Nevada’s unemployment trust fund, decimated by the recession, has climbed back to $341.3 million as of this week, Employment Security Administrator Renee Olson told the Employment Security Council on Tuesday.
But Olson said after the meeting that’s still only about a third of the $1.2 billion the fund would need to survive a year-long recession without again borrowing from the federal government.
At the height of the recession, Nevada had some 140,000 workers getting weekly checks and was paying out more than $100 million a month. The council was told the average number of weekly checks so far this year was down to 27,781 and, through nearly seven months of the year, the trust fund has paid out under $177 million.
When the recession began, Nevada had nearly $800 million in that trust fund. When it ended, the state not only spent that cash but borrowed another $800 million from the federal government to pay unemployment benefits.
The state sold bonds to pay off that federal debt because the bond interest rate was far less than the interest the feds would charge the state. According to Olson, Nevada is on course to pay off those bonds by the start of 2018.
Because of the bond payments, the cost of paying weekly checks and the need to keep rebuilding the trust fund, she said it’s unlikely the unemployment insurance rate, now set at an average of 2 percent of payroll, would drop much when the council meets to reset rates in October.
The tax will be assessed only on the first $28,200 of each worker’s pay, which will work out to a maximum of just more than $700 per worker per year.
All employers in the state are taxed to build the trust fund at rates which depend on their employee turnover history. The most stable businesses pay a rate as low as a quarter percent of payroll. The businesses with the highest turnover pay up to 5.4 percent. Olson said the average is just about 2 percent.
The maximum any displaced worker can collect is $417 a week.
The federal unemployment security system was passed by Congress and signed by President Franklin Roosevelt in 1932. The first employment security office opened in Nevada was in Las Vegas to help hire workers to build Hoover Dam.