According to the U.S. Department of Labor’s trust fund status posting, Connecticut has paid off the balance of its Title XII loan. The payoff should impact employers in Connecticut seeing a reduction in the 2016 FUTA tax rate down to the normal 0.6%.
The FUTA revenue from 2015 was higher than expected, while the state unemployment compensation benefit payout was lower than expected. The official release from Connecticut is anticipated to verify the payoff and impact on the 2016 FUTA tax rate. The US DOL update on the website for Connecticut UI Trust Fund Loan balances shows no balance for this state.Find out how the total number of states carrying federal UI loan debt has evolved, resulting in significantly improved State Unemployment Insurance Trust Fund Health.
Trust Fund Loans
Outstanding Loans from the Federal Unemployment Account. Balances as of March 24, 2016:
Assuming Kentucky pays off its small balance before November 10th, which should be easily accessible from their first-quarter revenue, California, Ohio and the Virgin Islands would be left paying higher FUTA tax for 2016.
Furthermore, while this is great news for employers in Connecticut concerning reduced FUTA tax rate, the need for the state to address the solvency of the state unemployment trust fund in anticipation of the next recession is critical.Learn how to reduce unemployment tax expenses and improve unemployment claims management with this comprehensive guide.
New Challenges for Connecticut
In 2009, the Connecticut UI trust fund became insolvent when the national economic recession resulted in unemployment rates as high as 9 percent, creating a sharp increase in the number of residents relying on unemployment benefits. With the loan fully repaid, Connecticut avoided an increased FUTA tax rate.
Nowadays, however, this state faces a similar challenge because the UI Trust Fund, out of which the UI Benefits are paid, is not solvent. There is currently $609 million in the Connecticut UI trust fund, which is funded by employers. In order to handle another economic downturn, the recommended amount is $1.7 billion. Many analysts point out the importance of building a system that is sustainable for the future and includes technology, such as an online filing system for claims.Outsource your unemployment claims management and start saving time and unemployment costs by leaving the hassle to experts.
Editor’s Note: This post has been updated for accuracy and comprehensiveness.