Unemployment Insurance Financing

Transcription

1 Unemployment Insurance Financing Presentation to Employment Security Council August 3, 2010

2 2 Discussion Topics Program Objectives Status of Nevada s Trust Fund Federal Loan Process Costs of Borrowing Potential Repayment Strategies

3 3 Program Objectives Economic Stabilization Maintaining purchasing power to help smooth economic cycles. Stronger Economic Safety Net Provide temporary, limited income support during involuntary unemployment. Counter-Cyclical Financing Build reserves in good economic times to energize the economy in bad times.

4 Unemployment Insurance Financing 4 Status of Nevada s Trust Fund

5 National Perspective: National Solvency 12/31/ AHCM <0.5 <1.0 >1.0 Map courtesy of used with permission

6 National Perspective: National Solvency 12/31/ AHCM <0.5 <1.0 >1.0 Map courtesy of used with permission

7 National Perspective: National Solvency 12/31/ AHCM <0.5 <1.0 >1.0 Map courtesy of used with permission

8 National Perspective: Borrowing Across the Nation 8 As of July 27, 2010 the following 35 states and territories have borrowed Title XII funds to pay benefits: More than $7 billion: CA More than $3 billion: MI, NY, PA More than $1 billion: FL, IL, IN, NJ, NC, OH, TX, WI More than $500 million: KY, MN, MO, SC More than $100 million: AL, AR, CO, CT, GA, ID, MD, MA, NV, RI, VA Less than $100 million: AZ, DE, KS, NH*, SD*, TN*, VT, VI * Earlier outstanding loans have been repaid as of this date

9 National Perspective: Responses to Falling Solvency As of January 12, 2010 the following actions were scheduled to be taken due to falling solvency: Increased UI Tax Rates: 27 States (10 additional states are at their statutory maximum) Legislature Increased Taxable Wage Base: 6 states Revised Tax Schedule Triggers: 3 states Supplemental Solvency Tax imposed: 2 states Increased taxes on employers with poor experience ratings: 2 states Frozen/Reduced unemployment benefits: 4 states Overall, 34 states were expected to experience tax increases and/or benefit freezes this year. 9

10 Nevada s Trust Fund: Before the Recession 10 Nevada was reasonably prepared for the recession. In the quarter the recession began, Nevada had: The 18 th strongest Trust Fund An Average High Cost multiple of 1.02 (Department of Labor recommends at least 1.0) A state solvency multiple of 1.47 (calculated per NRS )

11 Nevada s Trust Fund: What it Took to Borrow Unemployment Rate When Borrowing Began Total States % % % % % % % % % Announced Unemployment Rate (First month of borrowing) % NV

12 Nevada s Trust Fund: UI Borrowing July As of 7/29/2010, Nevada has borrowed $486.5 million to pay regular UI benefits. Due to seasonal factors, the largest draw on the Trust Fund is in January- March, while the smallest is in April-June Borrowing by Month (millions) October $10.0 November $30.1 December $87.0 January $74.7 February $36.1 March $93.2 April $64.3 May $2.1 June $40.8 July $48.1

13 Nevada s Trust Fund: 10-Year Perspective 13 $1,200 Trust Fund Balance: $1,000 Millions of dollars $800 $600 $400 $200 $0 -$ Revenue Benefits Balance

14 14 Current Conditions Unprecedented Activity Nevada has paid over $1 billion in regular benefits alone over the past year. Length of Recession This is the longest recession since the Nevada UI system was created. Extended Benefit Programs Federally-paid UI extensions currently provide up to 73 weeks of additional benefits.

