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Secretary of Labor Thomas E. Perez
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DOL Annual Report, Fiscal Year 2003
Required Supplementary Stewardship Information

STEWARDSHIP INVESTMENTS IN HUMAN CAPITAL

Stewardship investments are made by the DOL for the nation's benefit. For accounting purposes, these investments are expensed as incurred, and reflected in the net cost of the DOL's operations. Stewardship investments provide long-term benefits which cannot be measured in traditional financial reports.

The DOL's stewardship investments are in human capital, reported as expenses in the net cost of the DOL's employment and training programs. These investments are intended to maintain or increase national economic productive capacity, as demonstrated by program outputs and outcomes. Within the DOL, the Employment and Training Administration and the Veterans' Employment and Training Service administer programs which invest in human capital, as discussed below.

Employment and Training Administration

The U.S. Department of Labor, Employment and Training Administration's (ETA) Federal investment in human capital comprises expenses incurred for training and employment services enacted under the Workforce Investment Act of 1998 (WIA), Job Training Partnership Act, as amended (JTPA), the Trade Act of 1974, as amended (Trade Act), School-To-Work Opportunities Act of 1994, as amended (STW), and Balanced Budget Act of 1997, as amended. This investment is made for the general public and the expenses incurred are intended to increase or maintain national economic productive capacity. The ETA 's investment in human capital for fiscal years 1999 to 2003, excluding the cost of internal Federal education and training, is presented below.

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A brief description of the programs under each Act is as follows:

Workforce Investment Act (Successor Legislation to the JTPA)

Youth Activities - Grants to provide financial assistance to States and U.S. territories to design and operate workforce investment activities for eligible youth.

Adult and Dislocated Worker Employment and Training Activities - Grants to provide financial assistance to States and U.S. territories to design and operate training programs for low income adults and reemployment services and retraining assistance to individuals dislocated from their employment.

Job Corps - Nationwide program carried out in partnership with States and communities to assist eligible youth to become more responsible, employable, and productive citizens.

National Programs - Grants to provide financial assistance in support of employment and training activities and opportunities for Native American, Migrant and Seasonal Farm Workers, Veterans and Disadvantaged Youth.

Job Training Partnership Act (Antecedent Legislation to the WIA)

Adult Employment and Training - Grants to provide financial assistance to States and U.S. t erritories to design and operate training programs for low-income adults.

Dislocated Worker Employment and Training - Grants to provide re-employment services and retraining assistance to individuals dislocated from their employment.

Youth Training - Grants to provide financial assistance to States and U.S. territories to design and operate training programs for economically disadvantaged youth.

Summer Youth Employment and Training - Grants to operate programs of employment and opportunities, as well as academic enrichment for economically disadvantaged youth during the summer months.

Native Americans - Grants to Indian tribes and other Native American groups to provide training, work experience, and other employment-related services to Native Americans.

Migrant and Seasonal Farm Workers - Grants to public agencies and nonprofit groups to provide training and other employability development services to economically disadvantaged families whose principal livelihood is gained in migratory and other forms of seasonal farm work.

Veterans Employment - Grants or contracts to provide disabled, Vietnam era, and recently separated veterans with programs to meet their unique employment and training needs.

National Activities - Provides program support for JTPA activities and nationally administered programs for segments of the population that have special disadvantages in the labor market.

Trade Act of 1974

Trade Adjustment Assistance - Adjustment assistance, including cash weekly benefits, training, job search, and relocation allowances provided to workers as authorized by the Trade Act of 1974, as amended.

North American Free Trade Agreement (NAFTA) - Transition adjustment assistance, including weekly cash benefits, training, job search, and relocation allowances provided to workers determined to be adversely affected as a result of the NAFTA as authorized by the Trade Act of 1974, as amended.

School-To-Work Opportunities Act

School-To-Work Opportunities - Grants to States and localities, jointly administered by the DOL and U.S. Department of Education to build systems that provide youth with the knowledge and skills necessary to make an effective transition from school to careers through work-based learning, school-based education, and connecting activities.

Balanced Budget Act of 1997

Welfare-To-Work Opportunities - Grants to States and localities, jointly administered by the DOL and U.S. Department of Health and Human Services to build programs to provide recipients receiving assistance under State funded programs with the knowledge and skills necessary to make an effective transition to unsubsidized employment opportunities.

Veterans' Employment and Training Service

The mission of Veterans' Employment and Training Service (VETS) is to provide veterans with the resources and services to succeed in the 21st Century workforce, by maximizing their employment opportunities, protecting their employment rights, and meeting labor market demands with qualified veterans. The Agency's vision is embodied in this statement: Veterans Succeeding in the 21st Century Workforce.

VETS can be classified into two main areas, Career Counseling and Employment Services, and Transition and Reemployment Services. Brief descriptions follow:

Career Counseling and Employment Services

Disabled Veterans Outreach Program Specialist (DVOP) - This program is codified at 38 U.S.C. 4103A. DVOP grants are made to State Workforce Agencies (SWAs) according to a distribution formula prescribed by law. DVOP staff provide counseling, assessment, lifelong learning skills and/or referral to training for veterans, particularly those with disabilities or recently separated from the military.

Local Veterans' Employment Representative (LVER) - This program is codified at 38 U.S.C. 4104. The program provides grants to SWAs for the appointment of LVER staff positions identified in Job Service local offices and One-Stop Career Centers to enhance the services provided to veterans through oversight, technical support, and direct provision of services. LVER staff help veterans into productive employment through lifelong learning services.

Homeless Veterans' Reintegration Project (HVRP) - The HVRP, codified at 38 U.S.C. 2021, provides employment assistance to homeless veterans through grants to both urban and other areas.

Veterans' Workforce Investment Program (VWIP) - The VWIP, codified at 29 U.S.C. 2913, provides targeted veterans training and/or employment opportunities. The program targets service connected disabled veterans, recently separated, campaign badge veterans and veterans with significant employment barriers.

