Labor and Economic Opportunity
UIA Update: Trust Fund remains healthy, Michigan unlikely to borrow in 2021
February 18, 2021
Based on current unemployment claims activity and economic conditions, the Unemployment Insurance Agency today announced that it is highly unlikely the Agency will need to borrow from the federal government to cover unemployment benefits in 2021.
Currently, Michigan has one of the healthiest trust funds in the nation, with over $500M available for unemployment benefits and is one of few states that has yet to borrow from the fund. States such as California, Ohio and Texas started borrowing in spring 2020.
Each state maintains its own Unemployment Insurance Trust Fund (UITF) reserve to pay for state UI benefits. The fund is built from state taxes paid by employers. States can take on a title XII loan from the federal government if their own reserves are insufficient.
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A state House bill introduced Wednesday would extend eligibility until Dec. 31 for a key federal unemployment insurance program.
The Republican-sponsored House Bill 107, sponsored by Rep. Julia Howard, R-Davie, makes two changes to state COVID-19 regulations.
A companion Senate Bill 114 was introduced by Sen. Chuck Edwards, R-Buncombe.
The first would affect the federal pandemic emergency unemployment compensation program, which had expired on Dec. 31, 2020.
The second would keep employers contribution base rate at 1.9% for the state s unemployment tax for 2021. A rate increase is scheduled for this year.
Employers pay a tax into the state s UI system between 0.06% and 5.76%. Employers can pay a higher rate based on their history of job cuts and layoffs.
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