15 Current Conditions: New Unemployment Claims 15 40,000 Initial Claims 30,000 20,000 Current Level 10,000 0 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Initial Claims 12 Month Average

16 Current Conditions: Total Unemployment Claims Weekly UI Claims by Program vs. Total Unemployment 210, , , ,000 90,000 60,000 30,000 0 Jan- 08 Apr- 08 Jul- 08 Tier 1 Extended Tier 2 Added Oct- 08 Jan- 09 Apr- 09 Jul- 09 Tier 3 Added Tier 4 Added Oct- 09 Jan- 10 Apr- 10 Regular UI EUC SEB Total Unemployment

17 17 Addressing the Shortfall The UI shortfall requires a financing strategy that will: Pay Benefits Repay Loans Restore solvency to the Trust Fund This strategy may also account for related considerations: Impact on employers of UI taxes Counter-Cyclical nature of the UI program

18 18 Tax Rate Perspectives Recession Tax Rate Peak Tax Year Peak Tax Rate 1974 Recession 2.70% % Recession 1.78% % 1991 Recession 0.99% % 2001 Recession 1.29% % In the wake of recessions, UI taxes are generally increased significantly, and in proportion to the severity of the recession. The highest tax rate in the program s history is 3.22% following the only other period of borrowing (Year-end: $7.6 million; 1976 & 1977) in the state s history.

19 19 Tax Rate Perspectives Nevada Tax Rates v. Benefit Cost Rate Shaded areas indicate recessions 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Avg. Tax Rate Benefit Cost Rate

20 20 Unemployment Insurance Federal Loan Process

21 Federal Loan Process: Borrowing to Pay Benefits If a state s UI Trust Fund is insufficient to pay benefits, states may borrow from the Federal Unemployment Account. Such borrowing is outlined in Title XII of the Social Security Act. Such loans are interest-bearing, with the interest rate being set based on the interest earned on positive Trust Fund balances in the prior year. 21

22 Costs of Borrowing: FUTA vs. SUTA Taxes FUTA Fixed Wage Base: $7,000 Paid to Federal government Funds federal & state UI administration, Title XII loans Fixed tax rate: 6.2% minus 5.4% credit (0.8% overall) SUTA 22 Indexed Wage Base: $27,000 in 2010 Paid to Nevada Used only to pay benefits, or the principal of loans which were used to pay benefits. Average rate set each year by regulation, currently 1.33%

23 Costs of Borrowing: 23 FUTA Offset Credit Reduction If a state uses Title XII to pay benefits, and has outstanding loans after 2 years, the Federal government begins reducing the FUTA credit. This increases the FUTA tax paid by employers. The longer a state is borrowing, the steeper the credit reduction becomes. All revenue generated by the increased portion of the FUTA tax is applied to the outstanding loan balance.

24 Costs of Borrowing: FUTA Offset Credit Reduction 24 On the second January 1 with outstanding loans, the credit to employers is reduced by 0.3% ($21 per employee). The credit is reduced by an additional 0.3% each subsequent year. In addition to the base reduction there is an additional reduction that begins in the fifth year of borrowing.

25 Costs of Borrowing: FUTA Offset Credit Reduction 25 On the fifth consecutive January 1 with outstanding loans, the BCR Add-on is applied. This Add-On takes the higher of 2.7% or the 5-year average Benefit Cost Ratio, and subtracts the state s average tax rate. In the fifth year of projected borrowing (2014), Nevada will have a projected BCR of 3.9% Example of BCR Calculation: 3.9% - (2013 Average UI Tax Rate) E.g. 3.9% - 1.3% = 2.6% (rounded) The FUTA Credit would be reduced an additional 2.6% The size of the BCR Add-on is directly related to tax rates in the prior year.

26 Costs of Borrowing: FUTA Offset Credit Reduction 26 Year Base Reduction 5-Year Benefit Cost Rate Tax Rate BCR Add On FUTA Offset Reduction Cost Per Employee Principal Reduction ($M) % 0.3% $21 $ % 0.6% $42 $ % 0.9% $63 $ % 3.9% 1.3% 2.6% 3.8% $266 $ % 3.3% 1.3% 1.9% 3.4% $238 $ % 2.6% 1.3% 1.4% 3.2% $224 $ % 2.0% 1.3% 1.4% 3.5% $245 $ % 1.5% 1.3% 1.4% 3.8% $266 $ % 1.2% 1.3% 1.4% 4.1% $287 $228 These costs are in addition to the standard 0.8% FUTA tax rate ($56 per employee).