Transition and Reemployment Services

Transition Assistance Program (TAP) - Authority for TAP is provided in 10 U.S.C. 1144. TAP operates as a partnership between the Departments of Labor, Defense, and Veterans Affairs. This partnership also exists at the local level, where memoranda of understanding spell out the responsibilities of SESAs, military installations, VETS staff and VA facilities. The program provides separating service members and their spouses or individuals retiring from military service with career counseling and training on becoming productive members of society through employment.

Uniformed Services Employment and Reemployment Rights and Veterans' Preference Rights (USERRA) - is codified at 38 U.S.C. Chapter 43. The Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) succeeded Veterans' Reemployment Rights statutes. USERRA continues to protect civilian job rights and benefits for veterans, members of the National Guard and Reserves. Veteran's Preference for Federal employment is codified in 5 U.S.C. 2108. VETS educates both employee and employer so they better understand the rights of the individuals and promotes a more productive relationship between employer and employee.

The full cost of VETS major programs is presented below. Full costs include all direct program costs and those indirect costs which can reasonably be assigned or allocated to the program.

 

(Dollars in thousands)

 

2003

 

2002

 

2001

 

2000

 

       

Program Expenses

       

 

       

  Career Counseling and Employment Services

       

    Disabled Veterans Outreach Program

$

87,013

$

82,582

$

84,681

$

81,956

    Local Veterans' Employment Representative

 

82,148

 

77,977

 

80,155

 

78,753

  Transition and Reemployment Services

 

25,957

 

25,635

 

27,970

 

25,500

 

 

 

 

 

 

 

 

 

 

$

195,118

$

186,194

$

192,806

$

186,209

 

 

 

 

 

 

 

 

 

A summary of program outputs is presented below.

 

 

 

 

 

 

 

 

 

Program Outputs

 

2003

 

2002

 

2001

 

2000

  Disabled Veterans Outreach Program

 

 

 

 

 

    Participants employed

235,000

*

120,400

 

131,000

 

146,000

    Disabled veterans

na

 

15,057

 

16,000

 

17,500

      Special disabled veterans

na

 

7,107

 

8,000

 

8,600

    Participants assisted

na

 

584,719

 

581,000

 

568,000

 

 

 

 

 

 

  Local Veterans' Employment Representative

 

 

 

 

 

    Participants employed

251,000

*

128,450

 

138,700

 

156,700

      Disabled veterans

na

 

13,533

 

14,000

 

14,800

      Special disabled veterans

na

 

6,233

 

6,500

 

6,900

    Participants assisted

na

 

639,694

 

733,600

 

632,600

 

 

 

 

 

  Transition and Reemployment Services

 

 

 

 

    Participants served

110,055

104,000

112,000

121,384

    Workshops

3,142

3,151

3,181

3,121

 

 

 

 

 

  Uniformed Services Employment and Reemployment

 

 

 

 

    Briefings, presentations, and technical assistance

10,081

5,436

3,200

4,981

    Individuals briefed or assisted

66,545

66,545

-

-

 

 

 

 

 

* - Projected data.

 

 

 

 

na - Data not available at time of publication.

 

 

 

 

 

SOCIAL INSURANCE PROGRAMS

The Federal Accounting Standards Advisory Board (FASAB) has classified certain government income transfer programs as social insurance programs. Recognizing that these programs have complex characteristics that do not fit traditional accounting models, the FASAB has developed accounting standards for social insurance programs which require the presentation of supplementary information to facilitate the assessment of the program's long term sustainability.

The U.S. Department of Labor operates two programs classified under Federal accounting standards as social insurance programs, the Unemployment Insurance Program and the Black Lung Disability Benefits Program. Presented below is the supplementary information for the two programs.

Unemployment Insurance Program

The Unemployment Insurance (UI) Program was created in 1935 to provide income assistance to unemployed workers who lose their jobs through no fault of their own. The program protects workers during temporary periods of unemployment through the provision of unemployment compensation benefits. These benefits replace part of the unemployed worker's lost wages and, in so doing, stabilize the economy during recessionary periods by increasing the unemployed's purchasing power. The UI program operates counter cyclically, with benefits exceeding tax collections during recessionary periods and UI tax revenues exceeding benefit payments during periods of recovery.

Program Administration and Funding

The UI program is administered through a unique system of Federal-State partnerships, established in Federal law but executed through conforming State laws by State officials. The Federal government provides broad policy guidance and program direction through the oversight of the U.S. Department of Labor, while program details are established through individual State UI statutes, administered through State UI agencies.

Federal and State Unemployment Taxes

The UI program is financed through the collection of Federal and State unemployment taxes levied on subject employers and deposited in the Unemployment Trust Fund (UTF). The UTF was established to account for the receipt, investment and disbursement of unemployment taxes. Federal unemployment taxes are used to pay for the administrative costs of the UI program, including grants to each State to cover the costs of State UI operations and the Federal share of extended UI benefits. Federal unemployment taxes are also used to maintain a loan account within the UTF, from which insolvent States may borrow funds to pay UI benefits. State UI taxes are used exclusively for the payment of regular UI benefits, as well as the States share of extended benefits.

Federal Unemployment Taxes

Under the provisions of the Federal Unemployment Tax Act (FUTA), a Federal tax is levied on covered employers, at a current rate of 6.2% of the first $7,000 in annual wages paid to each employee. This Federal tax rate is reduced by a credit of up to 5.4%, granted to employers paying State UI taxes under conforming State UI statutes. Accordingly, in conforming States, employers pay an effective Federal tax of 0.8%. Federal unemployment taxes are collected by the Internal Revenue Service.

State Unemployment Taxes

In addition to the Federal tax, individual States finance their UI programs through State tax contributions from subject employers based on the wages of covered employees. (Three States also collect contributions from employees). Within Federal confines, State tax rates are assigned in accordance with an employer's experience with unemployment. Actual tax rates vary greatly among the States and among individual employers within a State. At a minimum, these rates must be applied to the Federal tax base of $7,000; however, States may adopt a higher wage base than the minimum established by FUTA. State UI agencies are responsible for the collection of State unemployment taxes.

