Amplify Funding by Reducing Unemployment Costs
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Sponsored by: A Service Of: Amplify Funding by Reducing Unemployment Costs Adam Thorn March 14, 2012
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This webinar can help nonprofits put money back where it is needed most – toward fulfilling their missions.There’s a simple way to free up unrestricted funds by lowering unemployment costs. Millions of employers are seeing rising taxes due to prolonged national unemployment – but 501(c)(3)s have an alternative.During this webinar, you will learn 3 simple steps nonprofits can take to reduce unemployment costs.
Transcript of Amplify Funding by Reducing Unemployment Costs
Sponsored by:A Service
Of:
Amplify Funding by Reducing Unemployment Costs
Adam Thorn
March 14, 2012
Sponsored by:A Service
Of:
Advising nonprofits in:
• Strategy
• Planning
• Organizational Development
www.synthesispartnership.com
(617) 969-1881
INTEGRATED PLANNING
Sponsored by:A Service
Of:
Affordable collaborative data
management in the cloud.
Sponsored by:A Service
Of:
Today’s Speaker
Adam ThornDirector of Operations
Unemployment Services Trust
Hosting:
Sam Frank, Synthesis PartnershipAssisting with chat questions: April Hunt, Nonprofit Webinars
Overview
• History & Background of Unemployment
Insurance (UI)
• Nonprofit Options
• Best Practices to Reduce UI Claims & Costs
• Determining the Right Option for Your Agency
History & Background
History & Background of Unemployment Insurance
What is the UI Tax System?
• 1935 – Created as part of FDR’s Public Works Program
• 1972 – Most nonprofits now required to pay unemployment benefits
• Nonprofits can pay through state tax system or by becoming “reimbursing employers”
Unemployment Insurance Today
• Unemployment was at highest point since the 1980s
• Benefits are lasting longer
• States borrowed $39,734,768,310
• 21 States got a FUTA Credit Reduction last year = higher taxes
• States paid $50 Billion of 2010-11 unemployment benefits in error
Options for Nonprofits to Pay UI Costs
Options for Nonprofits
Options for Nonprofits
Pay state UI taxes
- Pay an assigned UI tax rate
- Part of the pooled general UI fund
Paying State UI Tax
Benefits:
State always pays all claims
- If claims are more than taxes, the state UI will still cover the claims (but you can probably expect a tax increase in subsequent years).
Best for small agencies
Challenges:
Tax rates and taxable wage bases rising
16% average rate hike for US in 2011
You’re helping to subsidize:
High claims employers
State mistakes
State funding problems
Paying State UI Tax
Paying State UI Tax
On average, employers pay $2.00 intaxes for ever $1.00 in benefits paid
Options for Nonprofits
Become a Reimbursing Employer
- Reimburse the state for unemployment claims $1.00/$1.00
Self Reimburse
Benefits:
Only pay for actual claims
Can directly impact your operating costs by reducing claims
You get to keep the money you no longer pay into a tax
Risks/Challenges:
Unexpected claims
Budget planning
Managing and protesting claims istime consuming
Costly professional assistance
Can’t protest “base period claims”
Self Reimburse
Case Study: Paying State Tax
140 FTEs
Annual Claims average: $3,645
Annual Taxes average: $12,740
Cozy Homes Retirement Community
Case Study: Self Reimbursing
Annual Claims average $3,645
Cozy Homes Retirement Community
Claims
$0.00
$5,000.00
$10,000.00
Year 4 Year 3 Year 2 Year 1
Best Practices
Best Practices to Reduce UI Claims & Costs
Best Practices
Critical Ways to Reduce UI Costs
1. Hiring Practices
2. Proper Documentation
3. Monitoring Claims
4. Working with a Trust
Best Practices
1.Hiring Practices
• Vet hires - Background and reference checks vital
• Use assessment tools during hiring to evaluate:
- Personality and Behavior- Aptitude and Skills- Ethics- Critical Thinking- Teamwork - Etc.
Best Practices
2. Proper Documentation
• Written, publicized Company Policy:
- Easy to understand, explains what expected
- Outlines disciplinary process
- Employee sign-off for receipt of Policy
• Document infractions immediately (oral warnings too)
• Warnings need supervisor and employee signature
• Record details of final incident causing separation
3. Monitoring Claims
• Look for state errors and improper claims
• Protest all improper claims
• A Claims Monitor can help:
- Audit charge statements- Protest claims- Provide training- Record claims activity- Provide hearing assistance
Best Practices
Best Practices
• Pays state on your behalf
• Establishes a reserve for claims charges
• Evens out volatility of claims costs
• Predetermined quarterly deposits eliminate budgetary problems
• Claims Monitor works to lower claims liability and provide support
4. Working with a Trust
Working with a Trust
Taxpayer vs. Trust Member
How It Works
Deposits are used:
To reimburse the state for claims
For stop-loss reserve protection
For bond premiums
For Trust operating expenses
To establish a reserve for future claims
How It Works
Year 1-2: Guaranteed rate lower than tax rate
Year 3+: Rates based only on your claims experience
Reserve is an asset held in your name
Trust assets conservatively invested to offset expenses
How It Works
The Trust Claims Monitor provides:
Audits of claims from state
Protests and appeals
Online training for supervisors
Dedicated representative
Claims hearing support
Telephone consultation
Online access to your account/reports
Online performance assessment tools for hiring
Credits found in audits of state charges:
$1.9 millionPaid Claims: $71.6 million
Liability Removed:$36.3 million
$38.5 Million Saved Through Claims Management
How It Works
Determining the Right Option for Your Agency
Determining the Best Solution
Determining the Best Solution
Factors to consider:
10+ FTEs
Unemployment claims
history
Your current position on state tax rate scale
Any planned staff growth/reductions
Whether currently a reimbursing employer
Where to Learn More
Call: 888-249-4668
E-mail: [email protected]
Visit: www.ChooseUST.org
Opt-Out Deadline: Nov 30
Request a Savings Evaluation to find out if opting out is right for you
Sponsored by:A Service
Of:
Find listings for our current season of webinars and register at:
NonprofitWebinars.com