27 Costs of Borrowing: FUTA Offset Credit Caps 27 FUTA Offset Reductions can be capped if the state is making adequate progress toward restoring fund solvency The cap is the higher of: A 0.6% credit reduction, or The prior year s credit reduction

28 Costs of Borrowing: FUTA Offset Credit Caps 28 In order to cap the credit reduction, the state must meet four benchmarks: No state action was taken from October 1 to September 30 which would result in a reduction of the state s unemployment tax effort. No state action was taken from October 1 to September 30 which would result in a net decrease in solvency of the state UI system. The state unemployment tax rate is greater than or equal to the 5-year average benefit cost rate for the 5 prior calendar years. The state s outstanding loans from the Federal government are less than in the third prior year.

29 Costs of Borrowing: 29 Interest Expenses Interest on Title XII loans is due on September 30. Failure to pay this interest results in program decertification. FUTA Rate immediately becomes 6.2%, increasing FUTA taxes by about $480 million. State loses access to Title XII Loans State loses all administrative UI Funding, worth about $25 million per year. Funds used to pay interest can not come from state unemployment taxes.

30 Costs of Borrowing: 30 ARRA Interest Free-Period The ARRA stimulus bill provides that interest on Title XII loans is deemed paid through December 31, Normal interest accrual will begin on outstanding loans on January 1, 2011.

31 Costs of Borrowing: 31 Paying for Interest Expenses The interest rate charged is based on the interest earned on positive trust fund balances. The most recent interest rate was announced in January 2009: % The tax rate which will be in effect beginning January 1, 2011 will affect the actual interest due.

32 Costs of Borrowing: 32 Paying for Interest Expenses Total Interest Expense ($ Millions) Flat 1.33% Flat 2.0% Flat 2.75% Flat 3.5% Flat 4.25% $643.0 $393.9 $230.6 $137.8 $83.3 Interest expenses are affected by the rate and timing of any tax increases. Earlier tax rate increases both reduce the need for borrowing and repay loans sooner.

33 33 Unemployment Insurance Repayment Strategies

34 Repayment Strategies: General Points There are many strategies that can be considered. The Employment Security Council meets annually to look at the latest data. Both the magnitude and timing of increases matter. All numbers presented here are preliminary and are for illustration only. 34

35 Repayment Strategies: General Strategies 35 There are two primary approaches to consider. Flat Rate: Change the tax rate, with the intent of leaving that tax rate in place for several years. Ramped Increase: Increase the rate each year over several years.

36 Repayment Strategies: General Strategies 36 There are pros and cons to each approach. Flat Rate: A high tax rate would minimize the interest expense the state faces and regain solvency sooner, but would impact employers sooner. Ramped Increase: Delays the impact on employers, but initially makes slower progress towards solvency and raises interest and FUTA Offset expenses.

37 Repayment Strategies: General Strategies Illustrated 37 Tax Rate Comparison 4.0% Base 2.00% 2.75% 3.50% Ramped Rate 3.0% 2.0% 1.0% 0.0%

38 Repayment Strategies: Projected Benefit Costs Nevada Tax Rates v. Benefit Cost Rate Shaded areas indicate recessions 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Avg. Tax Rate 38 Benefit Cost Rate

39 Repayment Strategies: Flat Rate Examples 1.33% Leave the Average Tax Rate at 1.33% Shifts loan repayment to FUTA Offsets Loans are not repaid until after Current Rate % Maximum FUTA Reduction 4.1% Additional Per Employee FUTA Cost $ Per Employee SUTA Cost $ Year of Max Offset 2020 or later Capped FUTA Years 2020 Total FUTA Offsets ($ Millions) $1,276.0 Year Loans are Repaid After 2020 Maximum Borrowing ($ Millions) $2,069.2 Year of Max Borrowing 2015 Total Interest Expense ($ Millions) $643.0 Loan Repayment from FUTA 62%

40 Repayment Strategies: Flat Rate Examples 1.33% 40 Nevada Tax Rates v. Benefit Cost Rate Shaded areas indicate recessions 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Maximum Borrowing 2015 Avg. Tax Rate Benefit Cost Rate

