State UI Fund Projected to Have Positive Balance Next Year

California’s Unemployment Insurance Fund is projected to have a positive balance by the end of 2018, marking the first time since 2008 that the employer-funded account will end in the black, the California Employment Development Department (EDD) reported October 31. California in 2009 began borrowing from the federal government to pay unemployment benefits, and in 2012 the debt triggered a reduction in California employers’ Federal Unemployment Tax Act (FUTA) credit. The FUTA credit reduction has carried over every year since then, costing employers approximately $9.5 billion in additional tax from 2012 through 2018 (as projected by the EDD).

The FUTA tax credit reduction was 1.8 percent for 2016, and is forecast to be 2.1 percent this year. “No reduction is forecast in 2018 as California is not expected to have an outstanding loan balance,” the report stated.

Total employer contributions into the UI Fund were $5.8 billion in 2016, a slight decrease from $5.9 billion in 2015. Contributions are projected to be $5.7 billion this year, and $5.6 billion each year in 2018 and 2019. Total receipts (the employer contributions plus interest, reimbursements and other receipts) were $6.2 billion in 2016 and are projected to be $6.1 billion this year and $5.9 billion each year in 2018 and 2019.

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