May 3, 2022
The roller coaster economy that started with the mandated economic shut-downs due to the pandemic has been slow to recover despite significant new federal spending. The availability of funds through the CARES and ARP Acts has enabled states to restore some of the lost revenue to state UI trust fund accounts. Yet, many states have not fully taken advantage of the availability of these funds for this purpose and have not addressed measures that would significantly improve solvency. The result is that many state UI trust funds will remain insolvent or at risk of becoming insolvent with an economic downturn. The risk of recession has increased with the dramatic increase in general inflation rates, supply chain issues, and the impact of increasing gas prices.
The U.S. Department of Labor recently released the 2022 UI solvency report showing the status of state UI trust fund accounts and the relative solvency of each. According to the report, as of January 1, 2022, 10 states had an outstanding Title XII advance balance, totaling $39.9 billion. As of April 18th the number of states with outstanding advances had not changed very much. Nine states and the Virgin Islands still have outstanding advances to be repaid: California, Colorado, Connecticut, Illinois, Massachusetts, Minnesota, New Jersey, New York, Pennsylvania, and the Virgin Islands
Additional states with UI trust funds that are particularly at risk of becoming insolvent in the event of another economic downturn include: District of Columbia, Florida, Georgia, Hawaii, Indiana, Kentucky, Louisiana, Michigan, Missouri, Nevada, Ohio, Oklahoma, Rhode Island, Texas, and Washington
Employers are already seeing increases in state UI contribution rates to be paid in 2022 due to claims experience in 2020 and 2021 and reduced state UI trust fund solvency. We expect additional increases on average for 2023 on top of FUTA tax increases for employers with business in states with continued outstanding loans for 2022 and 2023. We are working with business representatives and states to avoid large spikes in contribution rates and FUTA tax increases and the development of long-term solvency measures. An economic downturn at the end of 2022 or in 2023 would result in further UI related state and federal taxes and increase the risk that more state UI trust funds would become insolvent.
Visually Impaired Preschool Services has been a client of First Non-Profit since it was first offered as a benefit of VisionServe Alliance. We completed a thorough evaluation of cash savings to our agency before taking advantage of this wonderful benefit and it has been a very wise decision. Our experience with the processes from accounting to claims have been professional, expeditious and easy.
The Ensight Skills Center has enjoyed working with First Nonprofit for several years. We are enrolled in their Unemployment Savings Program and although we have not required a lot of intervention, there have been a few times. I know others have dealt with the same problem of unemployment fraud over the last year and in our case, a call to First Nonprofit (they actually answer their phones) cleared up the issue. They also sent us a letter to send to all our employees telling them what they needed to do to prevent this in the future and protect themselves. What a relief! Over the years if I have questions or concerns, they are happy to listen, advise and help if they can. Another BIG advantage of using First Nonprofit is that all the money that is paid into the Unemployment Savings Program lives on my balance sheet as an asset. The money continues to be Ensight’s not the governments. First Nonprofit has certainly given me peace of mind.
In addition to their money-saving purpose on behalf of nonprofit organizations like AHS, First Nonprofit’s Nonprofit Unemployment Fund streamlines the information we need to efficiently manage unemployment claims. Our relationship with NU Fund gave us access to such things as advice on planning for what’s ahead and how to analyze cost scenarios when unexpected events occurred. Both experiences were very helpful.
We have had a great experience with FNP. During Covid, when there was the chance that reimbursable nonprofits would have to pay 50% of the unemployment costs, FNP went to bat for us. We would receive weekly information on the Unemployment claim and how they were working to reduce the costs to reimbursable nonprofits. They have a great service also working with [our claims administrator] to make sure all the paperwork is completed correctly for any unemployment claim.
PORT Health Services has had a great experience with the Unemployment Savings Program offered through First Nonprofit. Throughout the years we have been involved in the program, we have increased our reserve account significantly through this program and find the reporting we receive both timely and useful. We look forward to our continued involvement with this program and our connection with First Nonprofit for many years to come.
Job One was spending a lot of money on unemployment. Our insurance broker, Mark Simcosky, recommended that we switch over to First Nonprofit. We did just that! This switch has been a huge savings for us! This switch saved us over $10,000 in the first year. Their customer service is Superior! Any time we have a question, we get a response very quickly. Any time we send them a report and they have a question; they call rather than just assuming. They were very responsive during COVID, even when they were in crisis mode their selves. They also were always there when we needed during COVID and very helpful! We would 1,000% recommend First Nonprofit to anybody that could benefit from it!
My experience with FNP has always been positive. Every time I have had to contact them, I’m always put in contact with a friendly and knowledgeable person. If something is missing from our account, they reach out to us to request it. It’s nice to work with a company that makes sure our account is current. I would recommend them to any nonprofit looking to reduce their unemployment insurance costs.
We’ve saved tens of thousands of dollars PER YEAR by changing to become a reimbursing employer, freeing funds for much needed capital investment. FNP has been a valued partner in this process, providing assurance that we have stopgap coverage for extraordinary claims and keeping claims response painless and simple. It’s a huge Win/Win!