Financing and Benefits Dr. Wayne Vroman The Urban Institute - - PowerPoint PPT Presentation

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Financing and Benefits Dr. Wayne Vroman The Urban Institute - - PowerPoint PPT Presentation

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Overview of UI Program Financing and Benefits Dr. Wayne Vroman The Urban Institute October 24, 2018 1 Outline Trust funds and financing UI Benefits UI Modernization from the ARRA Disasters and Disaster Unemployment Assistance

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SLIDE 1

Overview of UI Program Financing and Benefits

  • Dr. Wayne Vroman

The Urban Institute October 24, 2018

1

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SLIDE 2

Outline

  • Trust funds and financing
  • UI Benefits
  • UI Modernization from the ARRA
  • Disasters and Disaster Unemployment Assistance (DUA)

2

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SLIDE 3

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1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2014 2018

  • 2.0

0.0 2.0 4.0 Percent of Payroll Reserve Ratio - Net Reserves as Percent of Payroll - Dec. 31

Chart 1. Aggregate Reserve Ratio, 1960 to 2018

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SLIDE 4

Taxable Wage Bases in 51 Programs - 2018

Tax Base Not Indexed Indexed 7,000 4 7,001 – 10,999 14 11,000 – 13,999 5 1 14,000 – 16,999 9 17,000 – 19,999 2 20,000 – 24,999 4 25,000 – 34,999 6 35,000 – 47,300 6 Total 32 19

4

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SLIDE 5

Ratio of 2018 Tax Base to 2008 Tax Base

2018/2008 Ratio Total Indexed Not Indexed >= 1.50 11 4 7 1.4 – 1.499 1.3 1.399 8 5 3 1.2 – 1.299 11 9 2 1.1 – 1.199 3 1 2 1.01 – 1.099 4 4 1.00 14 14 Total 51 19 32

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SLIDE 6

Simple Averages of State Reserve Ratios, December 2007 and December 2017

48 Programs 16 Indexed Programs 32 Non-indexed Programs December 2007 1.31 2.11 0.91 December 2017 1.29 2.13 0.87

6

Reserve ratio - net reserves as a percent of total payroll

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SLIDE 7

Indexation and Borrowing, The Great Recession

51 States Non-indexed States Indexed States All States 51 35 16 States with Loans 35 29 6 Borrowing Probability 0.69 0.83 0.38

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Municipal bonds

  • First issuances 1987 - Louisiana and West Virginia
  • 1991 Recession – Connecticut
  • 2002 Recession – Texas, Illinois and North Carolina
  • North Carolina issued short term notes in 2003, 2004 and

2005

  • After the Great Recession of 2007-2009
  • 2010 Texas
  • 2011 Idaho, Michigan
  • 2012 Colorado, Illinois, Pennsylvania
  • 2013 Arizona, Nevada

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SLIDE 9

Recent Municipal Bond Issuances

State Texas Idaho Mich- igan Colo- rado Illinois Pennsyl

  • vania

Arizona Nevada Issue Year

2010 2011 2011 2012 2012 2012 2013 2013

Loan Amounta

1,960 188 3,278 625 1,470 2,829 200 549

Loan/Pay- roll - %

0.5 1.1 2.4 0.7 0.7 1.5 0.2 1.3

Max Maturity

2020 2015 2023 2017 2020 2024 2014 2018

Callable Bonds?

Yes No Yes No Yes Yes

b

No

Year Fully Repaid

2017 2015 2020? 2017 2017 2019? 2014 2017 9

a- Loan amount in $millions b – 9 month tax anticipation notes

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SLIDE 10

Illustrative Repayment Calculations: Illinois

Year

Annual Muni Repay ($mill.) Cumu- lative Muni Repay FUTA Credit Offset Rate % FUTA Credit Offsets ($mill.) Cumu- lative FUTA Offsets

2013

247 247 0.3 153 153

2014

287 534 0.6 320 473

2015

368 901 0.9 494 967

2016

409 1,311 1.2 665 1,632

2017

159 1,470 1.5 844

Total

1,470

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SLIDE 11

Mean unemployment duration has increased

  • Duration – Mean unemployment duration, in weeks, CPS
  • Regression with annual data 1970 to 2008,
  • Duration = 0.066 + 0.656*TUR + 1.001*TURLag + 0.232*Trend 1970
  • t Ratio (0.1) (2.7) (4.6) (12.1)
  • TUR – Total unemployment rate (CPS, labor force survey)
  • Adjusted R2 = 0.83 Std. Error = 1.22 Weeks
  • Mean duration 1970 to 2008 = 14.8 weeks
  • Maximum duration 1970 to 2008 = 20.0 weeks in 1983

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SLIDE 12

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1970 1975 1980 1985 1990 1995 2000 2005 2010 2014 2018 10.0 20.0 30.0 40.0 Duration in Weeks

Average Duration Regression 1970-2008 Projection 2009-2018

Chart 2. Average Unemployment Duration

1970 to 2018

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SLIDE 13

13 IUTU - Ratio of weekly claimants to weekly unemployment WKTU – Ratio of weekly beneficiaries to weekly unemployment

0.15 0.2 0.25 0.3 0.35 0.4 0.45 1989 1992 1995 1998 2001 2004 2007 2010 2013 2015 2017

Chart 3. UI Recipiency Rates

1989 to 2017

IUTU WKTU

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SLIDE 14

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6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 1998 2001 2004 2007 2010 2013 2015 2017

Chart 4. Average Benefit Duration, Three Groups of States, 1989 to 2017

43 States with 26 Weeks FL,GA,NC MI,MO,SC

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SLIDE 15

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10 20 30 40 50 2000 2003 2006 2009 2012 2015 2018

Chart 5. UI Modernization - State Counts

2000 to 2018

ABP Dep Allowances Exhaustee Training Quits Part-Time

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SLIDE 16

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0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0

1953-57 1963-67 1973-77 1983-87 1993-97 2003-07 2013-17

Chart 6. U.S. Disaster Data

Five Year Averages

Major Disasters Fire Management Emergency Mgmt.

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SLIDE 17

Disaster Payments

  • FEMA Individual assistance
  • Housing Assistance
  • Other Individual Assistance
  • FEMA Public assistance
  • Trash and debris removal
  • Infrastructure restoration
  • Hazard Mitigation
  • Disaster Unemployment Assistance

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SLIDE 18

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0.000 0.250 0.500 0.750 1.000 1965-9 1975-9 1985-9 1995-9 2005-9 2015-7

Chart 7. Proportion of Disasters with Benefits

Five Year Averages, 1965 to 2017

P Individual Assistance P DUA Authorized P DUA Paid P Public Assistance