41 Repayment Strategies: Flat Rate Examples 2.0% Increase the average tax rate from 1.33% to 2.0% Loans are repaid in Flat 2.0% Maximum FUTA Reduction 3.1% Additional Per Employee FUTA Cost $ Per Employee SUTA Cost $ Year of Max Offset 2019 Capped FUTA Years None Total FUTA Offsets ($ Millions) $867.4 Year Loans are Repaid 2019 Maximum Borrowing ($ Millions) $1,580.3 Year of Max Borrowing 2014 Total Interest Expense ($ Millions) $393.9 Loan Repayment from FUTA 55%

42 Repayment Strategies: Flat Rate Examples 2.0% 42 Nevada Tax Rates v. Benefit Cost Rate Shaded areas indicate recessions 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Maximum Borrowing 2014 Avg. Tax Rate Benefit Cost Rate

43 Repayment Strategies: Flat Rate Examples 2.75% Increase the average tax rate from 1.33% to 2.75% Loans are repaid in Flat 2.75% Maximum FUTA Reduction 2.4% Additional Per Employee FUTA Cost $ Per Employee SUTA Cost $ Year of Max Offset 2015 Capped FUTA Years None Total FUTA Offsets ($ Millions) $424.3 Year Loans are Repaid 2017 Maximum Borrowing ($ Millions) $1,181.9 Year of Max Borrowing 2013 Total Interest Expense ($ Millions) $230.6 Loan Repayment from FUTA 36%

44 Repayment Strategies: Flat Rate Examples 2.75% 44 Nevada Tax Rates v. Benefit Cost Rate Shaded areas indicate recessions 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Maximum Borrowing 2013 Avg. Tax Rate Benefit Cost Rate

45 Repayment Strategies: Flat Rate Examples 3.5% Increase the average tax rate from 1.33% to 3.5% Loans are repaid in Flat 3.5% Maximum FUTA Reduction 1.6% Additional Per Employee FUTA Cost $ Per Employee SUTA Cost $ Year of Max Offset 2015 Capped FUTA Years None Total FUTA Offsets ($ Millions) $181.4 Year Loans are Repaid 2015 Maximum Borrowing ($ Millions) $933.9 Year of Max Borrowing 2012 Total Interest Expense ($ Millions) $137.8 Loan Repayment from FUTA 19%

46 Repayment Strategies: Flat Rate Examples 3.5% 46 Nevada Tax Rates v. Benefit Cost Rate Shaded areas indicate recessions 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Maximum Borrowing 2012 Avg. Tax Rate Benefit Cost Rate

47 Repayment Strategies: Flat Rate Examples 4.25% 47 Increase the average tax rate from 1.33% to 4.25% Loans are repaid in 2013 Flat 4.25% Maximum FUTA Reduction 0.6% Additional Per Employee FUTA Cost $42.00 Per Employee SUTA Cost $1, Year of Max Offset 2013 Capped FUTA Years 2013 Total FUTA Offsets ($ Millions) $79.1 Year Loans are Repaid 2014 Maximum Borrowing ($ Millions) $880.1 Year of Max Borrowing 2011 Total Interest Expense ($ Millions) $83.3 Loan Repayment from FUTA 9%

48 Repayment Strategies: Flat Rate Examples 4.25% 48 Nevada Tax Rates v. Benefit Cost Rate Shaded areas indicate recessions 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Maximum Borrowing 2011 Avg. Tax Rate Benefit Cost Rate

49 Repayment Strategies: Summary of Flat Rates Flat 1.33% Flat 2.0% Flat 2.75% Flat 3.5% Flat 4.25% Maximum FUTA Reduction 4.1% 3.1% 2.4% 1.6% 0.6% Additional Per Employee FUTA Cost $ $ $ $ $42.00 Per Employee SUTA Cost $ $ $ $ $1, Year of Max Offset 2020 or later Capped FUTA Years 2020 None None None 2013 Total FUTA Offsets ($ Millions) $1,276.0 $867.4 $424.3 $181.4 $79.1 Year Loans are Repaid After Maximum Borrowing ($ Millions) $2,069.2 $1,580.3 $1,181.9 $933.9 $880.1 Year of Max Borrowing Total Interest Expense ($ Millions) $643.0 $393.9 $230.6 $137.8 $83.3 Loan Repayment from FUTA 62% 55% 36% 19% 9% 49

