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One state’s unemployment benefits fund finished the last fiscal year in the black for the first time in over half a decade.

In Wisconsin, the unemployment fund shifted into positive territory for the first time in six years, much of which has been spent chipping away at federal loans following the recession. The movement into the black may come as a relief to employers who have been paying off the state’s unemployment debt through increased taxes.

Unemployment fund tips back into black in 2014
The Legislative Audit Bureau was asked to take a look at the Unemployment Reserve Fund by the Department of Workforce Development, and found that the fund had climbed from negative $208.4 million as of June 30, 2013, to $329.4 million as of June 30, 2014. This marks the first time the balance has been positive since fiscal year 2007-2008. The federal government recommends states have enough funds in their reserves to cover a year of benefits – about $1.6 billion for Wisconsin last year.

The state really began chipping away at the debt it owed to the federal government for unemployment loans in the 2011-2012 fiscal year. From then until fiscal year 2013-2014, the number of weeks workers were eligible for unemployment benefits dropped to 26 from 86. Additionally, the tax revenue from employers helped contribute to the fund’s shift out of the red.

Outstanding federal unemployment loans lead to more taxes
The state government’s outstanding loan balance led to more federal unemployment taxes for employers. In most states, employers receive a tax credit of 5.4 percent against the typical 6 percent rate, which brings a final FUTA tax rate of 0.6 percent, according to Komisar Brady & Co., LLP, a public accounting firm. However, when states have outstanding federal loan balances, that credit may decrease. In Wisconsin as it fell, the FUTA rate rose, hitting 1.2 percent in 2014.

In 2012, in Wisconsin, employers’ unemployment tax rates had them paying up to $42 per employee. As the credit in the state decreased though, this amount rose, hitting $84 by 2014.

At Corporate Cost Control, we work closely with employers across the country to better manage the nuances of unemployment insurance. Legislation changes on the state level could impact you today, and we welcome any questions or concerns you may have on a wide range of topics.


Contact CCC to see how we can save your organization time and money.
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