This webinar can help nonprofits put money back where it is needed most – toward fulfilling their missions. There’s a simple way to free up unrestricted funds by lowering unemployment costs. Millions of employers are seeing rising taxes due to prolonged national unemployment – but 501(c)(3)s have an alternative. During this webinar, you will learn 3 simple steps nonprofits can take to reduce unemployment costs.

1. Amplify Funding by Reducing
Unemployment Costs
Adam Thorn
March 14, 2012
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2. INTEGRATED PLANNING
Advising nonprofits in: www.synthesispartnership.com
• Strategy
• Planning (617) 969-1881
• Organizational Development info@synthesispartnership.com
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3. Affordable collaborative data
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4. Today’s Speaker
Adam Thorn
Director of Operations
Unemployment Services Trust
Assisting with chat questions: April Hunt, Hosting:
Nonprofit Webinars Sam Frank, Synthesis Partnership
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5. Amplify Funding by Reducing
Unemployment Costs
March 2012
Adam Thorn | Athorn@ChooseUST.org

6. Overview
• History & Background of Unemployment
Insurance (UI)
• Nonprofit Options
• Best Practices to Reduce UI Claims & Costs
• Determining the Right Option for Your Agency

7. History & Background
History & Background of Unemployment Insurance

8. What is the UI Tax System?
• 1935 – Created as part of
FDR’s Public Works Program
• 1972 – Most nonprofits
now required to pay
unemployment benefits
• Nonprofits can pay through
state tax system or by
becoming “reimbursing
employers”

9. Unemployment Insurance Today
• Unemployment was at highest
point since the 1980s
• Benefits are lasting longer
• States borrowed $39,734,768,310
• 21 States got a FUTA Credit
Reduction last year = higher taxes
• States paid $50 Billion of 2010-11
unemployment benefits in error

10. Options for Nonprofits
Options for Nonprofits to Pay UI Costs

11. Options for Nonprofits
 Pay state UI taxes
- Pay an assigned UI tax rate
- Part of the pooled general
UI fund

12. Paying State UI Tax
Benefits:
 State always pays all claims
- If claims are more than taxes, the state UI will
still cover the claims (but you can probably
expect a tax increase in subsequent years).
 Best for small agencies

13. Paying State UI Tax
Challenges:
 Tax rates and taxable
wage bases rising
 16% average rate hike for US in 2011
 You’re helping to subsidize:
 High claims employers
 State mistakes
 State funding problems

14. Paying State UI Tax
On average, employers pay $2.00 in
taxes for ever $1.00 in benefits paid

15. Options for Nonprofits
 Become a Reimbursing Employer
- Reimburse the state for
unemployment claims
$1.00/$1.00

16. Self Reimburse
Benefits:
Only pay for actual claims
Can directly impact your
operating costs by reducing
claims
You get to keep the money you
no longer pay into a tax

17. Self Reimburse
Risks/Challenges:
Unexpected claims
Budget planning
Managing and protesting claims is
time consuming
Costly professional assistance
Can’t protest “base period claims”

18. Case Study: Paying State Tax
Cozy Homes Retirement Community
 140 FTEs
 Annual Claims average: $3,645
 Annual Taxes average: $12,740

19. Case Study: Self Reimbursing
Cozy Homes Retirement Community
 Annual Claims average $3,645
Claims
$10,000.00
$5,000.00
$0.00
Year 4 Year 3 Year 2 Year 1

20. Best Practices
Best Practices to Reduce UI Claims & Costs

21. Best Practices
Critical Ways to Reduce UI Costs
1. Hiring Practices
2. Proper Documentation
3. Monitoring Claims
4. Working with a Trust

22. Best Practices
1.Hiring Practices
• Vet hires - Background and reference checks vital
• Use assessment tools during hiring to evaluate:
- Personality and Behavior
- Aptitude and Skills
- Ethics
- Critical Thinking
- Teamwork
- Etc.

23. Best Practices
2. Proper Documentation
• Written, publicized Company Policy:
- Easy to understand, explains what expected
- Outlines disciplinary process
- Employee sign-off for receipt of Policy
• Document infractions immediately (oral warnings too)
• Warnings need supervisor and employee signature
• Record details of final incident causing separation

24. Best Practices
3. Monitoring Claims
• Look for state errors and improper claims
• Protest all improper claims
• A Claims Monitor can help:
- Audit charge statements
- Protest claims
- Provide training
- Record claims activity
- Provide hearing assistance

25. Best Practices
4. Working with a Trust
• Pays state on your behalf
• Establishes a reserve for claims charges
• Evens out volatility of claims costs
• Predetermined quarterly deposits
eliminate budgetary problems
• Claims Monitor works to lower claims
liability and provide support

26. Working with a Trust
Taxpayer vs. Trust Member

27. How It Works
 Deposits are used:
 To reimburse the state for claims
 For stop-loss reserve protection
 For bond premiums
 For Trust operating expenses
 To establish a reserve for future claims

28. How It Works
 Year 1-2: Guaranteed rate
lower than tax rate
 Year 3+: Rates based only on
your claims experience
 Reserve is an asset held in
your name
 Trust assets conservatively
invested to offset expenses

29. How It Works
 The Trust Claims Monitor provides:
 Audits of claims from state
 Protests and appeals
 Online training for supervisors
 Dedicated representative
 Claims hearing support
 Telephone consultation
 Online access to your account/reports
 Online performance assessment tools for hiring

30. How It Works
$38.5 Million Saved Through Claims Management
Credits found in audits
of state charges:
Paid Claims: $1.9 million
$71.6 million
Liability
Removed:
$36.3 million

31. Determining the Best Solution
Determining the Right Option for Your Agency

32. Determining the Best Solution
Factors to consider:
 10+ FTEs
 Unemployment claims
history
 Your current position on state tax rate scale
 Any planned staff growth/reductions
 Whether currently a reimbursing employer

33. Where to Learn More
 Call: 888-249-4668
 E-mail: info@ChooseUST.org
 Visit: www.ChooseUST.org
 Opt-Out Deadline: Nov 30
 Request a Savings Evaluation to find out if
opting out is right for you

34. Find listings for our current season
of webinars and register at:
NonprofitWebinars.com
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