Commission on Unemployment Compensation

Sam Lupica, Acting CommissionerDecember 9, 2014

Status of the Unemployment Trust Fund

and Related Issues

Basic Benefit Information

Purpose Min/Max Amount

$60 $378

Min/Max Duration 12 weeks 26 weeks

Qualification Eligibility Minimum earnings requirement $3,000

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Trust Fund Data—Standard Forecast (Millions of Dollars)

2013 2014January 1 Balance ($34.3) $186.9

Tax Revenue $791.1 $745.3

Interest Revenue $4.7 $9.0

Benefits $575.8 $499.6

December 31 Cash Balance $186.9 $442.1

Solvency Level (6/30) 24.4% 40.3%

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December 31, 2013 and 2014, balances include $1.2 million and $0.5 million, respectively, from FUTA Credit

Reduction paid to IRS.

June 30 Trust Fund Balances and Solvency

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Mil

lio

ns

Trust Fund Solvency shown as a percent (%)

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

-$200

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$757(64%)

$291(24%)

-$104(-8%)

-$80(-6%)

$135(9%)

$335(24%)

$564(40%)

$710(46%)

$938(59%)

$1,121(67%)

$1,236(71%)

$1,298(71%)

$1,328(70%)

Average Total State Tax5

Cos

t pe

r E

mpl

oyee

Calendar Year

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020$0

$50

$100

$150

$200

$250

$97.40 $96.60

$127.60

$161.40$177.60

$187.60$175.40

$159.60 $154.80$142.20

$126.00 $117.20 $113.80

$1.60 $6.40

$22.40

$37.60

$42.40 $30.40

$17.60

$14.40 $15.20

$16.80

$16.00$12.80 $11.20

$16.00

$16.00

$16.00 $16.00

$16.00

$16.00 $16.00

$99 $103

$166

$215

$236 $234

$209

$190 $186

$159

$142$130 $125

base tax pool tax

Pool Taxes6

Calendar Year

Cos

t pe

r E

mpl

oyee

Distribution of 2014 Base Tax Rates(excluding 0.22% pool tax and 0.20% fund builder tax)Computed and Assigned Rates

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Tax Rates Number of Employers Percent of Total

Computed

0.10% 112,426 56.7%

0.15%-0.90% 9,223 4.6%

1.05%-1.95% 8,192 4.1%

2.10%-2.85% 5,509 2.8%

3.00%-3.90% 5,167 2.6%

4.05%-4.95% 3,949 2.0%

5.10%-5.85% 2,747 1.4%

6.00%-6.15% 803 0.4%

6.20% 17,538 8.8%

Assigned

New, 2.50% 25,250 12.7%

Delinquent, 6.20% 775 0.4%

Foreign Contractor, 6.20% 277 0.1%

Other, 6.20% 6,563 3.3%

Total 198,419 100.0%

Claims Filed

Calendar Year Initial Claims

2009 485,711

2010 380,830

2011 330,057

2012 301,211

2013 276,807

2014 (Jan. – Oct.) 182,897*

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*Annual claims projected to be 222,000.

Virginia’s Unemployment Rates2012 - 2014 (year to date)

9Pe

rcen

t of L

abor

For

ce

(not seasonally adjusted)

UI Initial Claims2012 - 2014 (year to date)

Total initial claims through October this year are down 19.8% because of fewer layoffs in manufacturing, administrative and support services, construction, and accommodations and food services.

October 2013 increase includes initial claims from partial federal government shutdown.

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UI Final Payments2012 - 2014 (year to date)

For the first ten months of 2014, final payments are down 18.9% from 2013 and 27.7% from 2012.

The exhaustion rate in October was 44.6%, down from last October’s 47.7%.

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Exhaustion Rates2012 - 2014 (year to date)

12

Exha

ustio

n Ra

te

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec40.0%

42.0%

44.0%

46.0%

48.0%

50.0%

52.0%

54.0%

56.0%

2012 2013 2014

Fourth Circuit States13

Trust Fund

Balance (10/31/14)(Millions)

Average Tax per

Employee (year

ending 12/31/13)

Average Tax Rate

(year ending

12/31/13)

Taxable Wage

Base 2014

2014 Maximum Weekly Benefit

2014 Maximum Weekly Benefit

Replacement Rate

2014State

Potential Duration(Weeks)

DC $310 $252 2.80% $9,000 $359 24% 19 – 26

MD $908 $331 3.89% $8,500 $430 43% 26

NC -$391 $481 2.30% $21,400 $350 42% 5 – 14

SC -$34 $305 2.54% $12,000 $326 43% 13 – 20

VA $475 $230 2.88% $8,000 $378 39% 12 – 26

WV $117 $365 3.04% $12,000 $424 56% 26

US Avg.

$424 3.26% $13,259 $423 45%

Short-Time Compensation and Military Trailing Spouse Updates

Short-Time Compensation (STC): U.S. Department of Labor has written that Virginia’s STC law precludes  Virginia from qualifying for the STC grant due to sunset provisions in 60.2-710(5) and 60.2-710(6).

Military Trailing Spouse: Since the effective date of July 2014 to present, $235,356 in benefits has been paid to 82 claimants. 

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2015 Session: HB 1278 Unemployment Compensation; responsibility for benefit charges

Amends provisions in Virginia's unemployment compensation laws designating the employer responsible for benefit charges. Under current law, the last employer that employed a benefits-eligible individual for 30 days or 240 hours will be assessed benefit charges relating to such individual's benefit claim. The bill increases the amount of employment required before responsibility attaches to 60 days or 480 hours.

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U.S. Department of Labor Rules forInterest-free Cash Flow LoansCash flow loans are interest-free if: Repaid by September 30 of the calendar year in

which they are made The State does not receive an additional loan

after September 30 of the same calendar year in which the loan is made

The State has met all three of the following funding goals: A solvency criteria (AHCM) that increases from 2014 to

2019 Two maintenance of tax effort goals, which must be

met every year between the last year solvency criteria met and year interest-free loan is taken: − Average tax cannot drop more than 20 percent from

previous year− Average tax cannot fall more than 25 percent below the 5-

year average of benefits-to-total wages ratio

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U.S. Department of Labor Rules forInterest-free Cash Flow Loans – Continued

Based on historical and current projected data, Virginia will not meet the solvency criteria in any year and will not meet the maintenance of tax effort criteria in some years.

Therefore, the State would not be eligible for interest-free cash flow loans.

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