Unemployment Trust Fund

Federal and State UI taxes are deposited into designated accounts within the Unemployment Trust Fund. The UTF was established under the authority of Title IX, Section 904 of the Social Security Act of 1935, as amended, to receive, hold, invest, loan and disburse Federal and State UI taxes. The U.S. Department of the Treasury acts as custodian over monies deposited into the UTF, investing amounts in excess of disbursing requirements in Treasury securities. The UTF is comprised of the following accounts:

Federal Accounts

The Employment Security Administration Account (ESAA) was established pursuant to Section 901 of the Act. All tax receipts collected under the Federal Unemployment Tax Act (FUTA) are appropriated to the ESAA and used to pay the costs of Federal and State administration of the unemployment insurance program and veterans' employment services, as well as 97 percent of the costs of the State employment services. Excess balances in ESAA, as defined under the Act, are transferred to other Federal accounts within the Fund, as described below.

The Federal Unemployment Account (FUA) was established pursuant to Section 904 of the Act. FUA is funded by any excesses from the ESAA as determined in accordance with Section 902 of the Act. Title XII, Section 1201 of the Act authorizes the FUA to loan Federal monies to State accounts that are unable to make benefit payments because the State UI account balance has been exhausted. Title XII loans must be repaid with interest. The FUA may borrow from the ESAA or EUCA, without interest, or may also receive repayable advances, with interest, from the general fund of the U.S. Treasury, when the FUA has a balance insufficient to make advances to the States.

The Extended Unemployment Compensation Account (EUCA) was established pursuant to Section 905 of the Act. EUCA provides for the payment of extended unemployment benefits authorized under the Federal-State Extended Unemployment Compensation Act of 1970, as amended. Under the extended benefits program, extended unemployment benefits are paid to individuals who have exhausted their regular unemployment benefits. These extended benefits are financed one-half by State unemployment taxes and one-half by FUTA taxes from the EUCA. The EUCA is funded by a percentage of the FUTA tax transferred from the ESAA in accordance with Section 905(b)(1) and (2) of the Act. The EUCA may borrow from the ESAA or the FUA, without interest, or may also receive repayable advances from the general fund of the Treasury when the EUCA has a balance insufficient to pay the Federal share of extended benefits. During periods of sustained high unemployment, the EUCA may also receive payments and non-repayable advances from the general fund of the Treasury to finance emergency unemp loyment compensation benefits. Emergency unemployment benefits require Congressional authorization.

The Federal Employees Compensation Account (FECA) was established pursuant to Section 909 of the Act.

The FEC account provides funds to States for unemployment compensation benefits paid to eligible former Federal civilian personnel and ex-service members. Generally, benefits paid are reimbursed to the Federal Employees Compensation Account by the various Federal agencies. Any additional resources n ecessary to assure that the account can make the required payments to States, due to the timing of the benefit payments and subsequent reimbursements, will be provided by non-repayable advances from the general fund of the Treasury.

State Accounts

Separate State Accounts were established for each State and territory depositing monies into the Fund, in accordance with Section 904 of the Act. State unemployment taxes are deposited into these individual accounts and may be used only to pay State unemployment benefits. States may receive repayable advances from the FUA when their balances in the Fund are insufficient to pay benefits.

Railroad Retirement Accounts

The Railroad UI Account and Railroad UI Administrative Account were established under Section 904 of the Act to provide for a separate unemployment insurance program for railroad employees. This separate unemployment insurance program is administered by the Railroad Retirement Board, an agency independent of DOL. DOL is not responsible for the administrative oversight or solvency of the railroad unemployment insurance system. Receipts from taxes on railroad payrolls are deposited in the Railroad UI Account and the Railroad UI Administrative Account to meet benefit payment and related administrative expenses.

UI Program Benefits

The UI program provides regular and extended benefit payments to eligible unemployed workers. Regular UI program benefits are established under State law, payable for a period not to exceed a maximum duration. In 1970, Federal law began to require States to extend this maximum period of benefit duration by fifty percent during periods of high unemployment. These extended benefit payments are paid equally from Federal and State accounts.

Regular UI Benefits

There are no Federal standards regarding eligibility, amount or duration of regular UI benefits. Eligibility requirements, as well as benefit amounts and benefit duration are determined under State law. Under State laws, worker eligibility for benefits depends on experience in covered employment during a past base period, which attempts to measure the workers' recent attachment to the labor force. Three factors are common to State eligibility requirements: (1) a minimum duration of recent employment and earnings during a base period prior to unemployment, (2) unemployment not the fault of the unemployed, and (3) availability of the unemployed for work.

Benefit payment amounts under all State laws vary with the worker's base period wage history. Generally, States compute the amount of weekly UI benefits as a percentage of an individual's average weekly base period earnings, within certain minimum and maximum limits. Most States set the duration of UI benefits by the amount of earnings an individual has received during the base period. Currently, almost all States have established the maximum duration for regular UI benefits at 26 weeks. Regular UI benefits are paid by the State UI agencies from monies drawn down from the State's account within the Unemployment Trust Fund.

Extended UI Benefits

The Federal/State Extended Unemployment Compensation Act of 1970 provides for the extension of the duration of UI benefits during periods of high unemployment. When the insured unemployment level within a State, or in some cases total unemployment, reaches certain specified levels, the State must extend benefit duration by fifty percent, up to a combined maximum of 39 weeks. Fifty percent of the cost of extended unemployment benefits is paid from the Extended Unemployment Compensation Account within the UTF, and fifty percent by the State, from the State's UTF account.

Emergency UI Benefits

During prolonged periods of high unemployment, Congress may authorize the payment of emergency unemployment benefits to supplement extended UI benefit payments. Emergency benefits are currently being paid under the Temporary Extended Unemployment Compensation Act. Emergency benefit payments totaling $10.7 billion were paid in FY 2003 and payments in excess of $19 billion have been paid since inception of the program in March 2002. The benefits under this program are paid from Federal unemployment taxes and general fund appropriations in EUCA.

