State’s unemployment insurance fund ends year $1.2B in black

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The state’s Unemployment Insurance Trust Fund ended last year with more in the bank than state officials had expected.

The fund pays out benefits to workers who lose their jobs because of layoffs or other circumstances beyond their control, using money from payroll taxes paid by employers.

The fund ended the year with a $1.2 billion balance on Dec. 31, up by 56 percent from where it was at the same time in 2015, according to a report presented by Tom McHugh, director of the Unemployment Insurance Division’s bureau of tax and accounting.

That balance was about $100,000 higher than what McHugh had predicted in the fall.

The fund’s balance hit $900 million last June, triggering a statutory tax schedule that moved most employers to lower tax brackets in 2017. As a result, employers are expected to see $38 million worth of unemployment-tax savings.

Also according to McHugh’s report, more than 11,000 employers will not pay unemployment-benefits taxes in 2017.

If the fund’s balance exceeds $1.2 billion on June 30, that will trigger another statutory tax schedule in 2018. This change is expected to reduce employers’ taxes by another $30 million.

McHugh also reported that about $457.4 million worth of benefits were paid out last year. That was 15 percent less than in the same period the year before.

McHugh made his presentation last week before a panel that advises state officials on unemployment-benefits matters.

The same meeting saw panel members receive a report on public hearings that state officials held on Nov. 17 to solicit advice on unemployment benefits. The meetings took place in Madison, Eau Claire, Green Bay, La Crosse, Milwaukee, Superior and Wausau. Fifty-one people eventually attended. Separately, the Department of Workforce Development has received more than 300 written comments on unemployment-benefits policies.

One popular topic of discussion — eliciting 246 comments — has been changes recently made to the state’s rules governing work-search waivers. Among other things, the new rules significantly reduced the maximum number of weeks a person could receive unemployment benefits without having to search for jobs. Before June 2015, a claimant could get waivers that lasted for a year.

The change reduced the maximum waiver period to 12 weeks. Contractors and other seasonal employees complained almost immediately that more time should have been given.

Two members of Unemployment Insurance Advisory Council, Earl Gustafson and Mark Reihl, said Thursday that the council will read the comments and see what action they can take to alleviate the concerns.

“These will be read,” said Gustafson. “They will not just be put on a dusty shelf.”

The above story was corrected on Jan. 24, 2017, to show the state’s Unemployment Insurance Trust Fund had a $900 million balance as of June 2016.