UIIB 03-04 Attachment

SUMMARY OF NATIONAL TOTALS
Selected Data from State ETA 581 Reports
Quarter Ending March 31, 2003

**Subject Employers - Nationally**
Total Number of Contributory Employers Reported:	6,901,797 ¹
Total Number of Reimbursing Employers Reported:	98,489 ²
Total of all Liable and Active Employers Reported:	7,000,286

**Status Determination Promptness**
	Total Number of Determinations	Completed 90 Days or less %	Completed 180 Days or less %
New Employers	240,702	81.6%	88.7%
Successor Employers	33,805	75.7%	85.0%

**Employer Report Filing**
	% Filed Timely	% Secured	% Resolved
Contributory Employers	88.0%	92.9%	97.3%
Reimbursing Employers	87.5%	94.7%	97.1%

Receivables
Contributory & Reimbursable Combined
Beginning Balance	$663,943,325	New Receivables	$392,016,100
Amount Liquidated	$343,921,789	Declared Uncollectible	$10,732,546
Removed Due to Age	$92,847,829	Ending Balance	$608,457,261

**Audit Activity**
Audits Completed	29,137	Average Hours per Audit	7.0
Large Employer Audits	684	Average Quarters Audited	4.5
Change Audits	11,962	Audit Penetration – Qtr.	0.425%³

Total Wages Under Reported	$373,353,206	Contributions Under Reported	$5,456,256
Total Wages Over Reported	$119,174,478	Contributions Over Reported	$934,869
Gross Change	$492,527,684	Gross Change	$6,391,125

Number of employees found misclassified as independent contractors in audits:			28,794

¹ Due to a failure to report this total does not include approximately 5,000 contributing employers for the VI.
² Due to a failure to report this total does not include approximately 100 reimbursable employers for the VI.
³ Audit penetration percentage is based on contributing employers as of 9/30/2002 – 6,852,994.

The total of all liable and active employers in the states taken on March 31, 2003, declined slightly to 7,000,286 from the 7,003,066 reported for the quarter ending December 31, 2002. These totals do not include the Virgin Islands who failed to report.

Quarterly declines in the count of total employers are rare. Looking forward from the first quarter of 1998, the national totals have shown declines in only three quarters: the fourth quarter of 1999, the first quarter of 2002 and the first quarter of 2003.

Reports of Inactivations/Terminations were unusually high for the months of January, February and March, 2003. Nationally the states reported either terminating or inactivating 272,262 accounts. This is an increase of 75,995 Inactivations and Terminations from the 196,267 reported for the quarter ending December 31, 2002, but a decrease of 4,433 compared to the quarter ending March 31, 2002, in which 276,695 accounts were either Inactivated or Terminated. The state of California, which has a significant impact on the national totals, reported 56,768 Inactivations/Terminations for the quarter ending 3/31/2003. Only in the first quarter of 2002 have Inactivations/Terminations been higher in California at 61,043.

Status determinations establishing liability for new employers totaled 240,702, of which 81.6% were completed within 90 days or less from the end of the quarter in which the employer met a liability threshold. The promptness percentage increased to 88.7% for the 180 day timeframe. Only three states failed to meet the UI Performs objective of establishing 60% of their accounts within ninety days. Five states failed to meet the 80% within-180-days objective.

Successorship determinations for the quarter totaled 33,805, an increase from the 25,732 determinations reported for the quarter ending 12/31/2002. Typically, more determinations are made in the first and second quarters than in the third and fourth quarters. For the quarter ending 3/31/2003, states averaged completing 75.7% of successor determinations within 90 days from the end of the quarter in which the change of ownership occurred. Successor determinations made within 180 days improved to 85.0%.

The 52 reporting states anticipated receiving 6,905,058 fourth quarter contribution and wage reports from contributing employers during this reporting period, of which 88.0% were actually filed by the state's due date. Most states have a due date of January 31, for the fourth quarter tax reports. North Dakota had the highest employer compliance rate with 106.3% of their employers filing reports timely. It is possible for states to receive more reports than they initially send out to employers. This happens because new employers that are set up during the reporting period, who were not included in the original mailing list, may also file fourth quarter 2002 reports during the reporting period. By the end of the reporting period (3/31/2003) State Workforce Agencies (SWAs) had "Secured" 92.9% of all fourth quarter reports that were due on or about 1/31/2003, either voluntarily or as a result of state enforcement actions.

