State Unemployment Trust Funds

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How is the joint federal-state unemployment insurance program funded? Federal and state unemployment taxes fund the joint federal-state unemployment insurance program. Federal unemployment tax revenues fund accounts in the federal Unemployment Trust Fund (UTF) that pay for federal and state unemployment insurance program administration costs, the federal portion of extended benefits, and loans to State Unemployment Trust Funds. State unemployment tax revenues fund State Unemployment Trust Funds, which pay regular benefits and the state portion of extended benefits. Read more about unemployment taxes here.

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State Unemployment Trust Funds are accounts within the federal Unemployment Trust Fund in which states deposit their unemployment insurance program taxes. Each state has a unique account in the federal fund to deposit its unemployment insurance program taxes. The money in each state's account is used to cover the state's unemployment insurance program expenses.

Funding

State unemployment tax revenues are transferred to the appropriate State Unemployment Trust Fund account in the federal Unemployment Trust Fund. Each state uses the money in its fund to pay regular unemployment benefits and its share of extended benefits.

New employers begin paying into the unemployment insurance system at the new employer rate. Depending on state laws, employers that have paid unemployment insurance taxes for a set time period (usually a few years) receive an experience rating. The more unemployment claims an employer has, the higher their tax rate.

Alaska, New Jersey, and Pennsylvania also require employees to contribute to unemployment taxes.

Trust fund solvency by state

Federal unemployment insurance program guidelines recommend that states hold at least one year of projected benefit payments in reserves. States base the year of projected benefit payments on the highest level of unemployment insurance payments experienced during the last 20 years.

States determine their program solvency by using the Average High Cost Multiple (AHCM)—the ratio of the state's trust fund balance to the average of its three highest years of unemployment insurance payments. States with an AHCM below 1.0 risk insolvency.

As of a March 2024 report, 19 states had trust funds operating at or above the minimum solvency standard. Two states and the Virgin Islands had trust funds with the lowest (least solvent) AHCM value of 0.00.

The map below identifies AHCM values by state as of March 2024. States shaded green have AHCM values above 1.0, while red states have AHCM values of 0.00. Gray states have AHCM values above 0.00 but below 1.0.

AHCM values by state, March 2024
State	AHCM value
Alabama	1.02
Alaska	2.16
Arizona	0.87
Arkansas	1.09
California	0.00
Colorado	0.10
Connecticut	0.01
Delaware	1.13
Florida	0.70
Georgia	0.45
Hawaii	0.44
Idaho	1.42
Illinois	0.23
Indiana	0.68
Iowa	1.40
Kansas	1.63
Kentucky	0.44
Louisiana	0.72
Maine	1.80
Maryland	1.09
Massachusetts	0.53
Michigan	0.41
Minnesota	0.51
Mississippi	1.24
Missouri	0.61
Montana	1.44
Nebraska	1.39
Nevada	0.58
New Hampshire	0.97
New Jersey	0.21
New Mexico	0.58
New York	0.00
North Carolina	1.06
North Dakota	1.07
Ohio	0.41
Oklahoma	0.57
Oregon	2.12
Pennsylvania	0.13
Rhode Island	0.77
South Carolina	1.07
South Dakota	1.86
Tennessee	0.72
Texas	0.19
Utah	1.18
Vermont	0.83
Virginia	0.79
Washington	0.64
Washington, D.C.	0.72
West Virginia	0.81
Wisconsin	0.64
Wyoming	2.17

See also

• Unemployment insurance
• Unemployment insurance fraud
• Unemployment insurance fraud recovery
• Unemployment taxes
• Unemployment Trust Fund
• Unemployment filings during the coronavirus (COVID-19) pandemic, 2020-2021
• State government plans to end federal unemployment benefits related to the coronavirus (COVID-19) pandemic, 2021

External links

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Footnotes

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