Federal UI Benefits

Unemployment benefits to unemployed Federal workers are paid from the Federal Employment Compensation Account within the Unemployment Trust Fund. These benefit costs are reimbursed by the responsible Federal agency and are not considered to be social insurance benefits. Federal unemployment compensation benefits are not included in this discussion of social insurance programs.

Program Finances and Sustainability

At September 30, 2003, total assets within the UTF exceeded liabilities by $48.2 billion. This fund balance approximates the accumulated surplus of tax revenues and earnings on these revenues over benefit payment expenses and is available to finance benefit payments in future periods when tax revenues may be insufficient. Treasury invests this accumulated surplus in Federal securities. The net value of these securities at September 30, 2003 was $48.2 billion. These investments accrue interest, which is distributed to eligible State and Federal accounts within the UTF. Interest income from these investments during FY 2003 was $3.4 billion. Federal and State UI tax and reimbursable revenues of $33.2 billion and regular, extended and emergency benefit payment expense of $53.4 billion were recognized for the year ended September 30, 2003.

As discussed in Note 1.L.1 to the consolidated financial statements, DOL recognized a liability for regular, extended and temporary extended unemployment benefits to the extent of unpaid benefits applicable to the current period. Accrued unemployment benefits payable at September 30, 2003 were $1.4 billion.

Effect of Projected Cash Inflows and Outflows on the Accumulated Net Assets of the UTF

The ability of the UI program to meet a participant's future benefit payment needs depends on the availability of accumulated taxes and earnings within the UTF. The Department measures the effect of projected benefit payments on the accumulated net assets of the UTF, under an open group scenario, which includes current and future participants in the UI program. Future estimated cash inflows and outflows of the UTF are tracked by the Department for budgetary purposes. These projections allow the Department to monitor the sensitivity of the UI program to differing economic conditions, and to predict the program's sustainability under varying economic assumptions. The significant assumptions used in the projections include total unemployment rates, civilian labor force levels, percent of unemployed receiving benefits, total wages, distribution of benefit payments by state, state tax rate structures, state taxable wage bases and interest rates on UTF investments.

Presented on the following pages is the effect of projected economic conditions on the net assets of the UTF, excluding the Federal Employees Compensation Account.

Charts I and II graphically depict the effect of expected economic conditions on the UTF over the next ten years.

Projected Cash Inflows and Outflows Under Expected Economic Conditions

Chart I depicts projected cash inflows and outflows of the UTF over the next ten years, under expected economic conditions. Both cash inflows and cash inflows excluding interest earnings are displayed. Current estimates by the Department are based on an expected unemployment rate of 5.70% during FY 2004, decreasing to 5.10% in FY 2008 and thereafter. Cash outflows exceed cash inflows combined with interest earnings for FY 2004. Positive cash flows resume in FY 2005, peaking at $8.6 billion in FY 2007 and decreasing to $3.5 billion in FY 2011, indicating that States have replenished their funds to desired levels.

These projections, excluding interest earnings, indicate net cash outflows in FY 2004, then net cash inflows for the next five years. Due to projected transfers of excess Federal funds to the States starting in 2008, which tends to depress state tax collections, there is crossover back to net outflows in FY 2010. The result is that the fund must rely on interest earnings to keep growing.

Chart I

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Effect of Projected Cash Inflows and Outflows on the Accumulated Net Assets of the UTF - Continued

Effect of Expected Cash Flows on UTF Assets

Chart II demonstrates the effect of these expected cash inflows and outflows on the net assets of the UTF over the ten year period ended September 30, 2013. Yearly projected total cash inflows, including interest earnings, and cash outflows are depicted, as well as the net effect of this cash flow on UTF assets.

Total cash outflows exceed cash inflows during 2004. Total cash inflows exceed cash outflows in each of the next nine years projected, with this excess peaking in 2007 and decreasing the next four years after that until resuming growth in 2012. Net UTF assets decrease to $41.4 billion in FY 2004 but increase by 119% over the next nine years to $90.7 billion by the end of FY 2013.

Chart II

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Recessionary Scenarios

Charts III and IV demonstrate the effect on accumulated UTF assets of projected total cash inflows and cash outflows of the UTF over the ten year period ending September 30, 2013, under mild and severe recession scenarios. Each scenario uses an open group, which includes current and future participants in the UI program. Charts III and IV assume increased rates of unemployment during mild and deep periods of recession.

Effect on UTF Assets of Mild Recession

The Department projects the effect of moderate recession on the cash inflows and outflows of the UTF. Under this scenario, which utilizes an unemployment rate peaking at 7.43% in FY 2005, net cash outflows are projected in FY 2004 through FY 2006. Net cash inflows are reestablished in FY 2007 and peak in FY 2010 with a drop in the unemployment rate to 5.18%.

The crossover pattern discussed above remains the same without including interest earnings. However, in the final year of the projections when cash outflows are marginally less than total cash inflows the states have replenished their funds to the desired level and growth of the fund slows.

Chart III

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Effect on UTF Assets of Deep Recession

The Department also estimates the effect of severe recession on the cash inflows and outflows of the UTF. This scenario assumes a rising unemployment rate peaking at 10.15% in FY 2006. Under this scenario, net cash outflows are projected in FY 2004 through FY 2007, with the fund in a deficit situation from 2005 to 2010. By the end of FY 2007, the net assets of the UTF decrease from $26.6 billion in FY 2004 to a negative $54.5 billion, a decline of $81.1 billion (305%). State accounts without sufficient reserve balances to absorb negative cash flows would be forced to borrow funds from the FUA to meet benefit payment requirements. State borrowing demands could also deplete the FUA, which borrows from the ESAA and the EUCA until they are depleted. The FUA would then require advances from the general fund of the U.S. Treasury to provide for State borrowings. (See discussion of State solvency measures following.)

