State FUTA receipts and funds returned, fiscal 1999

Official letter (https://oui.doleta.gov/dmstree/uipl/uipl98/uipl_2498c3.htm):

U.S. DEPARTMENT OF LABOR
Employment and Training Administration
Washington, D.C. 20210
CLASSIFICATION: OWS
CORRESPONDENCE SYMBOL: OIS/DFAS
ISSUE DATE: February 27, 2001
RESCISSIONS: None
EXPIRATION DATE: February 28, 2002

UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 24-98, Change 3

TO: ALL STATE EMPLOYMENT SECURITY AGENCIES
FROM: GRACE A. KILBANE, Administrator, Office of Workforce Security
SUBJECT: Comparative Data on Federal Unemployment Tax Act (FUTA) Receipts and Amounts Returned to States

Purpose. To provide tables for Fiscal Year (FY) 1999 showing estimated FUTA receipts attributable to employment in each State and the amounts provided to each State for program administration and benefit payments. Cumulative totals for FY 1981 through FY 1999 are also included.

References. UIPL No. 24-98 and UIPL No. 24-98, Change 2.

Background. There has been considerable interest among State Employment Security Agencies (SESAs) in comparing FUTA receipts attributable to employment in each State compared with amounts provided to each State in past years. This UIPL provides data for FY 1999 and a cumulative table for FY 1981 through FY 1999. Data for earlier years can be found in UIPL No. 24-98 (FY 1981-1993) and in UIPL No. 24-98, Change 2 (FY 1994-1998). When comparing FUTA receipts and amounts returned, it is important to note that postage costs and National Activities (approximately $2.8 billion for the FY 1981 through FY 1999 period) are not reflected in the State data; this effectively reduces the apparent proportion of FUTA receipts returned to States.

Action Required. Please distribute to appropriate staff.

Inquiries. Direct inquiries to the appropriate Regional Office. Data may be obtained in computerized format by contacting Scott Gibbons of the National Office at 202-693-3008. Data is also available on the OWS web site (oui.doleta.gov) through the Document Management System. The text and tables can be accessed through a link under UI Program Letters in the folder labelled FY 1998.

Attachment: FUTA RECEIPTS VS. AMOUNTS RETURNED — Column Definitions; Explanatory Notes; Annual Charts.

Attachment: Column Definitions

Estimated FUTA

Total -- Estimated total FUTA receipts (excluding reduced credits).

General Fund Repayment -- The share of receipts transferred from the EUCA to repay loans incurred as a function of Federal benefit payments which preceded 1981. This category applies only to FY 1981 through FY 1987.

Implied Net FUTA -- This column represents the amount of the FUTA receipts net of the General Fund Repayment and applies only to FY 1981 through FY 1987.

EUCA -- Share of receipts transferred to the Extended Unemployment Compensation Account (EUCA).

FUA -- Share of receipts transferred to the Federal Unemployment Account (FUA). This applies to FY 1988 through FY 1991 only.

ESAA -- Share of receipts retained in the Employment Security Administration Account (ESAA).

95% of ESAA -- 95% of the ESAA share. The amount appropriated for State administration is limited by law to 95% of ESAA receipts.

Administrative Costs

UI -- State administrative costs for Unemployment Insurance (UI) excluding postage and a portion of National Activities.

Other -- Includes Employment Service (ES), veterans employment programs, and Labor Market Information. All data exclude postage. ES fiscal year data are estimated from program year data and adjusted for the general revenue share of ES funding (approximately 3% of the total).

Total -- Total administrative costs. All administrative cost data are Federal obligations.

Reed Act Distribution -- Distribution of excess Federal account balances.

Benefits Paid

Fed Share EB -- Federal share of Federal-State Extended Benefits (EB). Also includes shareable regular benefits.

EUC -- The estimated amount of Emergency Unemployment Compensation (EUC) benefits funded from FUTA.

Total to State -- Total FUTA funds returned to the State.

Attachment: Explanatory Notes

Administrative Grants

Some EUC administrative costs funded from general revenues are included in the State data. These total $43 million in FY 1992 and $217 million in FY 1993.

FY 1999 UI administrative grants include special funds to help States identify and prevent year 2000 computer problems.

There are several items that are appropriated as State administration but are not included in the State data. These include postage costs, ES National Activities, and a portion of UI National Activities. Annual totals for postage and ES National Activities are shown below. Comparable annual data for UI National Activities are not available, but the total amount for FY 1981 through FY 1999 that is not reflected in the State data is approximately $59 million.

FUTA Estimates

Since actual data on FUTA receipts by State do not exist, it is necessary to estimate these data using wage and employment data from the ES202 report. Receipts are estimated by first estimating calendar year FUTA taxable wages and then multiplying by the effective tax rate (0.7% through CY 1982, then 0.8%). Calendar year estimates are then converted to fiscal year based on quarterly receipt patterns.

The sum of the State estimates do not match yearly totals reported by Internal Revenue Service (IRS) or amounts deposited in the Unemployment Trust Fund because of IRS reporting problems for some years and the fact that deposits were based on estimates from 1986 to 1992, with large adjustments in 1989 and 1992. Also, State estimates do not reflect unpaid taxes or penalties and interest.

Attachment: Annual Charts

Official four-page chart (https://www.dol.gov/sites/dolgov/files/ETA/advisories/UIPL/2001/UIPL24-98_Ch3_Attach3.pdf). Figures are in millions of dollars.

FUTA receipts vs. amounts returned, FY 1999

DOL / ETA / OWS; see explanatory notes, February 16, 2001.

FUTA receipts vs. amounts returned, FY 1981–1999

DOL / ETA / OWS; see explanatory notes, February 16, 2001.