Tuesday, July 23, 2024

Louisiana Unemployment Trust Fund surpasses $1 billion

by BIZ. Staff

BATON ROUGE – The Unemployment Insurance (UI) Trust Fund, which is administered by the Louisiana Workforce Commission (LWC), surpassed the $1 billion mark this week – the highest the fund has been since 2009.

As it stands, the trust fund has a balance of $1.070 billion, a gain of more than $88 million since the state’s Revenue Estimating Conference (REC) reviewed the fund in September 2018.

Louisiana’s employers pay into the trust fund based on the number of covered workers employed by the company. These funds, in turn, pay unemployment benefits to eligible claimants.

In the same vein, employer contributions via employer quarterly taxes helps fund the state’s Incumbent Worker Training Program (IWTP), which provides a means for employers to train their existing workers. Since July 1, 2018, the LWC has approved almost $20 million in IWTP contracts to train and/or retain more than 53,000 workers, create 1,587 jobs, and contribute to a 5.9 percent wage increase for participants. This fiscal year’s figures reflect a gain of more than $1 million in approved IWTP contracts, with more employers and workers participating than in fiscal year 2018.

“This milestone is proof that our economy is moving in a more positive direction, and the assurance that Louisiana is a great place in which to conduct business,” said LWC Secretary Ava Dejoie. “As more job-seekers return to the workforce in the months ahead, Louisiana’s trust fund will continue to strengthen and provide assistance to workers in transition from one job to the next.”

If the trust fund continues on its current rate of growth until the REC meets again in September 2019, the fund’s projected balance will trigger a lower wage-base contribution for employers, as well as increased unemployment benefits for qualified claimants. The trust fund must reach a balance of $1.15 billion for the new levels to be implemented.

Employers in the state already enjoy the second-lowest taxable wage base in the country, with only the first $7,700 of an employee’s paid wages taxed for unemployment insurance in Louisiana. 

Louisiana has the 15th strongest UI trust fund in the nation – with trust fund “strength” being a measure of the number of months that benefits can be paid if no additional revenue was taken in.

As noted by the U.S. Department of Labor, Louisiana’s UI trust fund reserve ratio is 1.3. This means the state could continue to pay unemployment benefits for 15 months if no additional contributions were made by employers.

Secretary Dejoie cited several efforts by the LWC that have contributed to the trust fund’s continued growth:

For employers:

  • Louisiana was the first state in the nation to require employers to electronically file their wage and tax reports. Full compliance was required beginning in 2014. This mandate resulted in greater reporting compliance among employers, as well as greater accuracy in computations of taxes due.
  • LWC provides a means for employers to pay their unemployment taxes electronically, creating administrative cost savings and faster receipt of funds due. Currently, 98 percent of employers pay their unemployment taxes electronically.
  • The agency is an active partner on the state’s GAME ON task force to combat worker misclassification, an unethical business practice used to prevent paying unemployment taxes and other wage-related taxes and employee benefits. The LWC ranks near the top in the country in the number of misclassifications found per employer audit.

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