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South Dakota Retailers Association

South Dakota Retailers Association. South Dakota’s Job Loss. December 2007: National recession hits U.S. U.S. Unemployment Rate: 4.9% S.D. Unemployment Rate: 2.7% Workforce 2025 Focus – finding workers October 2008: National recession impacts S.D. U.S. Unemployment Rate: 6.6%

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South Dakota Retailers Association

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  1. South Dakota Retailers Association

  2. South Dakota’s Job Loss • December 2007: National recession hits U.S. • U.S. Unemployment Rate: 4.9% • S.D. Unemployment Rate: 2.7% • Workforce 2025 Focus – finding workers • October 2008: National recession impacts S.D. • U.S. Unemployment Rate: 6.6% • S.D. Unemployment Rate: 3.2% • Hiring stops; layoffs begin • October 2009: Impact continues in S.D. • U.S. Unemployment Rate: 9.8% (September 2009) • S.D. Unemployment Rate: 4.8% (September 2009) • Layoffs continue; hiring minimal

  3. South Dakota Workers Affected

  4. Weekly Unemployment Benefit Trends

  5. SD Workforce Changes

  6. UI Trust Fund Unemployment Insurance Totals (in millions) Year Total Income Benefits Trust Fund 15.8 15.1 48.7 1999 17.5 15.2 51.1 2000 2001 16.9 22.8 45.1 17.0 29.8 51.2 2002 17.5 31.0 37.4 2003 2004 18.0 28.1 27.3 2005 18.9 25.8 20.4 2006 19.5 20.8 19.3 2007 26.3 20.8 24.1 2008 26.5 25.1 25.5 -7.8 2009* 25.8 64.9 *Projected

  7. ARRA Stimulus Provisions • Provides funds to State Trust Funds to pay more workers Option 1: Alternative Base Period ($5.9 million) Must implement Option 1 to be eligible for Option 2 Option 2: Expand Eligibility ($11.7 million)

  8. JAN APR JUL OCT JAN FEB MAY AUG NOV FEB MAR JUN SEP DEC MAR Alternative Base Period Base Period: First 4 of last 5 completed quarters If claim is filed in: Base Period OCT JAN APR JUL JAN NOV FEB MAY AUG FEB DEC MAR JUN SEP MAR Alternative Base Period: Last 4 completed quarters Alternative Base Period Base period changes every quarterEligibility requires earnings in 2 base period quarters

  9. Alternative Base Period • Implemented July 2009 • Estimated 730 workers would become monetarily eligible (equivalent of 61 per month) • Actual alternative base period claims: • July 2009 = 52 • August 2009 = 37 • September 2009 = 52

  10. UI Financial Projections - Quarterly Summary (in Millions) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total 2009 Contributions/Interest In $2.9 $13.0 $6.2 $3.7 $25.8 Stimulus Revenue In $5.9 $5.9 Benefits Out $20.3 $17.8 $12.5 $14.3 $64.9 Trust Fund $8.9 $8.8 $2.8* -$7.8** -$7.8 UI Trust Fund Projection - 2009 * ** * Surcharge will trigger 9/30/09 for 4th Quarter employer payments due 1/31/10. (1.5% on first $9,500 wage base = $142.50) ** Trust Fund balance goes negative; federal loans available at 0% interest thru 2010. Surcharge will again trigger 12/31/09 for 1st Quarter employer payments due 4/30/10. (1.5% on $10,000 wage base = $150)

  11. 2009 Surcharge Example$9,500 Wage Base Employee A: Full Time/$40,000 annual salary Wages Paid per Quarter: Surcharge Effective 4th Quarter Base Wage of $0 x 1.5% = $0 Surcharge

  12. 2009 Surcharge Example$9,500 Wage Base Employee B: Part Time/$10,000 annual salary Wages Paid per Quarter: Surcharge Effective 4th Quarter Base Wage of $2,000 x 1.5% = $30 Surcharge

