Form Esd-Ark-501 - Application For Unemployment Insurance Benefits Page 7
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12Arkansas Division of Legislative Audit
Exhibit V
interest rate of 4.1% in calendar year 2011.
DWS plans to repay the advances with
Arkansas Department of Workforce Services
interest by 2015. To date, DWS has made
Employer Contribution Rate Formula
one interest payment of $10.1 million and
one principal payment of $29.1 million,
Contributing
unemployment
insurance
leaving a loan balance of $330.9 million at
taxpayers report wages paid quarterly and
pay the Arkansas contribution rate on the
December 31, 2011. On April 1, 2011, Ar-
first $12,000 (increased from $10,000 on
kansas law increased the unemployment tax
January 1, 2010) of wages paid to each
rate on all contributing employers by 0.2% to
employee in each calendar year. The con-
fund the interest due on the advances. The
tribution rate is the sum of the following:
entire employer contribution rate formula is
discussed in Exhibit V on page 7.
The employer rate – Either (a) the new
employer rate of 2.9% for the first three
Based on our review of the federal funds
years of the employer’s existence or (b)
advanced from the federal government, we
the experienced employer rate for employ-
conclude the advances were allowed and, as
ers in existence for more than three years.
shown in DWS’ financial statements at
The experienced employer rate varies
Appendix
A,
were
necessary to
pay
from 0.1% to 10%, depending upon if and
unemployment benefits.
Of 27 states and
how
much
unemployment
insurance
the U.S. Virgin Islands, which owe a total of
benefits have been paid on behalf of the
$37.9 billion to the federal government,
employer.
Arkansas ranks 19th in terms of monies
The stabilization tax – An additional 0.8%
owed.
that is levied on all contributing employers
when the balance of the unemployment
CONCLUSION
insurance fund is insufficient to pay for
anticipated obligations.
As a result of our review, we did not identify
The extended benefits tax – An additional
any areas of inappropriate activity relating to
0.1% levied on all contributing employers
benefit payments.
Also, we conclude the
to pay for the State’s 50% share of
borrowing of $360 million from the federal
extended benefits when the unemploy-
government to pay unemployment benefits
ment insurance fund balance is insufficient
was allowed and necessary. At December
to pay those benefits deemed necessary
31, 2011, DWS had a remaining loan
by the federal government.
When
balance of $330.9 million, which is expected
deemed necessary, the federal govern-
ment provides funding for 50% of the
to be repaid with interest by 2015. The loan
extended benefits.
interest payments are funded by a 0.2%
The advance interest tax – An additional
increase in the unemployment tax rate paid
by all contributing employers. Additionally,
0.2% levied on all contributing employers
to pay the interest on the advances made
we conclude the $161.3 million in overpay-
by the U.S. Treasury to fund unemploy-
ments reported by the USDOL is only a
ment insurance benefits in excess of other
performance measure used to evaluate
sources of funding.
benefit processing procedures and is not an
amount expected to be repaid to the federal
government.
Source: Arkansas Department of Workforce Services
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