State Unemployment Insurance Trust Fund Still Dropping

Huron, SD – The South Dakota Unemployment Insurance Advisory Council heard a somewhat gloomy report from the state Department of Labor this week. Council members learned the state’s unemployment insurance trust fund is being depleted at a faster rate than had earlier been estimated and it's prompting the Council to consider new ways to safeguard the state's unemployment funds.

Paul Aylward, executive director of the American Federation of State, County and Municipal Employees, and a Council member, says their group was told the trust fund has dropped from nearly $25 million last year to around $12 million today. Changes made by the state legislature this year did qualify the state for $5.9 million in stimulus funding, says Aylward, but an additional $11 million would still be available if the state legislature expands current labor laws to qualify more low-income workers.

"I think the attitude is that these changes probably will be good public policy, and if we make the changes, we would qualify for the money. I think the attitudes are that it may be a good thing to do. It would qualify a few more people to draw unemployment that are not eligible now. Plus, it would qualify us for that stimulus money."

Governor Rounds has expressed concerns that accepting the additional stimulus dollars might saddle employers with more taxes when that funding dries up. But, Aylward says those new dollars will actually help businesses who will be forced to pay a tax surcharge if, after September, the state's unemployment insurance trust fund falls below $11 million.

"If the unemployment rate stays about where it is, we’re projecting that the fund will probably be below that $2-million mark into the third quarter this year. If that happens, and the projections are true, it will trigger the surcharge and right now that’s about a percent-and-a-half on the first 10,000 of employee wages."

Aylward says that would amount to about $150 per employee per year in South Dakota. The Unemployment Insurance Advisory Council meets again in June to discuss changes the legislature can make to ensure the state qualifies for the remaining unemployment stimulus dollars.