OKLAHOMA CITY – The unemployment insurance tax paid by employers will be boosted next year to its highest statutory level, but still may not produce enough money to keep the Unemployment Insurance Trust Fund solvent.
The UI trust fund, from which jobless benefits are paid, held a balance of $286 million on Monday, Oklahoma Employment Security Commission (OESC) ledgers show. Of that amount, $113.7 million was the UI portion and the balance was federal funds, according to OESC Executive Director Shelley Zumwalt.
In comparison, the trust fund balance on May 24 was $1.484 billion, the highest it had been in at least 22 years, an OESC spokesman said.
Oklahoma’s UI trust fund is underwritten with taxes collected from employers and was supplemented this year with infusions of federal stimulus aid. Approximately 90,000 employers “currently pay into the UI Trust Fund,” OESC spokesman Anthony Triana said earlier this month.
RATE HIKE INTENDED TO REPLENISH FUND
Conditional Factor D will be imposed next year to reinvigorate the trust fund.
The Oklahoma Employment Security Act specifies four condition factors, A, B, C and D, all of which boost the balance in the unemployment trust fund. “A” is the least severe measure imposed on employers, while “D” is the most severe.
“This will be the 17th time” that Conditional Factor D has been imposed, Zumwalt said; the most recent period was 2011-14, an agency record indicates.
The increase in unemployment insurance rates “will vary employer to employer,” she said. The current rate schedule is .01% to 5.5%. The rate for 2021 will be .03% to 7.5%. “Nearly three-fourths of Oklahoma employers (72%) will see their rates come in at .03%,” Zumwalt said.
A company’s unemployment tax is calculated as a percentage of payroll per employee, up to the annual taxable wage base ($18,700 in 2020).
IF ECONOMY RECOVERS...
The UI Trust Fund is projected to accrue $550 million to $600 million from employer contributions next year, “if the economy proves to be good,” Zumwalt said Monday.
“In years past the trust fund has paid out around $250 million annually.” However, more than $1.25 billion in traditional unemployment benefits have been paid since March 1, she said.
“Anything less than that will be a subject for concern.”
Maximum unemployment benefit payments this year are $539 and the minimum benefit is $16, according to the OESC.
State statute provides that if the balance in the Unemployment Insurance Trust Fund is anticipated to sink to $25 million for the upcoming year, the OESC must institute an immediate surcharge of up to 33% on employers “to keep the fund solvent,” Zumwalt said.
Governor Stitt has pledged $100 million of federal CARES Act funds to keep the UI Trust Fund “from hitting the $25 million threshold this year,” Zumwalt said.
The trust fund is evaluated each summer to determine what, if any, conditional factor should be applied, using the depletion rate of the fund as compared to prior years “to determine what type of rate increase or decrease will be applied to employer rates,” Zumwalt explained. No conditional factor was in effect this year, she said.
CLAIMS RATES DROP
For the week ending October 17, the unadjusted number of initial claims totaled 5,375, a decrease of 126 from the previous week’s revised level. The advance unadjusted number of continued claims totaled 63,701, a decrease of 18,681 from the previous week’s revised level of 93,332.
The OESC also reported that for the 17th consecutive week, the four-week moving average of continuing claims declined again: to 83,301, which was 10,031 fewer than the previous week’s revised average.
Additionally, OESC and the U.S. Department of Labor reported that Oklahoma’s seasonally adjusted unemployment rate dropped to 5.3% in September, the ninth-lowest in the country.
WORK SEARCH, REGISTRATION REQUIREMENTS REINSTATED
Work registration and work search requirements were reinstated October 25 for claimants filing for unemployment benefits. This is a requirement from the U.S. Department of Labor, which mandates that Oklahomans filing for jobless benefits must register to work and actively search for work every week they are unemployed.
Also, all claimants filing new unemployment claims will be required to serve a one-week waiting period before benefits are paid, per Oklahoma law.
“The state waiver for these eligibility requirements expired on October 24,” Zumwalt said. “This requirement had been in place prior to the pandemic, and the timing to reinstate this requirement is right. Many companies are looking for seasonal and full-time employees right now. Still, we want people to be comfortable with rejoining the workforce and are making accommodations to the requirement for those who have medical concerns or issues that prevent them from returning to the workforce at this time.”
Reinstatement does not require claimants to leave their home to complete the work search requirement. OESC will provide additional information on the requirements for those claimants who are part of a population that is deemed vulnerable or have medical conditions that restrict them from returning to the workforce.
LOST WAGES ASSISTANCE PROGRAM CONCLUDES
The federal Lost Wages Assistance program, which provided unemployed workers an extra $300 a week for six weeks, has concluded. The OESC paid out about $230 million in LWA benefits to approximately 150,000 claimants, Zumwalt said.