The COVID-19 recession has significantly impacted the solvency of state UI Trust Fund Accounts. A snapshot of the status of accounts as of September 16, 2020 shows that 21 states have already requested authorization to obtain loans from the Federal Unemployment Account because state unemployment trust fund balances have been or will be exhausted. (see below)
A number of states have taken the initiative to use Coronavirus Relief Funds to improve state unemployment trust fund solvency. Iowa, in particular, was successful in addressing UI trust fund solvency by using 44% of the state Coronavirus Relief funds to cover the costs of unemployment due to the increase in unemployment compensation due to COVID-19. This directly matches the costs due to COVID-19 with federal funds available to the state to address these costs. Such a transfer serves to avoid significant increases in the cost of unemployment related taxes that would impact job recovery.
On July 2, 2020, Governor Kim Reynolds directed $490 million of the $1.25 billion in Coronavirus relief funds Iowa was provided through the CARES Act, to be deposited into Iowa’s Unemployment Insurance Trust Fund. The deposit will ensure that eligible Iowans continue to receive unemployment insurance benefits, and will also enable Iowa employers to remain in Tax Table 7 for 2021.
The Governor indicated that she wanted to minimize the pandemic’s impact on employers so they could focus on growing and reinvesting in Iowa. The move also ensured that the Iowa trust fund remained healthy despite COVID-19. Governor Reynolds also noted “From the beginning of the pandemic, Iowa has not been charging employers with claims made by laid off employees to ensure employers would not see their tax rates go up because of these claims,”
Iowa Workforce Development Director Beth Townsend added “Keeping employers in Tax Table 7, saves them over $400 million in unemployment taxes.”
As states review the use of Coronavirus relief funds they should consider using these funds to improve the solvency of their UI trust funds before the end of 2020.
Title XII Advance Activities Schedule
As of: September 16, 2020
Interest Rate: 2.40870090%
| State | Outstanding Advance Balance |
Advance Authorization Current Month |
Gross Advance Draws Current Month |
Interest Accrued for FY2020* |
| California | 12,391,611,997.16 | 3,000,000,000.00 | 1,824,000,000.00 | 0.00 |
| Colorado | 250,694,003.95 | 500,000,000.00 | 135,092,353.15 | 0.00 |
| Connecticut | 284,846,197.94 | 380,000,000.00 | 64,846,197.94 | 0.00 |
| Delaware | 0.00 | 60,000,000.00 | 0.00 | 0.00 |
| Georgia | 236,000,000.00 | 585,000,000.00 | 236,000,000.00 | 0.00 |
| Hawaii | 442,038,177.77 | 435,000,000.00 | 148,094,324.32 | 0.00 |
| Illinois | 1,912,744,049.64 | 1,300,000,000.00 | 384,342,197.69 | 0.00 |
| Indiana | 0.00 | 60,000,000.00 | 0.00 | 0.00 |
| Kentucky | 346,698,336.54 | 350,000,000.00 | 73,323,987.00 | 0.00 |
| Louisiana | 0.00 | 200,000,000.00 | 0.00 | 0.00 |
| Massachusetts | 1,459,526,628.06 | 680,000,000.00 | 205,676,615.00 | 0.00 |
| Minnesota | 483,468,443.65 | 400,000,000.00 | 145,754,464.49 | 0.00 |
| New Jersey | 109,388,985.23 | 800,000,000.00 | 188,986,000.00 | 0.00 |
| New Mexico | 29,391,006.24 | 125,000,000.00 | 29,391,006.24 | 0.00 |
| New York | 7,488,955,972.89 | 2,200,000,000.00 | 776,718,331.82 | 0.00 |
| Ohio | 886,718,473.34 | 700,000,000.00 | 118,919,000.00 | 0.00 |
| Pennsylvania | 0.00 | 1,000,000,000.00 | 0.00 | 0.00 |
| Texas | 4,495,789,016.62 | 1,200,000,000.00 | 708,035,600.98 | 0.00 |
| Virginia | 0.00 | 360,000,000.00 | 0.00 | 0.00 |
| Virgin Islands | 65,541,365.78 | 5,000,000.00 | 2,201,600.27 | 0.00 |
| West Virginia | 75,667,677.72 | 125,000,000.00 | 20,380,399.78 | 0.00 |
| Totals | 30,959,080,332.53 | 14,465,000,000.00 | 5,061,762,078.68 | 0.00 |
*Section 1202(b)(10)(A) of the Social Security Act as amended by Section 4103 of PL 116-127 deferred the accrual of interest on state advances until December 31, 2020.
