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Calculation of 2015 Bond Rates

Calculation of 2015 Bond Rates. Presented to Employment Security Council October 8, 2014 David Schmidt Research & Analysis Bureau. 2. Overview of UI Bonds. First payment made : June 2014 $0 Principal $13.6 million interest Next payment due: December 2014 $71.8 million Principal

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Calculation of 2015 Bond Rates

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  1. Calculation of 2015 Bond Rates Presented to Employment Security Council October 8, 2014 David Schmidt Research & Analysis Bureau

  2. 2 Overview of UI Bonds • First payment made: June 2014 • $0 Principal • $13.6 million interest • Next payment due: December 2014 • $71.8 million Principal • $12.0 million Interest • Current Account Balances (September 1) • Principal account: $83.6 million • Interest account: $16.4 million

  3. 3 Step 1: Upcoming Obligations • What payments are due in 2015? • Principal: $121.3 million x 1.5 = $181.9 million • Interest & Expenses: $22.7 million x 1.5 = $34 million • What reserves will be available to make those payments? • Principal: $57.9 million • Interest & Expenses: $14.1 million • What do we need to collect to make those payments and meet our bond obligations? • Principal: $124 million • Interest & Expenses: $19.9 million

  4. 4 Step 2: Baseline Bond Rates • What are the estimated taxable wages? • $27.3 billion x 95% = $25.9 billion • What are the baseline rates? • Principal: $124 million ÷ $25.9 billion = 0.48% • I & E: $19.9 million ÷ $25.9 billion = 0.08% • 2015 Total rate: 0.56% • 2014 Total Rate: 0.63%

  5. 5 Step 3: Tiers Defined in Regulation • What are the four tiers? • Tier 1: New employers • Tier 2: Negative Reserve Ratio employers • Tier 3: Bottom 90% of Positive Reserve Ratio wages • Tier 4: Top 10% of Positive Reserve Ratio wages • What is the distribution of wages within tiers? • Tier 1: 7.8% of wages; 38% of employers • Tier 2: 14.8% of wages; 13.5% of employers • Tier 3: 69.8% of wages; 24.2% of employers • Tier 4: 7.6% of wages; 24.3% of employers

  6. 6 Step 4: Calculating Rates by Tier • What are the rates for each tier?

  7. 7 Long Term Bond Estimates

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