OKLAHOMA CITY – The coronavirus pandemic has taken a toll on Oklahoma’s Unemployment Insurance Trust Fund.
That fund, which is the source of unemployment benefit payments, had fallen to $98 million by Wednesday, according to Nick Buscemi of Saxum, a contracted public information officer for the Oklahoma Employment Security Commission (OESC).
The UI Trust Fund contained at least $127 million during the week that ended December 20 last year, Buscemi said. In comparison, the trust fund balance on May 24, 2020, was $1.484 billion, the highest it had been in at least 22 years, an OESC spokesman said.
Oklahoma is one of two states whose unemployment insurance trust fund hasn’t run dry in recent decades, OESC Executive Director Shelley Zumwalt said on December 30.
Because of the economic downturn blamed on the health crisis, unemployment taxes for employers have gone up and the taxable wage base has increased by almost one-third.
Conversely, the maximum weekly unemployment benefit payment this year has declined by $78 (14.5%): from $539 in 2020 to $461 in 2021, Buscemi reported. The minimum benefit payment remains at $16 again this year.
CONTRIBUTION RATES WENT UP THIS YEAR
Oklahoma’s UI trust fund is underwritten with taxes collected from employers. Approximately 90,000 employers pay into the UI Trust Fund, according to the OESC.
The state’s unemployment insurance trust fund supported historic benefit pay-out levels to jobless claimants in 2020, the agency reported. State law requires the OESC to monitor the solvency of the fund and adjust the next year’s employer contribution rates if solvency declines to a specific level. An evaluation last year determined that solvency had decreased.
Consequently, Condition Factor D was imposed January 1st to replenish 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. The last time the OESC imposed a condition factor was seven years ago, in 2014, an agency spokesperson reported last August.
The increase in unemployment insurance rates “will vary employer to employer,” Ms. Zumwalt said. The rate schedule last year was .01% to 5.5%. The rates for 2021 range from .03% to a maximum of 7.5%. “Nearly three-fourths of Oklahoma employers (72%) will see their rates come in at .03%,” Zumwalt said.
The UI Trust Fund is projected to accrue $550 million to $600 million from employer contributions in 2021 “if the economy proves to be good,” Zumwalt said last October 26.
Asked Monday by the Ledger whether the new rates will be sufficient to sustain Oklahoma’s UI Trust Fund this year, Zumwalt replied, “At this point there are too many variables to give a definite answer just four weeks into the year. OESC has modeled many different scenarios for the coming year and continues to monitor the UI Trust Fund and claims volumes daily.”
A company’s unemployment tax is calculated as a percentage of payroll per employee, up to the annual taxable wage base. The taxable wage base increased from $18,700 in 2020 to $24,000 for 2021.
The unemployment contribution an employer pays is based on the employer’s benefit wage charges (BWCs) for the quarters that are being evaluated, Zumwalt said. “The BWCs for employers were waived from the end of March through the end of 2020, and the waiver has been renewed by the OESC through June 20, 2021,” she said.
JOBLESS BENEFITS ARE TAXABLE
Oklahomans who received unemployment payments last year are reminded that those benefits are taxable, so they will have an extra tax form to file this year: the 1099-G.
Unemployment benefit payments must be reported on state and federal tax returns alike. OESC said those benefits include federal programs and all payments from CARES Act funds such as Pandemic Unemployment Assistance, Lost Wages Assistance and Pandemic Emergency Unemployment Compensation.
OESC has mailed the 1099-G forms to claimants, the agency reported Sunday. “If you have not received one already, they should be arriving soon,” Zumwalt said. By February 8 all claimants will be able to view and print a copy of their 1099 at https://unemployment. state.ok.us.
Some Oklahomans who did not receive unemployment benefits in 2020 have nevertheless received a 1099-G in the mail. “This happened to me before I was director of the agency,” Zumwalt told an Oklahoma City television station.
Those individuals are advised to call the OESC 1099 hotline “to discuss this with our team,” Zumwalt said. The IRS, too, has resources available for anyone who believes he/she may be the victim of identity theft. That link is https://www.irs.gov/ identity-theft-fraud-scams/ employment-related-identity- theft.
The hotline number to request assistance with a 1099-G tax form, or to report a potential case of fraud, is 405-521-6099.
Besides contacting the OESC and/or the IRS, persons who were mailed a 1099-G even though they didn’t receive unemployment benefits last year also should contact the major credit reporting agencies (TransUnion, Experian and Equifax).
DIGITAL UPGRADE STILL UNDERWAY
An 18-month digital transformation project to completely update OESC’s systems was announced last September and is underway, Buscemi said Wednesday.
The job entails not only replacing a 40-year-old system with new hardware and software, Zumwalt said. It also includes “streamlining and modernizing our systems for claims and submission processing, benefits renewal, appeals, risk management, employer claims and account management, reporting and re-employment,” she said.
The “BT40” project is expected to be finished by the end of the first quarter of 2022, she said.
The necessity for the overhaul quickly became apparent when the number of initial unemployment claims for benefits filed by Oklahomans laid off from their jobs skyrocketed from 1,836 on March 14 to an adjusted one-week number of 21,926 for the week that ended March 21.
On April 4 the OESC logged a one-week record of 60,534 unemployment claims. Prior to the tsunami of jobless claims stemming from the coronavirus pandemic, the previous highest week for initial claims for unemployment benefits occurred 30 years ago: 9,778 claims for the week ending Jan. 12, 1991, OESC ledgers extending back to 1987 reflect.
The agency has paid more benefits since March 2020 – in excess of $4 billion – than were paid out during the entire decade of 2010-19, ledgers showed.
On January 25 and 26 the OESC paid more than $240 million in Continued Assistance Act benefits to eligible claimants, Zumwalt said.
For the week ending Jan. 23, the unadjusted advance number of initial claims totaled 5,302, a decrease of more than 1,800 from the previous week’s revised level. The four week moving average of initial claims was 6,381, an increase of 68 from the previous week’s revised average.
The advance unadjusted number of continuing claims totaled 20,267, a decrease of 19,792 from the previous week’s revised level of 40,059.