Net cash inflows are reestablished in FY 2008, with a drop in the unemployment rate to 7.28%. By the end of FY 2013, this positive cash flow has replenished UTF account balances to $44.7 billion, higher than the beginning of the recession. This example demonstrates the counter cyclical nature of the UI program, which experiences net cash outflows during periods of recession, to be replenished through net cash inflows during periods of recovery.

Chart IV

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Tables containing the total yearly cash inflow, interest earnings and cash outflow for each scenario are presented in the following pages.

 

 

U.S. DEPARTMENT OF LABOR
SUPPLEMENTARY SOCIAL INSURANCE INFORMATION
CASH INFLOW AND OUTFLOW OF THE
UNEMPLOYMENT TRUST FUND EXCLUDING THE FEDERAL EMPLOYEES COMPENSATION ACCOUNT
FOR THE TEN YEAR PERIOD ENDING SEPTEMBER 30, 2013

(1) EXPECTED ECONOMIC CONDITIONS

(Dollars in thousands)

 

2004

 

2005

 

2006

 

2007

 

2008

 

2009

 

2010

 

2011

 

2012

 

2013

                                         

Balance, start of year

$

48,010,330

$

1,411,541

$

46,916,333

$

55,468,569

$

64,115,596

$

70,570,145

$

75,459,407

$

79,452,561

$

82,960,577

$

86,648,761

 

Cash inflow

 

 

 

 

 

 

 

 

 

 

 

  State unemployment taxes

 

31,571,000

 

36,921,000

 

39,362,000

 

39,999,000

 

40,474,000

 

40,828,000

 

41,563,000

 

42,825,000

 

44,684,000

 

46,310,000

  Federal unemployment taxes

 

6,824,000

 

7,016,000

 

7,694,000

 

7,994,000

 

6,767,000

 

6,539,000

 

6,691,000

 

6,848,000

 

7,162,000

 

8,064,000

  General revenue appropriation

 

387,600

 

700

 

400

 

500

 

600

 

700

 

700

 

700

 

700

 

700

  Interest on loans

 

113,000

 

150,000

 

117,000

 

83,000

 

65,000

 

62,000

 

60,000

 

81,000

 

121,000

 

150,000

  CMIA receipts

 

3,000

 

3,000

 

3,000

 

3,000

 

3,000

 

3,000

 

3,000

 

3,000

 

3,000

 

3,000

  Deposits by the Railroad Retirement Board

 

138,500

 

119,400

 

118,500

 

115,400

 

105,500

 

101,700

 

110,300

 

119,000

 

117,300

 

112,400

    Total cash inflow excluding interest

 

39,037,100

 

44,210,100

 

47,294,900

 

48,194,900

 

47,415,100

 

47,534,400

 

48,428,000

 

49,876,700

 

52,088,000

 

54,640,100

  Interest on Federal securities

 

2,422,962

 

2,169,917

 

2,472,644

 

2,926,838

 

3,410,294

 

3,799,239

 

4,083,480

 

4,304,896

 

4,513,879

 

4,736,563

    Total cash inflow

 

41,460,062

 

46,380,017

 

49,767,544

 

51,121,738

 

50,825,394

 

51,333,639

 

52,511,480

 

54,181,596

 

56,601,879

 

59,376,663

Cash outflow

 
   
 
 
 
 
 
 
 
 

  State unemployment benefits

 

43,918,000

 

36,803,000

 

37,085,000

 

38,256,000

 

40,049,000

 

42,013,000

 

44,010,000

 

46,027,000

 

48,142,000

 

50,414,000

  State administrative costs

 

3,878,090

 

3,807,734

 

3,864,229

 

3,947,728

 

4,044,785

 

4,147,822

 

4,218,942

 

4,348,918

 

4,465,971

 

4,570,230

  Federal administrative costs

 

143,266

 

147,183

 

151,820

 

156,740

 

162,087

 

167,508

 

171,656

 

178,566

 

183,989

 

189,406

  Interest on tax refunds

 

2,995

 

2,888

 

3,179

 

3,343

 

2,953

 

2,907

 

3,008

 

3,096

 

3,255

 

3,665

  Railroad Retirement Board withdrawals

 

116,500

 

114,420

 

111,080

 

110,900

 

112,020

 

113,140

 

114,720

 

116,000

 

118,480

 

119,220

    Total cash outflow

 

48,058,851

 

40,875,225

 

41,215,308

 

42,474,711

 

44,370,845

 

46,444,377

 

48,518,326

 

50,673,580

 

52,913,695

 

55,296,521

    Excess of total cash inflow excluding
      interest over total cash outflow

 

(9,021,751)

 

3,334,875

 

6,079,592

 

5,720,189

 

3,044,255

 

1,090,023

 

(90,326)

 

(796,880)

 

(825,695)

 

(656,421)

    Excess of total cash inflow
      over total cash outflow

 

(6,598,789)

 

5,504,792

 

8,552,236

 

8,647,027

 

6,454,549

 

4,889,262

 

3,993,154

 

3,508,016

 

3,688,184

 

4,080,142

Balance, end of year

$

41,411,541

$

46,916,333

$

55,468,569

$

64,115,596

$

70,570,145

$

75,459,407

$

79,452,561

$

82,960,577

$

86,648,761

$

90,728,903

 

 

 

 

 

 

 

 

 

 

 

                                         

      Total unemployment rate

 

5.70%

 

5.40%

 

5.23%

 

5.13%

 

5.10%

 

5.10%

 

5.10%

 

5.10%

 

5.10%

 

5.10%

 

U.S. DEPARTMENT OF LABOR
SUPPLEMENTARY SOCIAL INSURANCE INFORMATION
CASINFLOWAND OUTFLOW OF THE
UNEMPLOYMENT TRUST FUND EXCLUDING THE FEDERAL EMPLOYEES COMPENSATION ACCOUNT
FOR THE TEN YEAR PERIOD ENDING SEPTEMBER 30, 2013