The "Resolved" measure (see Chart 2 and Table 2) indicates the percentage of all contribution and wage reports for contributing employers that became due during the preceding ETA 581 Report quarter that were either: a) filed timely, or b) filed late but during the reporting period (which we refer to as “Secured), or c) delinquent tax reports that are “Resolved” through actions taken by states to clear the delinquent reports. The "Resolved" percentage includes reports that have final assessments (i.e. assessments whose appeal period has past) covering the estimated delinquency on the missing reports, reports that have been determined to be not due, and reports for which determinations of non-liability have been made. The "Resolved" percentage for contributing employers improved from 96.4% for the reporting period ending 12/31/2002, to 97.3% for the reporting period ending March 31, 2003.

Reimbursing employers (RE) filed by the due date 87.5% of the 89,634 reports that became due during the reporting period ending 3/31/2003. In the Resolved category, of the 89,541 contribution and wage reports that became due during the preceding quarter ending December 31, 2002, 97.1% were "Resolved" by March 31, 2003 (see table 3). Sixteen states reported "Resolved" percentages in excess of 100%.

RI reported Resolving 173.5% of their reimbursable reports which is unusually high. This anomaly came about because RI completed a major reorganization of their reimbursable accounts during the third quarter of 2002 in which they merged approximately 1,000 separate state accounts into one large state account. Consequently, the third quarter reports that were Resolved by 3/31/2003, greatly exceeded the RE employer count at the end of the third quarter.

Please see:
Table 2, Filing Reports - Contributory Employers and
Table 3, Filing Reports - Reimbursing Employers

Past due contributions and reimbursements combined totaled $608,457,261 at the end of the reporting period, a decrease of $55,486,064 from the quarter ending December 31, 2002, and a decrease of $50,449,431 from the quarter ending March 31, 2002. Thirty-nine states reported a reduction in their receivables when compared to the Q/E 12/31/2002. States that experienced increases in delinquency were mostly in the Midwest and the West such as Wisconsin, Iowa, Kansas, California, Hawaii, Alaska, Idaho and Oregon.

The table below shows a breakdown of receivables by age for the quarter ending March 31, 2003, as compared to the preceding quarter ending December 31, 2002.

	Amount	<=6 months	7-9 months	10-12 months	13-15 months	> 15 months
Q/E 3/31/2003	$608.5 M	32.0%	12.8%	18.6%	12.9%	23.7%
Q/E 3/31/2002	$658.9 M	31.10%	13.6%	18.8%	12.1%	24.4%

National audit production for the quarter increased from 26,108 audits completed during the quarter ending 12/31/2002, to 29,137 for the quarter ending 3/31/2003. Large employer audits completed for the quarter totaled 684. By definition large employers have at least 100 employees or at least one million dollars in annual taxable payroll in the calendar year that precedes the first quarter audited. The average time required for completing an audit declined slightly to 7.0 hours and the average number of quarters audited was 4.5 quarters.

Audits completed in the first quarter of 2003 revealed a total of 28,724 workers that were discovered to have been misclassified as independent contractors, compared to 25,306 for the first quarter of 2002. Although states were required to begin reporting this information on their reports for the first quarter of 2000 six states (DC, IN, KY, MN, PA, and VA) reported "0" in this item for the report quarter ending 3/31/2003. The number of misclassifications range from zero (in the previously mentioned six states) to a high of 4,168 in California. Although California completed only 293 audits for the quarter ending 3/31/2003, they discovered 4,168 misclassified independent contractors.

Discrepancies in either wages or contributions due were discovered in 11,962 of the 29,137 audits that were completed for a change rate of 41.1%. California reported the highest discrepancy rate - 226 of their 293 audits were discrepant for a change rate of 77.1%. Nationally, the audits revealed that total wages were under reported by $373,353,206 and over reported by $119,174,478 making a gross change in total wages of $492,527,684. The audits completed during the quarter ending March 31, 2003, resulted in a net increase (under reported minus over reported adjustments) in contributions due of $4,521,387 or about $155.18 average per audit.

Chart 1 - Status Determinations Promptness QE 03/31/2003
Chart 2 - Filing Employer Contribution Reports QE 03/31/2003
Chart 3 - Age of Receivables % Comparison: QE 03/31/2002 to QE 03/31/2003
Chart 4 - Audit Results, Employees Misclassified as Independent Contractors QE 03/31/2003

Table 1 - Status Determination Promptness
Table 2 - Filing Reports - Contributory Employers
Table 3 - Filing Reports - Reimbursing Employers
Table 4 - Collection Activities
Table 5 - Percent Distribution of Age of Receivables
Table 6 - Audit Activity
Table 7 - Audit Change in Total Wages and Contributions