Where State Unemployment Compensation Trust Funds Stand in December

December 18, 2020

With 2020 nearing its close, state unemployment compensation trust funds continue to struggle under the weight of so many pandemic-created beneficiaries, though some funds are beginning to stabilize as people increasingly return to work.

As of December 17th, 20 states and the U.S. Virgin Islands have drawn a collective $44.3 billion in Title XII Advances—federal loans which will ultimately need to be paid back with interest—and another two are already pre-authorized to begin taking advances when necessary. States entered 2020 with aggregate trust fund balances of $75 billion. On net, these balances now stand at $25 billion, with 19 states and the Virgin Islands in the red. (Indiana’s current trust fund balance slightly exceeds its indebtedness.)

From worst to least bad, on the basis of how many weeks of current payments in arrears they are, the states (and one territory) with negative balances are the Virgin Islands, New York, California, Hawaii, Texas, Kentucky, Illinois, Massachusetts, Ohio, Colorado, Connecticut, West Virginia, Minnesota, New Mexico, New Jersey, Louisiana, Pennsylvania, Virginia, Georgia, and Nevada. Several other states—Indiana, Maryland, Arizona, and Oklahoma leading the way—are closing in on insolvency. Idaho, Mississippi, North Carolina, Arkansas, Utah, and Wyoming are currently in the best shape.

A faster-than-expected jobs recovery has helped many states remain solvent. In May, active unemployment claims peaked at 22,794,145. As of December 12th, they stand at 5,294,701—still over 3 million more claims than pre-pandemic, but a dramatic improvement from the early months of the pandemic. (Claims have begun to spike again as states have reimposed tighter restrictions, with new jobless claims the week ending December 12th hitting the highest levels seen since early September.) In July, the CBO projected that the U.S. would return to 6.7 percent unemployment in the first quarter of 2023, a level in fact reached in November 2020, over two years ahead of schedule. These significantly lower unemployment levels have stretched unemployment compensation trust funds further than many would have initially expected.

Unemployment insurance taxes are imposed on a taxable wage base that is generally fairly low, so in many states, the majority—sometimes the overwhelming majority—of all UI tax revenues arrive in the first quarter of each calendar year. States can, therefore, look forward to a substantial boost in trust fund balances in the early months of 2021. Nevertheless, outlooks in some states remain gloomy.

The following table shows states’ current trust fund balance (net of any outstanding Title XII Advances), the number of current unemployment compensation beneficiaries, and the average weekly benefit the state pays per beneficiary. States will ultimately need to raise UI taxes to pay back these Title XII Advances and replenish their trust funds—often the increases are automatic—but for now, states should take a page from their Great Recession playbook and delay substantial UI tax hikes as long as possible to avoid penalizing rehiring.

Current State Unemployment Compensation Trust Fund Balances
State Net Trust Fund Balance* UC Beneficiaries** Avg. Weekly Benefit
Alabama $310,315,634 20,179 $228
Alaska $398,424,446 19,980 $272
Arizona $98,819,365 79,353 $234
Arkansas $800,755,332 19,330 $284
California -$17,192,065,115 1,175,831 $338
Colorado -$627,946,963 98,546 $460
Connecticut -$414,886,859 74,882 $414
Delaware $172,128,448 13,346 $293
Florida $871,361,507 135,622 $253
Georgia -$31,869,351 159,670 $319
Hawaii -$718,608,949 35,218 $533
Idaho $792,679,848 9,875 $345
Illinois -$2,940,404,864 336,555 $403
Indiana $23,212,801 78,252 $299
Iowa $1,028,605,418 38,748 $419
Kansas $497,969,422 81,566 $395
Kentucky -$460,457,012 47,000 $380
Louisiana -$80,444,079 62,669 $217
Maine $467,091,631 13,608 $352
Maryland $113,183,455 68,948 $354
Massachusetts -$1,893,919,690 161,928 $555
Michigan $871,089,777 171,290 $329
Minnesota -$660,494,400 139,907 $478
Mississippi $871,089,777 26,283 $213
Missouri $453,156,625 43,321 $273
Montana $390,151,001 16,551 $384
Nebraska $471,791,695 11,210 $357
Nevada $12,367,048 79,642 $372
New Hampshire $123,072,715 20,743 $346
New Jersey -$432,838,882 149,476 $471
New Mexico -$178,866,084 52,240 $350
New York -$8,560,529,452 393,644 $385
North Carolina $2,791,225,404 65,451 $277
North Dakota $258,315,209 8,741 $483
Ohio -$1,230,546,910 154,133 $382
Oklahoma $208,603,788 37,313 $402
Oregon $3,869,228,511 90,078 $429
Pennsylvania -$592,382,876 316,549 $410
Puerto Rico $179,574,969 43,960 $164
Rhode Island $187,425,480 17,711 $379
South Carolina $1,180,524,287 40,731 $265
South Dakota $120,171,435 3,793 $349
Tennessee $1,156,863,623 45,294 $246
Texas -$5,701,906,996 391,327 $427
Utah $769,972,135 14,361 $430
Vermont $224,712,935 12,293 $387
Virginia -$74,012,467 68,210 $322
Washington $1,852,447,946 190,948 $492
West Virginia -$102,803,793 23,269 $337
Wisconsin $1,185,622,031 96,831 $329
Wyoming $283,559,636 5,627 $410
District of Columbia $172,128,448 27,520 $363
Virgin Islands -$82,380,339 3,148 $395
U.S. Total $24,918,353,162 5,492,701 $378

*   –  As of Dec. 17, 2020.

** – Through the week ending December 12, 2020.

Sources: U.S. Department of Labor; Tax Foundation calculations.

Errata: A spreadsheet error affected calculations for some states initially; numbers have been corrected since initial posting.

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