CCC + TCC + Emptech are now Experian Employer Services. Learn More

Although solvency has always been important, the Great Recession of 2008 pushed solvency measures to their max.    More than half the states requested Title XII advances, creating a debt of over 41 billion dollars to pay benefits to claimants.   As of April 2017, many states have outstanding debt from private loans secured to repay the debt.  California and the Virgin Islands remains on the list of having outstanding Title XII loan balances.  recession-economy-trading-investment-option-trading-gdp-inflation

Because of inadequate trust funds in 2008, the federal government passed legislation with new measures of solvency.   All state agencies are required to have an Average High-Cost Multiple of 1.0 by the year 2019 to qualify for interest-free loans under the Title XII loans provision.    The requirement started at 0.5 in 2014 and increases by 0.1 increments each year until 2019.    The trust fund balances are evaluated each year on December 31st to measure this new level of solvency.   According to the DOL (Department of Labor), twenty-one states currently have an AHCM of 1.0 as of December 31, 2016.  Thirty-one states qualify for an interest-free loan in 2017 if requested.    While others are improving, the trust fund balance of six states dropped (IL, LA, MN, ND, WV, and WY) with California and the Virgin Islands remain insolvent.

Why is it so hard to maintain a healthy trust fund balance?    The amount paid in for an employee in contributions does not equal the amount paid to the same employee when they become a claimant.  For example, the taxable wage base is $12,960, and the maximum rate in Illinois is 7.35%.   The total contributions of one employee in this example would be $953 per year.    The total a claimant can collect on benefits in Illinois (without extensions) is $11,362 collected in 26 weeks.   It takes contributions paid for twelve employees to satisfy the benefits of one unemployment claim.   When layoffs were high, and employment was low, the trust funds dropped to all-time lows across the nation.    Increased taxable wage bases, increased rates for a few years, and reduced benefits have helped some states to reach the AHCM required by the DOL.    Will it be enough for the next recession?   According to the new measurement of the DOL, only twenty-one states are ready to pay heightened benefits for one year.  For the remaining 32 states, the outlook is not so good.

If you have any questions or concerns, please contact your CCC Tax Analyst.


Contact CCC to see how we can save your organization time and money.
Contact our Sales Team
(800) 207-6926

Featured Videos

View All Videos

Latest News

Close

Sales

    Your Name:*

    Title:

    Company Name:*

    Company Address:

    Company City:

    Company State:

    Company Zip:

    Number of Employees:

    Your Email:*

    Phone Number:*

    Fax Number:

    Check the boxes below if you wish to receive information on any of the following:

    Unemployment Cost ControlTax Credits & Incentives (WOTC)Employment / Wage Verification

    Your Message:

    Employment & Income Verfication

      Your Name:*

      Title:

      Company Name:*

      Company Address:

      Company City:

      Company State:

      Company Zip:

      Number of Employees:

      Your Email:*

      Phone Number:*

      Fax Number:

      Your Message: