Unemployment Insurance Financing: Examining State Trust Funds Facing Recession

Source: Rick McHugh and Andrew Stettner, National Employment Law Project, Briefing Paper, May 2008

As state UI trust funds face a looming economic downturn, NELP has released a briefing paper today that looks at overall UI financing as well as giving a state-by-state breakdown of current trust fund reserves compared with common UI solvency measures. “Unemployment Insurance Financing: Examining State Trust Funds Facing Recession” looks at the current status of state trust funds and examines the question of why states are less solvent in 2008 than they were prior to the 2001 recession. NELP also describes policies that states should adopt to strengthen their UI financing mechanisms so that UI programs can better assist both jobless workers and a state’s economy during recessions.

Included in the paper are explanations of how UI solvency is measured, comparisons of current state solvency status with each state’s solvency situation prior to the 2001 recession, and findings that 21 states have adequately solvent trust funds while as many as 18 states face serious solvency challenges in an upcoming recession. Michigan, Missouri, New York, and Ohio are the states with the nation’s lowest UI trust fund solvency at this time.

Leave a Reply