Corporate Cost Control recently attended the UWC convention in San Diego, California. The topic of the three-day session was improving the current UI programs, so individual states are ready for the next recession. As the economy improves, the state workload is reducing with less claims and lower rate schedules. States are still struggling to achieve performance measures set by the federal government, with fraud being the most difficult. States have begun to hire third-party vendors, through federal grants, that review their UI program and try to advise remedies to replace or strengthen the old methods and systems.
Since the recession, states have tried several methodologies to increase their unemployment trust funds. Thirteen states increased their taxable payroll. Kansas and Mississippi increased the taxable payroll by $4000 while the increase was minor in most states. Ten states reduced the duration a claimant can collect. Two states changed their computation from a reserve ratio state to a benefit ratio state. Still, many of the states are not ready for another major recession.

Six states owe monies under the Title XII loan provision and will lose a portion of their FUTA tax credits unless the monies are repaid by November 10, 2015. California, Indiana, Kentucky, Ohio and Virgin Islands, have requested a waiver for the Benefit-Cost ratio. Connecticut did not request a waiver, and employers will pay at a FUTA tax of 2.8%. Kentucky has also requested a cap to allow the total FUTA tax rate at the 2014 rate of 1.8%. Kentucky is hoping to repay the Title XII loan balance before the November 10th deadline. However, it is recommended that you accrue at 1.8% until the DOL confirms that payment has been made.
Changes for July 1, 2015, are beginning to be released. Michigan’s taxable wage base may decrease for the third and fourth quarters of 2015. SB 806 increased the taxable wage base from $9000-$9500 effective January 1, 2012. The legislation also stated that if the trust fund balance reached $2.5 billion for two quarters, the wage base would decrease the following quarter. To qualify for the $9000 taxable wage base, an employer cannot be delinquent in payment, penalties, or interest. Employers who met the wage base of $9500 will not receive a refund since the effective date of the wage base decrease is July 1, 2015. We are waiting for confirmation from the state regarding the wage base decrease.

Vermont was the first of fiscal year states to issue rates. Vermont remains at Rate Schedule 5 with rates ranging from 1.3% – 8.4%. While Schedule 5 is still in effect, some employers may see higher rates as the ratios within the schedule changed. New Jersey has announced that Rate Schedule E will remain in effect for the 2015/2016 rate year. Rates will range from 1.2% to 7.0%. New Jersey provides the voluntary contribution option that would need to be submitted within thirty days of the mail date on the rate notice. Tennessee employers with 10 or more employees must file electronically as of January 1, 2016. Employers can report on CD, DVD, or diskette while preparing to file electronically. After July 1, 2016, a penalty of $50 a month will be assessed with a maximum of $500 until the employer complies. Tennessee rates are issued in early September that is effective July 1, 2015 – June 30, 2016. Keep in mind that both New Jersey and Tennessee evaluates their trust fund balance twice a year -once as of June 30th and again December 31st. The rate schedules for both states can change for the first two quarters of 2016.

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