(2) MILD RECESSIONARY UNEMPLOYMENT RATE

(Dollars in thousands)

 

2004

 

2005

 

2006

 

2007

 

2008

 

2009

 

2010

 

2011

 

2012

 

2013

                     

Balance, start of year

$

48,010,330

$

32,821,941

$

19,368,061

$

14,925,434

$

21,779,906

$

34,677,817

$

47,960,942

$

61,397,631

$

72,269,147

$

78,755,808

                                         

Cash inflow

 

 

 

 

 

 

 

 

 

 

  State unemployment taxes

 

31,591,000

 

38,491,000

 

44,156,000

 

47,673,000

 

48,967,000

 

48,478,000

 

47,517,000

 

46,333,000

 

45,915,000

 

46,971,000

  Federal unemployment taxes

 

6,751,000

 

6,856,000

 

7,759,000

 

9,403,000

 

9,985,000

 

10,998,000

 

11,035,000

 

10,571,000

 

8,399,000

 

7,470,000

  General revenue appropriation

 

417,900

 

21,800

 

17,300

 

4,100

 

600

 

900

 

400

 

500

 

600

 

700

  Interest on loans

 

172,000

 

503,000

 

894,000

 

1,028,000

 

846,000

 

595,000

 

312,000

 

154,000

 

111,000

 

106,000

  CMIA receipts

 

3,000

 

3,000

 

3,000

 

3,000

 

3,000

 

3,000

 

3,000

 

3,000

 

3,000

 

3,000

  Deposits by the Railroad Retirement Board

 

138,500

 

119,400

 

118,500

 

115,400

 

105,500

 

101,700

 

110,300

 

119,000

 

117,300

 

112,400

                                         

    Total cash inflow excluding interest

 

39,073,400

 

45,994,200

 

52,947,800

 

58,226,500

 

59,907,100

 

60,176,600

 

58,977,700

 

57,180,500

 

54,545,900

 

54,663,100

                                         

  Interest on Federal securities

 

2,198,268

 

1,233,547

 

1,014,524

 

1,196,813

 

1,544,247

 

2,123,146

 

2,880,027

 

3,581,924

 

4,048,919

 

4,330,061

                                         

      Total cash inflow

 

41,271,668

 

47,227,747

 

53,962,324

 

59,423,313

 

61,451,347

 

62,299,746

 

61,857,727

 

60,762,424

 

58,594,819

 

58,993,161

                                         

  Cash outflow

 
 
 
 
 
 
 
 
 
 

  State unemployment benefits

 

52,151,000

 

56,193,000

 

53,880,000

 

48,103,000

 

44,114,000

 

44,514,000

 

43,891,000

 

45,241,000

 

47,336,000

 

49,560,000

  State administrative costs

 

4,046,328

 

4,224,202

 

4,258,845

 

4,194,269

 

4,160,972

 

4,217,083

 

4,238,701

 

4,350,563

 

4,465,871

 

4,570,230

  Federal administrative costs

 

143,266

 

147,183

 

151,820

 

156,740

 

162,087

 

167,508

 

171,656

 

178,566

 

183,989

 

189,406

  Interest on tax refunds

 

2,963

 

2,822

 

3,206

 

3,932

 

4,357

 

4,890

 

4,961

 

4,779

 

3,818

 

3,395

  Railroad Retirement Board withdrawals

 

116,500

 

114,420

 

111,080

 

110,900

 

112,020

 

113,140

 

114,720

 

116,000

 

118,480

 

119,220

                                         

    Total cash outflow

 

56,460,057

 

60,681,627

 

58,404,951

 

52,568,841

 

48,553,436

 

49,016,621

 

48,421,038

 

49,890,908

 

52,108,158

 

54,442,251

    Excess of total cash inflow excluding
      interest over total cash outflow

 

(17,386,657)

 

(14,687,427)

 

(5,457,151)

 

5,657,659

 

11,353,664

 

11,159,979

 

10,556,662

 

7,289,592

 

2,437,742

 

220,849

                                         

    Excess of total cash inflow over
      total cash outflow

 

(15,188,389)

 

(13,453,880)

 

(4,442,627)

 

6,854,472

 

12,897,911

 

13,283,125

 

13,436,689

 

10,871,516

 

6,486,661

 

4,550,910

                                         

Balance, end of year

$

32,821,941

$

19,368,061

$

14,925,434

$

21,779,906

$

34,677,817

$

47,960,942

$

61,397,631

$

72,269,147

$

78,755,808

$

83,306,718

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

      Total unemployment rate

 

6.60%

 

7.43%

 

7.13%

 

6.35%

 

5.63%

 

5.48%

 

5.18%

 

5.10%

 

5.10%

 

5.10%

 

U.S. DEPARTMENT OF LABOR
SUPPLEMENTARY SOCIAL INSURANCE INFORMATION
CASH INFLOW AND OUTFLOW OF THE
UNEMPLOYMENT TRUST FUND EXCLUDING THE FEDERAL EMPLOYEES COMPENSATION ACCOUNT
FOR THE TEN YEAR PERIOD ENDING SEPTEMBER 30, 2013

(3) DEEP RECESSIONARY UNEMPLOYMENT RATE

(Dollars in thousands)

 

2004

 

2005

 

2006

 

2007

 

2008

 

2009

 

2010

 

2011

 

2012

 

2013

                                         

Balance, start of year

$

48,010,330

$

26,580,618

$

(13,911,847)

$

(52,515,249)

$

(54,503,714)

$

(47,769,492)

$

(37,404,250)

$

(20,901,602)

$

2,402,980

$

24,192,801

 

Cash inflow

 

 

 

 

 

 

 

 

 

 

  State unemployment taxes

 

31,753,000

 

39,949,000

 

48,311,000

 

55,840,000

 

59,499,000

 

59,751,000

 

58,633,000

 

56,804,000

 

53,804,000

 

