Missouri has finally paid off federal unemployment trust fund debt!
According to the Missouri Department of Labor, on May 28, 2014, the U.S. Treasury applied the March FUTA payment of $44 million to Missouri’s Unemployment Insurance (UI) Trust Fund. This payment fully repaid Missouri’s outstanding UI loan.
If the U.S. Treasury applies the April FUTA payment to Missouri’s UI Trust Fund before July, it is unlikely that additional borrowing will be required for the remainder of the 2014 calendar year. If the U.S. Treasury does not apply the April FUTA payment to the UI Trust Fund before early July, it is likely that a small amount of borrowing may be necessary. If borrowing is required in July, it will be repaid in late July or early August, at which point Missouri’s indebtedness will be paid off. After July, no additional borrowing is anticipated in 2014. This estimate is based on UI claims activity remaining at the current level.
This is good news for Missouri employers! Missouri employers have paid stiff penalties through higher federal unemployment taxes because of this outstanding balance that has now been repaid. The FUTA effective tax rate will return to .6% for 2015.
While this is good news for employers,” said Ray McCarty, president of Associated Industries of Missouri, “we are still awaiting Governor Nixon’s signature on SB 673.” The bill would require the Board of Unemployment Fund Financing to meet and consider whether it is prudent to issue bonds when the balance in the federal unemployment trust fund exceeds $300 million. Bonds would smooth out the impact to employers by spreading the repayment period over a longer period of time. But bonds would not be the best answer if the federal government offers an interest-free grace period, or in situations where the debt could be repaid relatively quickly. The bill would also help reduce the need for borrowing by reducing the number of weeks of unemployment when the unemployment rate drops.
Another bill, SB 510, would also help by reducing payments to claimants that do not deserve unemployment benefits in the first place. The bill would tighten up the definition of “misconduct” so that employees that are dismissed for good cause are not eligible for unemployment benefits.
SB 673 was sponsored by Senator Mike Kehoe, and SB 510 was sponsored by Senator Will Kraus.