Santa Barbara, CA (PRWEB) October 16, 2012
On September 30th, 18 states and the U.S. Virgin Islands paid more than $2 billion in interest on the federal loans they received after their Unemployment Insurance Funds reached insolvency during the Great Recession. Employers are footing much of the still outstanding bill, while nonprofit employers are getting pressure to both pay higher UI taxes and provide more services, says the Unemployment Services Trust.
Many of the states—which still owe a combined $26 billion plus mounting interest—leveraged payments from employers in the state unemployment insurance tax system by charging high interest assessment fees or sold state-specific bonds to make the $2 billion payment.
Despite the Recession being officially over and unemployment rates continuing to trend downward, high interest payments such as this have sparked concern for nonprofit analysts. “The major concern is that state UI funds are being refilled so slowly that if there is another downturn in the future—as was suggested many times throughout the recovery—states which were forced to borrow money from the federal government to refill insolvent trust funds will be in an even worse position to provide coverage to jobless workers,” said Adam Thorn, head of the Division of Nonprofit Research at UST.
“So many states have already made such strident cuts to their unemployment insurance programs that if this were to happen,” explained Executive Director Donna Groh, “it would put a significant amount of strain on nonprofits that provide help to the unemployed, the homeless, those in need of health services, and families facing hardship. Perhaps more concerning, however, is that it would put added strain on nonprofit organizations without providing the framework for any additional support in terms of public contributions or government funding.”
“That’s where I believe that UST is most helpful for nonprofits,” she continued. “Because UST helps nonprofits opt out of the state unemployment tax system and lower their unemployment costs by only reimbursing the state for unemployment claims made by former employees, our members are able to ultimately put more money toward fulfilling their own missions.”
With less than one month left, more nonprofits are looking at UST to help them file the paperwork with their state to opt out of the gravely flawed state unemployment tax systems before the November 30 deadline.
Founded by nonprofits, for nonprofits, UST is the largest unemployment trust in the nation, providing nonprofit organizations with a safe, cost-effective alternative to paying state unemployment taxes. UST regularly saves nonprofit members money through dedicated oversight and unemployment cost management. Visit http://www.ChooseUST.org to request a savings evaluation and find out whether opting out of the state UI system is right for your 501(c)(3).