Department of Workforce Development
201 E. Washington Avenue
P.O. Box 7946
Madison, WI 53707-7946
Telephone: (608) 266-3131
Fax: (608) 266-1784
Scott Walker, Governor
Reginald J. Newson, Secretary
FOR IMMEDIATE RELEASE
Wednesday, September 17, 2014
CONTACT: DWD Communications, 608-266-2722
On the Web: http://dwd.wisconsin.gov/dwd/news.htm
On Facebook: http://www.facebook.com/WIWorkforce
On Twitter: @WIWorkforce
UI Reforms, Economic Gains Help Wisconsin Employers' Bottom Line
After inheriting $1.4 billion UI Trust Fund deficit, Walker Administration, Legislators restore health to fund
MADISON – After inheriting an Unemployment Insurance (UI) Trust Fund (Trust Fund) deficit of $1.4 billion in January 2011, Governor Scott Walker and legislative partners enacted historic reforms that moved the Trust Fund to its first positive balance this year since 2009. The fund's positive balance will result in lower federal UI taxes for thousands of Wisconsin employers.
DWD forecasts the Trust Fund balance, which most recently entered positive territory in late July 2014, will be positive on the key date of November 9, 2014, when the Federal Unemployment Tax Act (FUTA) rate for Wisconsin employers will be determined as required by the federal government. The rate is expected to revert from 1.5% to the normal rate of 0.6% on the first $7,000 of an employee's wages, representing a 60% reduction. A typical small business with 40 employees who earn $7,000 or more will save more than $2,500 in taxes for 2014.
"A financially stable and growing UI trust fund helps to support the pro-business climate that Wisconsin's job creators need to expand and create more opportunities for working families," said Department of Workforce Development (DWD) Secretary Reggie Newson, whose agency administers the state's UI system. "The UI reforms that Governor Walker and the Legislature passed through the 2013-15 biennial budget and 2013 Wisconsin Act 36 are producing results, and there is more work to be done."
Highlights of the changes include:
- Wisconsin's reliance on the federal loan increased the Federal Unemployment Tax Act (FUTA) rate that Wisconsin employers that are covered under state UI law have to pay into the UI Trust Fund. The federal government uses the rate increase to generate funds to help repay the loan.
- Wisconsin was one of over 30 states that accumulated federal UI trust fund loans as a result of the unprecedented volume of claims that were part of the Great Recession. The loan balance was at $1.4 billion in January 2011, the month Governor Walker took office.
- Under Governor Walker's leadership and in partnership with the Legislature, Wisconsin enacted a series of reforms to strengthen UI program integrity, return people to work, and move the trust fund toward solvency.
- DWD's unemployment rate declined by two full percentage points to 5.8% in July 2014 from 7.8% in December 2010. Initial weekly UI claims for the first 36 weeks of 2014 dropped to the lowest point since 2000, and the annual average weekly UI claims are at their lowest levels since 2000. The decline in the claims volume and the unemployment rate are two of numerous indicators showing the state's economy is improving.
Examples of key UI reforms include:
- $26 million in GPR funding was included in the 2013-15 budget that was approved by the Legislature and signed by the Governor to cover interest on the federal trust fund loan, eliminating the Special Assessment for Interest for employers for 2013 and 2014. The 2015-17 budget request that DWD submitted this week includes a reduction in state funding by $14 million over the biennium, as the agency expects to repay the interest in the current fiscal year.
- Allowed the state Department of Administration to loan the UI Trust Fund up to $50 million to help ensure that Wisconsin employers saw a reduction in their federal unemployment tax rates. At this time DWD does not expect the loan will be needed.
- Repealed several voluntary work termination provisions from UI eligibility to bring Wisconsin in line with neighboring states; established a common-sense standard for misconduct and substantial fault that would disqualify claimants from collecting UI; and, with certain exceptions, required a claimant who was last employed by a temporary help company to contact that temporary help company weekly as part of their work search.