UI Outlook FY 2015 Budget Midsession Review
Twice each year, when the Office of Management and Budget issues economic assumptions for the federal budget, the Division of Fiscal and Actuarial Services (DFAS) of the Office of Unemployment Insurance (OUI) uses those assumptions to develop financial projections for the Unemployment Insurance system.
Using the economic assumptions, the paths of key program variables are projected for the following five years. It should be noted that the economic assumptions beyond the first two years are not intended to be forecasts but rather are based on long-term trends. Deviations from the assumed economic path could have a significant effect on the accuracy of the estimates shown here.
Highlights of the analysis for the FY 2015 Budget Midsession Review are detailed below. The total unemployment rate (TUR) is assumed to average 6.5% in FY 2014 and 5.9% in FY 2015, both lower than assumed for the FY 2015 President's Budget.
Under these assumptions,
- the insured unemployment rate (IUR) is projected to average 2.2% in FY 2014 and 2.1% in FY 2015, roughly the same as the President's Budget;
- State UI regular benefit outlays are estimated at $37.2 billion in FY 2014 and $36.8 billion in FY 2015, down a bit from the President's Budget;
- revenues and interest income for state trust fund accounts are projected to exceed outlays by $13.3 billion in FY 2014 and by $12.8 billion in FY 2015;
- State trust fund account balances, net of loans, are projected to increase by $16.3 billion in FY 2014 and $15.9 billion in FY 2015. At the end of FY 2013, state trust fund balances net of loans were positive for the first time since FY 2009;
- State borrowing from the Federal Unemployment Account (FUA) is expected to continue over the next few years, but the aggregate loan balance is projected to decline from $20.7 billion at the end of FY 2013 to $0.08 billion at the end of FY 2019; and
- FUA is projected to finish repaying its general fund advance balance in FY 2015, but EUCA is projected to have a general fund advance balance of $1.24 billion at the end of FY 2019.
The tables in this publication are based on current law. The FY 2015 Budget Midsession Review included a solvency proposal which would return the net FUTA tax rate to 0.8% in 2015, then reduce it to 0.37% in 2017. The FUTA taxable wage base (which effectively provides a floor for state taxable wage bases) would be increased to $15,000 in 2017, and then would be indexed to wage growth. The proposal would also provide near-term tax relief by allowing for a two-year moratorium on state loan interest and by delaying FUTA credit reductions for borrowing states for two years. These changes would first reduce, and then increase, state loan repayments and repayment of FUA general fund advances as well as increasing repayments of EUCA general fund advances.
Questions and comments regarding this document are welcome. Please contact Kevin Stapleton at firstname.lastname@example.org or (202) 693-2930 or Robert Pavosevich at email@example.com or (202) 693-2935, or write to
Office of Unemployment Insurance
U.S. Department of Labor, Room S-4524
200 Constitution Ave., NW
Washington, DC 20210