DIRECTIVE	:	UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 24-98, Change 2
TO	:	ALL STATE EMPLOYMENT SECURITY AGENCIES
FROM	:	GRACE A. KILBANE Director Unemployment Insurance Service
SUBJECT	:	Comparative Data on Federal Unemployment Tax Act (FUTA) Receipts and Amounts Returned to States

1. Purpose.  To provide tables for Fiscal Year (FY) 1994 through FY 1998 showing estimated FUTA payments attributable to employment in each State and the amounts returned to the States for program administration and benefit payments. Totals for FY 1981 through FY 1998 are also included.

2. References.  UIPL 24-98 and UIPL 24-98, Change 1.

3. Background.  There has been considerable interest among State Employment Security Agencies (SESAs) in seeing FUTA payments attributable to employment in each State compared with amounts returned to the States in past years. UIPL 24-98 provided these data for FY 1981 through FY 1996. This UIPL provides data for FY 1998 and a cumulative table for FY 1981 through FY 1998. Revised tables for FY 1994 through FY 1997 are also provided. Tables for FY 1994 through FY 1997 have revised FUTA revenue estimates for California. Tables for FY 1995 through 1997 have revised estimates for the Federal share of Extended Benefits (EB). Employment Services data for FY 1997 was also revised. Note that the data in UIPL 24-98, Change 1, are completely replaced by these revised data.

   When comparing FUTA receipts and amounts returned, it is important to note that postage costs and National Activities expenditures (approximately $ 2.67 billion for the FY 1981 through FY 1998 period) are not reflected in the State data, which effectively reduces the apparent proportion of FUTA receipts returned to States.

4. Action Required.  Please distribute to appropriate staff.

5. Inquiries.  Direct inquiries to the appropriate Regional Office. Data may be obtained on diskette by contacting Mike Miller of the National Office at 202-219-9297.

6. Attachment. 

   FUTA RECEIPTS VS. AMOUNTS RETURNED

   * Column Definitions

   * Explanatory Notes

   * Annual Charts

FUTA RECEIPTS VS. AMOUNTS RETURNED

Column Definitions

Estimated FUTA

Total -- Estimated total FUTA receipts (excluding reduced credits).

EUCA -- Share of receipts transferred to the Extended Unemployment Compensation Account (EUCA)

General Fund Repayment -- The share of receipts transferred from the EUCA to repay loans incurred as a function of Federal benefit payments which preceded 1981. This category applies only to FY 1981 through FY 1987.

Implied Net FUTA -- This column represents the amount of the FUTA receipts net of the General Fund Repayment and applies only to FY 1981 through FY 1987.

FUA -- Share of receipts transferred to the Federal Unemployment Account (FUA). This applies to FY 1988 through FY 1991 only.

ESAA -- Share of receipts retained in the Employment Security Administration Account (ESAA).

95% of ESAA -- 95% of the ESAA share. The amount appropriated for State administration is limited by law to 95% of ESAA receipts.

Administrative Costs

UI -- State administrative costs for UI excluding postage and a portion of National Activities.

Other -- Includes Employment Service (ES), veterans employment programs, and Labor Market Information. All data exclude postage. ES fiscal year data are estimated from program year data and adjusted for the general revenue share of ES funding (approximately 3% of the total).

Total -- Total administrative costs. All administrative cost data are Federal obligations.

Benefits Paid

Fed Share EB -- Federal share of Federal-State Extended Benefits (EB). Also includes shareable regular benefits.

EUC -- The estimated amount of Emergency Unemployment Compensation (EUC) benefits funded from FUTA.

Total to State -- Total FUTA funds returned to the State.

FUTA RECEIPTS VS. AMOUNTS RETURNED

Explanatory Notes

Administrative Grants

• Some EUC administrative costs funded from general revenues are included in the State data. These total $43 million in FY 1992 and $217 million in FY 1993.

• FY 1998 UI administrative grants include special funds to help States identify and prevent year 2000 computer problems.

• There are several items that are appropriated as State administration but are not included in the State data. These include postage costs, ES National Activities, and a portion of UI National Activities. Annual totals for postage and ES National Activities are shown below. Comparable data for UI National Activities are not available, but the total amount for FY 1981 through FY 1998 that is not reflected in the State data is approximately $70.0 million.

  	ES National
  	Postage (Millions)	Activities (Millions)
  FY 1981	N.A.	N.A.
  FY 1982	$95.2	N.A.
  FY 1983	106.5	11.9
  FY 1984	70.8	19.3
  FY 1985	70.6	48.9
  FY 1986	73.6	31.2
  FY 1987	76.3	36.9
  FY 1988	84.6	56.4
  FY 1989	90.1	48.7
  FY 1990	87.7	67.5
  FY 1991	116.5	75.9
  FY 1992	139.0	84.8
  FY 1993	142.3	81.6
  FY 1994	111.0	82.9
  FY 1995	108.3	74.0
  FY 1996	114.3	57.1
  FY 1997	110.9	62.7
  FY 1998	104.0	59.9

FUTA Estimates

• Since actual data on FUTA receipts by State do not exist, it is necessary to estimate these data using wage and employment data from the ES202 report. Receipts are estimated by first estimating calendar year FUTA taxable wages and then multiplying by the effective tax rate (0.7% through CY 1982, then 0.8%). Calendar year estimates are then converted to fiscal year based on quarterly receipt patterns.

• The sum of the State estimates do not match yearly totals reported by IRS or amounts deposited in the Unemployment Trust Fund because of IRS reporting problems for some years and the fact that deposits were based on estimates from 1986 to 1992, with large adjustments in 1989 and 1992. Also, State estimates do not reflect unpaid taxes or penalties and interest.