Scott Walker, Governor
Reginald J. Newson, Secretary
Department of Workforce Development
201 E. Washington Avenue
P.O. Box 7946
Madison, WI 53707-7946
Telephone: (608) 266-3131
Fax: (608) 266-1784
FOR IMMEDIATE RELEASE
Thursday, April 23, 2015
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
DWD Issues Positive UI Financial Outlook Report
Return to less costly tax schedule could save employers $97 million per
MADISON – The improving health of the state's Unemployment Insurance (UI) Trust Fund could trigger the activation of a lower UI tax schedule for covered employers for the first time since 2009, saving close to $100 million in UI taxes every year for tens of thousands of Wisconsin employers.
Some 134,000 Wisconsin employers who are covered by the state's UI program have been paying UI taxes based upon the highest UI tax schedule set forth under state law since 2009 due to Trust Fund borrowing during the Great Recession and its aftermath. Current projections call for the UI Trust Fund balance to exceed $300 million when the current fiscal year ends on June 30, which would trigger the next-lowest UI tax schedule for employers in calendar year 2016.
The state's move to the next lowest tax schedule will reduce the UI employer tax burden by an estimated $97 million per year.
"The economy is projected to grow throughout the period of 2015 through 2017 and correspondingly the UI Trust Fund is projected to continue to grow through the end of 2017, which is great news for employers who pay taxes into the fund," Department of Workforce Development (DWD) Secretary Reggie Newson said today. "The state's improving economy, coupled with the smart UI reforms that we've implemented in recent years, will build confidence among employers to expand and create more jobs."
The projections are included in the state's 2015 UI Financial Outlook report, which DWD submitted on April 15 to the Governor and state Legislature as required by statute.
Highlights of the report include:
- The Unemployment Insurance (UI) Trust Fund ended 2014 with a balance of $214 million. This is the first year since 2008 that the UI Trust Fund finished a year with a positive balance.
- The UI Trust Fund is expected to be over $300 million on June 30, 2015, moving Wisconsin's tax schedule to the next-lowest schedule. This move will reduce the employer UI tax burden by some $97 million per year, though an individual employer's savings will vary based on the tax bracket the employer falls into.
- The UI Trust Fund is meeting its benefit costs without having to borrow, allowing Wisconsin employers in good standing to receive the full Federal Unemployment Tax Act (FUTA) credit. This reduces the effective FUTA tax rate from 1.5% to 0.6%.
- UI benefits are expected to stay at historically low levels through 2017. UI tax revenue is expected to fall each year due in part to a change in the effective UI tax schedule and in part to the improvement of employer reserve fund balances.
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.
Other indicators demonstrating the health of the state's UI program and economy include:
- Total loans taken since February 2009 reached $4.9 billion and the balance was still $1.4 billion when Governor Walker first took office. All federal loans were paid off by July 29, 2014.
- Benefits paid in January 2015 declined by 16.1 percent to $69.4 million from $82.7 million in January 2014.
- The state's unemployment rate dropped in March 2015 to 4.6 percent from 4.8 percent in February and is at its lowest point since 2008. Wisconsin's rate is also below the national rate of 5.5 percent.
- Average Initial Unemployment Insurance (UI) claims for the first 15 weeks of 2015 dropped to the lowest point since 1995, and the annual average weekly continued UI claims are at their lowest levels since 2000.
The full UI Financial Outlook report is available online.