STATEWIDE — Oregon’s unemployed drained more than $318 million from the state’s unemployment insurance trust fund in fourth-quarter 2008, as the number of claimants rose to 105,451 by year’s end.
Despite the mammoth payout, Oregon maintains one of the nation’s strongest-performing trust funds. Even if current economic conditions deteriorate, Oregon has enough money in the trust fund — $1.9 billion — to pay benefits for another 23 months. Oregon’s trust fund is one of the most solvent in the nation, according to Oregon Employment Department spokesman Craig Spivey.
Each state typically funds UI benefits by assessing payroll taxes which are pooled into a trust fund. If a state possesses enough reserves to cover 18 months of benefits at its “highest cost” period, or time at which benefits payments were at their highest, without relying on UI payroll tax revenues, its trust fund is considered solvent.
But several states, including California and South Carolina, doled out more benefits payments than they collected in payroll tax revenues last year, meaning their UI trust funds will dry up quickly as the recession worsens. In total, 19 states risk trust fund insolvency in 2009, according to a report by the National Employment Law Project.
“The beauty of Oregon’s tax schedule is that it won’t allow it to happen,” says Spivey. “Even if we did not bring in another dime, the trust fund would last us awhile.”
Oregon uses an eight-tier tax schedule to ensure the trust fund remains solvent. Each September, OED economists evaluate the solvency of the trust fund to determine the proper tax schedule. Given the doubling of UI claims and growing payouts, the OED will implement a tax schedule in 2009 that will mean an increase in payroll taxes.