50 Repayment Strategies: Summary of Flat Rates Nevada Tax Rates v. Benefit Cost Rate Shaded areas indicate recessions 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Avg. Tax Rate 50 Benefit Cost Rate

51 Repayment Strategies: Ramped Rates 51 Ramped Rate strategies each raise the average SUTA tax rate by a fixed increment each year. Each of these scenarios peaks at 4.0% to 4.25%. Per employee SUTA costs in the tables reflect the additional cost per employee, per year.

52 Repayment Strategies: Ramped Rates 0.5% Steps Increase tax rate to 2%, then by 0.5% each year, capping at 4.0% Smallest Ramped Rate example presented here Loans are repaid in Ramped Rate - 0.5% Increments Maximum FUTA Reduction 1.6% Additional Per Employee FUTA Cost $ Additional SUTA Cost Per Year $ Year of Max Offset 2015 Capped FUTA Years 2015 Total FUTA Offsets ($ Millions) $268.6 Year Loans are Repaid 2016 Maximum Borrowing ($ Millions) $1,383.8 Year of Max Borrowing 2013 Total Interest Expense ($ Millions) $241.2 Loan Repayment from FUTA 19%

53 Repayment Strategies: Ramped Rates 0.5% Steps 53 Nevada Tax Rates v. Benefit Cost Rate Shaded areas indicate recessions 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Maximum Borrowing 2013 Avg. Tax Rate Benefit Cost Rate

54 Repayment Strategies: Ramped Rates 0.75% Steps Increase tax rate to 2%, then by 0.75% each year, capping at 4.25% Middle Ramped Rate example presented here Loans are repaid in Ramped Rate % Increments Maximum FUTA Reduction 0.9% Additional Per Employee FUTA Cost $63.00 Additional SUTA Cost Per Year $ Year of Max Offset 2015 Capped FUTA Years 2014, 2015 Total FUTA Offsets ($ Millions) $189.9 Year Loans are Repaid 2016 Maximum Borrowing ($ Millions) $1,333.7 Year of Max Borrowing 2013 Total Interest Expense ($ Millions) $208.0 Loan Repayment from FUTA 14%

55 Repayment Strategies: Ramped Rates 0.75% Steps 55 Nevada Tax Rates v. Benefit Cost Rate Shaded areas indicate recessions 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Maximum Borrowing 2013 Avg. Tax Rate Benefit Cost Rate

56 Repayment Strategies: Ramped Rates 1.0% Steps Increase tax rate to 2%, then by 1.0% each year, capping at 4.0% Largest Ramped Rate example presented here Loans are repaid in Ramped Rate - 1.0% Increments Maximum FUTA Reduction 0.9% Additional Per Employee FUTA Cost $63.00 Additional SUTA Cost Per Year $ Year of Max Offset 2015 Capped FUTA Years 2014, 2015 Total FUTA Offsets ($ Millions) $189.9 Year Loans are Repaid 2016 Maximum Borrowing ($ Millions) $1,283.6 Year of Max Borrowing 2013 Total Interest Expense ($ Millions) $193.5 Loan Repayment from FUTA 15%

57 Repayment Strategies: Ramped Rates 1.0% Steps 57 Nevada Tax Rates v. Benefit Cost Rate Shaded areas indicate recessions 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Maximum Borrowing 2013 Avg. Tax Rate Benefit Cost Rate