52,285,000

  Federal unemployment taxes

 

6,716,000

 

6,710,000

 

7,537,000

 

9,484,000

 

10,841,000

 

13,295,000

 

15,309,000

 

17,603,000

 

16,569,000

 

18,115,000

  General revenue appropriation

 

419,400

 

35,000

 

33,600

 

11,600

 

4,800

 

8,200

 

7,100

 

1,100

 

200

 

400

  Interest on loans

 

232,000

 

1,154,000

 

2,765,000

 

3,774,000

 

3,805,000

 

3,627,000

 

3,244,000

 

2,603,000

 

1,862,000

 

1,125,000

  CMIA receipts

 

3,000

 

3,000

 

3,000

 

3,000

 

3,000

 

3,000

 

3,000

 

3,000

 

3,000

 

3,000

  Deposits by the Railroad Retirement Board

 

138,500

 

119,400

 

118,500

 

115,400

 

105,500

 

101,700

 

110,300

 

119,000

 

117,300

 

112,400

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Total cash inflow excluding interest

 

39,261,900

 

47,970,400

 

58,768,100

 

69,228,000

 

74,258,300

 

76,785,900

 

77,306,400

 

77,133,100

 

72,355,500

 

71,640,800

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Interest on Federal securities

 

1,981,149

 

766,923

 

376,038

 

298,577

 

421,912

 

577,704

 

789,495

 

1,166,176

 

1,546,241

 

1,968,128

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Total cash inflow

 

41,243,049

 

48,737,323

 

59,144,138

 

69,526,577

 

74,680,212

 

77,363,604

 

78,095,895

 

78,299,276

 

73,901,741

 

73,608,928

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash outflow

 

 

 

 

 

 

 

 

 

 

  State unemployment benefits

 

58,239,000

 

83,776,000

 

90,723,000

 

64,019,000

 

60,345,000

 

59,659,000

 

54,809,000

 

49,025,000

 

46,908,000

 

48,180,000

  State administrative costs

 

4,171,048

 

4,789,423

 

5,058,526

 

4,624,436

 

4,522,152

 

4,552,803

 

4,490,988

 

4,467,170

 

4,493,920

 

4,572,421

  Federal administrative costs

 

143,266

 

147,183

 

151,820

 

156,740

 

162,087

 

167,508

 

171,656

 

178,566

 

183,989

 

189,406

  Interest on tax refunds

 

2,947

 

2,762

 

3,114

 

3,966

 

4,731

 

5,911

 

6,883

 

7,958

 

7,531

 

8,234

  Interest on General Fund advances

 

-

 

400,000

 

1,700,000

 

2,600,000

 

2,800,000

 

2,500,000

 

2,000,000

 

1,200,000

 

400,000

 

-

  Railroad Retirement Board withdrawals

 

116,500

 

114,420

 

110,900

 

112,020

 

113,140

 

114,720

 

116,000

 

118,480

 

119,220

 

111,080

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Total cash outflow

 

62,672,761

 

89,229,788

 

97,747,540

 

71,515,042

 

67,945,990

 

66,998,362

 

61,593,247

 

54,994,694

 

52,111,920

 

53,069,281

    Excess of total cash inflow excluding
      interest over total cash outflow

 

(23,410,861)

 

(41,259,388)

 

(38,979,440)

 

(2,287,042)

 

6,312,310

 

9,787,538

 

15,713,153

 

22,138,406

 

20,243,580

 

18,571,519

    Excess of total cash inflow over
      total cash outflow

 

(21,429,712)

 

(40,492,465)

 

(38,603,402)

 

(1,988,465)

 

6,734,222

 

10,365,242

 

16,502,648

 

23,304,582

 

21,789,821

 

20,539,647

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, end of year

$

26,580,618

$

(13,911,847)

$

(52,515,249)

$

(54,503,714)

$

(47,769,492)

$

(37,404,250)

$

(20,901,602)

$

2,402,980

$

24,192,801

$

44,732,448

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Total unemployment rate

 

6.93%

 

9.08%

 

10.15%

 

7.83%

 

7.28%

 

7.05%

 

6.43%

 

5.65%

 

5.20%

 

5.10%

States Minimally Solvent

Each States accumulated UTF net assets or reserve balance should provide a defined level of benefit payments over a defined period. To be minimally solvent, a State's reserve balance should provide for one year's projected benefit payment needs based on the highest level of benefit payments experienced by the State over the last twenty years. A ratio of 1.0 or greater indicates a state is minimally solvent. States below this level are vulnerable to exhausting their funds in a recession. States exhausting their reserve balance must borrow funds from the Federal Unemployment Account (FUA) to make benefit payments. The Illinois, Missouri, New York and Minnesota state accounts had loans payable to FUA at the end of FY 2003. During periods of high sustained unemployment, balances in the FUA may be depleted. In these circumstances, FUA is authorized to borrow from the Treasury general fund.

Chart V presents the State by State results of this analysis at September 30, 2003, in descending order, by ratio. As the table below illustrates, 32 states failed to maintain minimal solvency ratios at September 30, 2003. The ratio is not computed for Texas because the bulk of their fund balance represents proceeds from the sale of bonds.

