Unemployment Insurance Trust Funds

The federal-state unemployment insurance (UI) program relies on state trust funds to hold enough reserves to meet benefit needs during economic downturns. The sufficiency of such "forward funding" has been a policy concern for decades, particularly during the recent recession, which has caused very high unemploy. rates. While the economy added jobs in Mar. 2010, unemploy. remains very high and has continued to rise in most states, suggesting that state UI programs will continue to face serious financial challenges for at least the near future. This report: (1) describes the current condition of state UI trust funds; (2) highlights policies or practices that have contributed to their conditions; and (3) identifies options for improving UI forward funding in the future.

Unemployment Insurance Trust Funds: Long-standing State Financing Policies Have Increased Risk of Insolvency

"The federal-state unemployment insurance (UI) program relies on state trust funds to hold enough reserves to meet benefit needs during economic downturns. The sufficiency of such "forward funding" has been a policy concern for decades, particularly during the recent recession, which has caused very high unemployment rates. While the economy added jobs in March 2010, unemployment remains very high and has continued to rise in most states, suggesting that state UI programs will continue to face serious financial challenges for at least the near future.This report (1) describes the current condition of state UI trust funds, (2) highlights policies or practices that have contributed to their conditions, and (3) identifies options for improving UI forward funding in the future. To address these questions, GAO analyzed statistics from the Department of Labor, reviewed applicable laws and regulations, interviewed state UI representatives and UI experts, and synthesized GAO's and others' findings to present policy options. "