  13. UI Financial Projections - Quarterly Summary (in Millions) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total 2010 Contributions/Interest In $2.7 $13.0 $6.2 $4.1 $26.0 Surcharge In $3.5* $23.3 $9.3 $36.1 Benefits Out $15.3 $10.4 $6.3 $8.0 $40.0 Federal Repayment Out $16.9 $16.9 Trust Fund -$9.0** $26.0*** $18.3 $14.4 $14.4 UI Trust Fund Projection - 2010 * 4th Quarter 2009 Employer Payments ** Trust Fund deficit covered by federal borrowing as needed. Surcharge will trigger again 3/31/10 for 2nd Quarter employer payments due 7/31/10. (1.5% on $10,000 wage base = $150) *** Surcharge will not trigger for 3rd Quarter employer payments; balance will be over $16.5 million.

  14. 2010 Surcharge Example$10,000 Wage Base Employee A: Full Time/$40,000 annual salary Wages Paid per Quarter: Surcharge Effective 1st Quarter Base Wages of $10,000 x 1.5% = $150 2nd Quarter Base Wages of $0 x 1.5% = $0

  15. 2010 Surcharge Example$10,000 Wage Base Employee B: Part Time/$10,000 annual salary Wages Paid per Quarter: Surcharge Effective Surcharge Due: 1st Quarter – $2,500 x 1.5% = $37.50 2nd Quarter – $2,500 x 1.5% = $37.50 3rd Quarter – Surcharge Removed TOTAL PAID = $75

  16. Consequences • Surcharge will trigger 9/30/09.4th Quarter employer payments due 1/31/10(1.5% on first $9,500 wage base = $142.50)Revenue raised: $3,531,000 • Trust Fund balance goes negative.Federal loans available at 0% interest thru 2010 • Surcharge will again trigger 12/31/09 and 3/31/10All employer payments due 4/30/10 and 7/31/10(1.5% on $10,000 wage base = $150)Revenue raised: $32,606,000 • Additional $11.7 million in stimulus funds available if benefits are expanded by 2010 Legislature.

  17. UI Financial Projections - Quarterly Summary (in Millions) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total 2011 Contributions/Interest In $3.1 $14.2 $6.8 $4.5 $28.6 Surcharge In $9.7 $0.4 $10.1 Benefits Out $12.3 $8.1 $5.1 $7.0 $32.5 Trust Fund $5.2* $11.3** $22.7 $20.6 $20.6 UI Trust Fund Projection - 2011 * * Surcharge will trigger 3/31/11 for 2nd Quarter payments due 7/31/11 (1.5% on $10,000 = $150). ** Surcharge will trigger again on 3/31/11for 3rd Quarter payments due 10/31/11 (.1% on $10,000 wage base = $10) because the balance has not reached $16.5 million.

  18. UI Recovery Act Provisions Option 2: Expand Eligibility ($11.7 million) • Part-time Workers • Dependents Allowance • Quit for Compelling Family Reasons • Benefits for Training

  19. Benefits for Training • UI exhaustees participating in state-approved or WIA-funded training programs receive additional payment of 26 weeks. • Projected Annual Cost: $800,000

  20. UI Financial Projections - Quarterly Summary (in Millions) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total 2010 Contributions/Interest In $2.7 $13.0 $6.2 $4.3 $26.2 Stimulus Revenue In $11.7 $11.7 Surcharge In $3.5 $23.3 $9.3 $36.1 Benefits Out $15.3 $10.4 $6.6 $8.3 $40.6 Federal Repayment Out $16.9 $16.9 Trust Fund * -$9.0 $26.0 $29.8 $25.7 $25.7 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total 2011 Contributions/Interest In $3.2 $14.4 $6.9 $4.5 $29.0 Benefits Out $12.6 $8.4 $5.4 $7.3 $33.7 Trust Fund $16.3 $22.2 $23.7 $20.9 $20.9 * Trust Fund Difference Covered by Federal Borrowing as Needed UI Trust Fund Projection –If Legislature Passes Modernization Option 2

  21. UI Advisory Council Recommendations 1. Pass UI modernization legislation in 2010 2. Study the entire UI tax system for 2011 Legislature

  22. South Dakota Retailers Association • Discussion

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