Presented by Margaret (Peggy) Piety Indiana Legislative Services Agency
NCSL Legislative Summit Louisville, Kentucky Wednesday, July 28, 2010
State Unemployment Funds: Going for Broke?
The Indiana Experience
Indiana Unemployment Insurance Trust Fund(In Millions)
-$2,000
-$1,500
-$1,000
-$500
$0
$500
$1,000
$1,500
$2,000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Fund Balance Tax Revenue and Interest Earnings Benefit PayoutData Source: Department of Workforce Development
2009 Characteristics of the WorkforceNAICS Category Sorted by Total Wages
3,532
494
1,253
214
1,267
413
256
4,919
2,028
1,579
12,001
9,440
5,148
7,755
14,894
6,237
12,763
17,681
10,092
13,620
8,629
$11
$321
$344
$359
$364
$911
$1,150
$1,164
$1,188
$1,579
$1,813
$2,893
$3,971
$4,240
$4,798
$5,263
$6,240
$6,821
$7,402
$7,608
$27,597
Not Assigned
Public Administration
Agriculture, Forestry, Fishing, and Hunting
Mining
Educational Services
Company and Enterprise Mgmt
Utilities
Real Estate, Rental, and Leasing
Arts, Entertainment, and Recreation
Information
Other Services
Accommodation and Food Services
Transportation and Warehousing
Admin, Sppt, and Waste Mgt, and Remed Svcs
Professional, Scientific, and Technical Services
Finance and Insurance
Wholesale Trade
Construction
Health Care and Social Services
Retail Trade
Manufacturing
Total Wages (In Millions)
Number of Employers
Data Source: Department of Workforce Development
Change in Number of EmployeesSelected Private Industries
589 546 557
551427 444
395414 413
291262 281
284273 278
139131 130
153118 113
159
149 150All Other Construction Financial ActivitiesLeisure & Hospitality
Profession & Business Services
Private Education & Health Services
Manufacturing
Trade, Transportation, & Utilities
June 2007
December2009
June 2010
Data Source: Department of Workforce Development
Change in Number of EmployeesPrivate versus Government Sector Employment
2,5612,319 2,365
431 440 443
June 2007
December2009
June 2010
Private GovernmentData Source: Department of Workforce Development
Indiana Unemployment RateAverage Annual Rate
5.0%
5.6%
6.1%
5.0%
4.5%4.3%
3.9%
3.3%
2.9% 2.9% 2.9%
4.2%
5.2% 5.3% 5.3% 5.4%
5.0%4.6%
5.8%
10.1% 10.1%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*
*June 2010 Monthly RateData Source: Department of Workforce Development
Indiana Unemployment Claims
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010*
Initial Claims
Continued Claims
*Partial Year to MayData Source: Department of Workforce Development
$416.01
$491.13
$600.58
$684.67
$728.13
$187.00 $220.00
$288.00
$390.00 $390.00
$106.96
$178.71 $222.19
$278.07 $306.99
Average Weekly Wages Maximum Weekly Benefit Average Weekly Benefit
Calendar YearReplacement Rate
199030.8%
199548.3%
200049.3%
200553.6%
200956.1%
(34th)
(34th)
(28th)
(3rd)
Indiana Unemployment Benefits
Data Source: Department of Workforce Development
Unemployment Tax SystemContribution Variables
Current After 2010
28 Separate Rates
9 Tax Schedules
Reserve Ratio
2011 Rates Range: 0.7% to 11.5%2012+ Rates Range: 0.75% to 12.2%
24 Separate Rates
4 Tax Schedules
Reserve Ratio
Rates Range: 1.1% to 5.6%
Taxable Wage Base: $7,000 Taxable Wage Base: $9,500
Unemployment Tax SystemNew Employer Tax Rate (Applies to First 36 Months)
Current
2.7%
After 2010
2.5%
Unemployment Tax SystemDelinquent Employer Tax Rate
Current
5.6%
HEA 1379
12.0%
SEA 23
Employer contribution rate plus 2%
Unemployment Tax SystemContributions and Benefits
2009Employer Contributions: $521.4 M
Benefits Paid: $1,865.3 M
2011
2012
Est. Added Contributions: $295.1 M
Est. Added Contributions: $343.5 M
Data Source: Fiscal Note HEA 1379
Legislation to Address ShortfallHEA 1379 (P.L. 175-2009)
Employer Funding•Increased taxable wage base to $9,500
•Expanded definition of "employing unit"
•Restricted new experience accounts
•New tax schedules and rates (Schedule B in first year)
•One-time voluntary contribution by debit balance employers
Legislation to Address ShortfallHEA 1379 (P.L. 175-2009)
Benefits and Claims•Changes to extended benefits
•One work application each week; department waiver
•Changes to minimum wage credits
•Changes to "discharge for just cause" and "gross misconduct"
•Benefit reductions under certain conditions
•Changes to definition of "unsuitable“ work based on length of time benefits paid
•Compliance center
Legislation to Address ShortfallHEA 1379 (P.L. 175-2009)
Other Provisions•Unemployment Insurance Oversight Committee •ALJ training, monitoring, and discipline•Transfer of excess P&I fund balance to Trust Fund •Hoosier Workers First Training Program •Study whether to implement changes for federal
stimulus funding
Legislation to Address ShortfallSEA 23 (P.L. 110-2010)
Employer Funding•Delayed for one year new tax schedules and rates
•Change to delinquent employer contribution rate
•Repealed voluntary contribution provision
Legislation to Address ShortfallSEA 23 (P.L. 110-2010)
Benefits and Claims•Removed one work application each week requirement
•Jury service not disqualifier for unemployment benefits
•Removed compliance center provision
•Charged 50% of overpayments to uncooperative employer's experience account
Legislation to Address ShortfallSEA 23 (P.L. 110-2010)
Other Provisions•ALJ must be licensed attorney
•Study indexing of benefits and taxable wage base
•Helping Indiana Restart Employment (HIRE) program using TANF emergency funds
•Worker classification
•Tax credits/job creation incentives
Repayment of Interest
FUTA Credit Reduction
Immediate Issues
Restore balance in contribution/benefit structure of state unemployment system
Indexing of benefits and taxable wage base
Changes to claim review/overpayment collections
Employee tax
Array system tax rate assignment
Longer Term Strategies
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