fact I have still have the CD (Old Format) from that hearing. During the hearings, they were trying to determine whether to raise the employer’s tax rate to rebuild the general fund or to borrow from DOL. Since California is not considered an Employer friendly State (especially in LA County), they decided to risk a politically devastating audit and borrow from DOL. Nothing ever came of it though. They delayed. The funding worked itself out. State revenues increased and the General Fund re-stabilized.
And that was a good thing because the problem with asking DOL for a loan is the justification process. A lot of (FUTA) funding doesn’t go into UI funding programs as required. As an example that state, (California) received $400,000,000 in (IIRC) 2005. Approximately $170,000,000 million went to salaries, $30,000,000 to bills that are not allowed to be paid by State Funds (State Budget) such as utilities and lease payments for building not State owned, and ~$25,000,000 in a discretionary fund for things like overtime, training and travel claims, etc…
That’s roughly $225,000,000. Approximately $175,000,000 went into a Legislative black hole for Senatorial Special programs that no one talks about. But that’s wasn’t the real problem because “ALL” States play funny money with UI program funding. The problem was an Accounting problem. It was trying to explain the disappearance of funding from decades of supposedly accumulating moneys from the UI General Fund. Asking DOL for money would have triggered a Federal Audit and the news would have sent a page 30 article to Headlines…alone with a few resignations…
[QUOTE=lm1883;154589]…. If my bar napkin numbers are right which they most likely are not (just saying) $4billion year would sustain about 250k unemployed. There are 6 million that have been unemployed less than 27 weeks according to the BLS. I liked the post, just looking for some more details.[/QUOTE]
Please do not confused the UI program funding source with the funding source for unemployment payments. Two different tax sources. UI programming source is collected from your employer by the “Federal Government” Federal Unemployment Tax Act (FUTA) and controlled by DOL. This is the source to actually run the program. FUTA funding cannot be used to pay benefits to the unemployed.
State unemployment benefits to the unemployed is collected from your employer by the “State” and deposited into their (the employer’s) reserve account for the unemployed to draw from. Employer taxes collected by the State cannot be used to pay UI bills (salaries, utilities, computer upgrades, equipment, training, travel claims, overtime, etc…)
So if you ever get into an argument (which is very easy to do) with a UI program State Employee, and you just happen to say, “I pay your salary” …which I’m sure they hear a lot of, please keep in mind that although they are State employees, their pay does not come from the State’s Budget. They know it and probably roll their eyes every time they hear it.