58 Repayment Strategies: Ramped Rates Summary Ramped Rates 0.5% Steps 0.75% Steps 1.0% Steps Maximum FUTA Reduction 1.6% 0.9% 0.9% Additional Per Employee FUTA Cost $ $63.00 $63.00 Additional SUTA Cost Per Year $ $ $ Year of Max Offset Capped FUTA Years , , 2015 Total FUTA Offsets ($ Millions) $268.6 $189.9 $189.9 Year Loans are Repaid Maximum Borrowing ($ Millions) $1,383.8 $1,333.7 $1,283.6 Year of Max Borrowing Total Interest Expense ($ Millions) $241.2 $208.0 $193.5 Loan Repayment from FUTA 19% 14% 15% 58

59 Repayment Strategies: Ramped Rates Summary Nevada Tax Rates v. Benefit Cost Rate Shaded areas indicate recessions 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Avg. Tax Rate 59 Benefit Cost Rate

60 Repayment Strategies: Targeting Capped FUTA Rates FUTA Cap strategies each raise the average SUTA tax rate by a fixed increment each year. These are targeted Ramped Rate scenarios. Once rates peak, they cannot be lowered until borrowing is repaid or the FUTA cap will not apply. Per employee SUTA costs in the tables reflect the additional cost per employee, per year. 60

61 Repayment Strategies: Cap FUTA Offsets at 0.6% Increase tax rate by 1.5% for two years, the cap at 4.5% Significant rate increases are needed to stem borrowing before Loans are repaid in Cap FUTA Offset at 0.6% Maximum FUTA Reduction 0.6% Additional Per Employee FUTA Cost $42.00 Additional SUTA Cost Per Year $ Year of Max Offset 2013 Capped FUTA Years Total FUTA Offsets ($ Millions) $110.6 Year Loans are Repaid 2016 Maximum Borrowing ($ Millions) $1,069.5 Year of Max Borrowing 2012 Total Interest Expense ($ Millions) $118.8 Loan Repayment from FUTA 10%

62 Repayment Strategies: Cap FUTA Offsets at 0.6% 62 Nevada Tax Rates v. Benefit Cost Rate Shaded areas indicate recessions 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Maximum Borrowing 2012 Avg. Tax Rate Benefit Cost Rate

63 Repayment Strategies: Cap FUTA Offsets at 0.9% Increase tax rate by 0.7% for four years, then leave the rate constant. Lower rates in 2011 and 2012 lead to more borrowing and higher interest costs. Loans are still repaid in Cap FUTA Offset at 0.9% Maximum FUTA Reduction 0.9% Additional Per Employee FUTA Cost $63.00 Additional SUTA Cost Per Year $ Year of Max Offset 2015 Capped FUTA Years Total FUTA Offsets ($ Millions) $189.9 Year Loans are Repaid 2016 Maximum Borrowing ($ Millions) $1,343.7 Year of Max Borrowing 2013 Total Interest Expense ($ Millions) $217.4 Loan Repayment from FUTA 14%

64 Repayment Strategies: Cap FUTA Offsets at 0.9% 64 Nevada Tax Rates v. Benefit Cost Rate Shaded areas indicate recessions 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Maximum Borrowing 2013 Avg. Tax Rate Benefit Cost Rate

65 Repayment Strategies: FUTA Offset Cap Summary Cap FUTA Rates at 0.6% at 0.9% Maximum FUTA Reduction 0.6% 0.9% Additional Per Employee FUTA Cost $42.00 $63.00 Additional SUTA Cost Per Year $ $ Year of Max Offset Capped FUTA Years Total FUTA Offsets ($ Millions) $110.6 $189.9 Year Loans are Repaid Maximum Borrowing ($ Millions) $1,069.5 $1,343.7 Year of Max Borrowing Total Interest Expense ($ Millions) $118.8 $217.4 Loan Repayment from FUTA 10% 14% 65

66 Repayment Strategies: FUTA Offset Cap Summary Nevada Tax Rates v. Benefit Cost Rate Shaded areas indicate recessions 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Avg. Tax Rate 66 Benefit Cost Rate

67 Repayment Strategies: Final Thoughts 67 The point at which loans are repaid is the point at which the Trust Fund balance reaches $0. The October Employment Security Council meeting will present fewer scenarios in more depth. Forecasts are expected to change between August and October as new data becomes available.