Chart V

Minimally Solvent

   

 

   

 

Not Minimally Solvent

   

 

State

Ratio

   

 

State

Ratio

New Mexico

2.90

   

 

South Carolina

0.99

Mississippi

2.30

   

 

Georgia

0.97

Vermont

2.29

   

 

Oklahoma

0.97

Virgin Islands

2.00

   

 

South Dakota

0.90

Delaware

1.94

   

 

Wisconsin

0.90

Maine

1.80

   

 

Alaska

0.87

New Hampshire

1.67

   

 

Kansas

0.85

Arizona

1.63

   

 

Nebraska

0.83

Montana

1.53

   

 

Tennessee

0.82

Hawaii

1.49

   

 

New Jersey

0.75

Puerto Rico

1.45

   

 

Maryland

0.74

Iowa

1.39

   

 

Washington

0.67

Wyoming

1.39

   

 

Kentucky

0.64

Indiana

1.34

   

 

Rhode Island

0.64

Louisiana

1.34

   

 

Michigan

0.61

District o f Columbia

1.25

   

 

Alabama

0.60

Utah

1.25

   

 

Vest Virginia

0.60

Oregon

1.22

   

 

Idaho

0.57

Florida

1.01

   

 

Connecticut

0.55

Nevada

1.01

   

 

Ohio

0.53

   

 

   

 

   

 

Virginia

0.47

   

 

   

 

   

 

North Dakota

0.39

   

 

   

 

   

 

Pennsylvania

0.34

   

 

   

 

   

 

Colorado

0.32

   

 

   

 

   

 

Arkansas

0.31

   

 

   

 

   

 

California

0.28

   

 

   

 

   

 

Massachusetts

0.13

   

 

   

 

   

 

North Carolina

0.01

   

 

   

 

   

 

Illinois

-0.06

   

 

   

 

   

 

Missouri

-0.08

   

 

   

 

   

 

New York

-0.12

   

 

   

 

   

 

Minnesota

-0.13

   

 

   

 

   

 

Texas

N.A.

 

Black Lung Disability Benefit Program

The Black Lung Disability Benefit Program provides for compensation, medical and survivor benefits for eligible coal miners who are disabled due to pneumoconiosis (black lung disease) arising out of their coal mine employment. The U.S. Department of Labor operates the Black Lung Disability Benefit Program. The Black Lung Disability Trust Fund (BLDTF) provides benefit payments to eligible coal miners disabled by pneumoconiosis when no responsible mine operator can be assigned the liability.

Program Administration and Funding

Black lung disability benefit payments are funded by excise taxes from coal mine operators based on the sale of coal, as are the fund's administrative costs. These taxes are collected by the Internal Revenue Service and transferred to the BLDTF, which was established under the authority of the Black Lu ng Benefits Revenue Act, and administered by the U.S. Department of the Treasury. The Black Lung Benefits Revenue Act provides for repayable advances to the BLDTF from the general fund of the Treasury, in the event that BLDTF resources are not adequate to meet program obligations.

Program Finances and Sustainability

At September 30, 2003, total liabilities of the Black Lung Disability Trust Fund exceeded assets by $8.2 billion. This deficit fund balance represented the accumulated shortfall of excise t axes necessary to meet benefit payment and interest expenses. This shortfall was funded by repayable advances to the BLDTF, which are repayable with interest.

Outstanding advances at September 30, 2003 were $8.2 billion, bearing interest rates ranging from 5.375 to 13.875 percent. Excise tax revenues of $506.1 million, benefit payment expense of $375.0 million and interest expense of $620.6 million were recognized for the year ended September 30, 2003.

As discussed in Note 1.L.3, DOL recognized a liability for disability benefits to the extent of unpaid benefits applicable to the current period. Accrued disability benefits payable at September 30, 2003 were $25.7 million. Although no liability was recognized for future payments to be made to present and future program participants beyond the due and payable amounts accrued at year end, future estimated cash inflows and outflows of the BLDTF are tracked by the Department for budgetary purposes. The significant assumptions used in the projections are coal production estimates, the tax rate structure, number of beneficiaries, life expectancy, medical costs and the interest rate on new repayable advances from Treasury. These projections are sensitive to changes in the tax rate and changes in interest rates on repayable advances from Treasury.

These projections, made over the thirty-seven year period ending September 30, 2040, indicate that cash inflows from excise taxes will exceed cash outflows for benefit payments and administrative expenses for each period projected. Cumulative net cash inflows are projected to reach $9.1 billion by the year 2040. However, when interest payments required to finance the BLDTF's repayable advances are applied against this surplus cash inflow, the BLDTF's cash flow turns negative during each of the thirty-seven periods included in the projections. Net cash outflows after interest payments are projected to reach $60.6 billion by the end of the year 2040, increasing the BLDTF's deficit to $53.8 billion at September 30, 2040. (See Chart I on following page.)

The net present value of future benefit payments for the thirty-seven year period ending 2040 is $3.0 billion. The net present value of future excise taxes for the thirty-seven year period is $7.3 billion which results in a $4.3 billion excess of excise taxes over benefit payments. However, the net present value of total cash outflows, including interest payments and administrative costs, is $21.8 billion resulting in an excess of cash outflows over excise taxes of $14.5 billion. The interest rate used for net present value is 5.375 percent.

Chart I

Image of a charttext only

The projected decrease in cash inflows in the year 2014 and thereafter is the result of a scheduled reduction in the tax rate on the sale of coal. This rate reduction is projected to result in a fifty-eight percent decrease in the amount of excise taxes collected between the years 2013 and 2015. The cumulative effect of this change is estimated to be in excess of $12.5 billion by the year 2040.

Yearly cash inflows and outflows are presented in the table on the following page.

U.S. DEPARTMENT OF LABOR
SUPPLEMENTARY SOCIAL INSURANCE INFORMATION
CASH INFLOW AND OUTFLOW OF THE BLACK LUNG DISABILITY TRUST FUND
FOR THE THIRTY-SEVEN YEAR PERIOD ENDING SEPTEMBER 30, 2040

(Dollars in thousands)

 

2004

 

2005

 

2006

 

2007

 

2008

 

2009 - 2040

 

Total

               

Cash inflow

 
 
 
 
 
 
 

  Excise taxes

$

557,000

$

560,000

$

573,000

$

589,000

$

607,000

$

12,228,169

$

15,114,169

  Interest

 

-

 

-

 

-

 

-

 

-

 

-

 

-

                           

    Total cash inflow

 

557,000

 

560,000

 

573,000

 

589,000

 

607,000

 

12,228,169

 

15,114,169

                           

Cash outflow

 
 
 
 
 
 
 

  Disabled coal miners benefits

 

350,016

 

334,105

 

318,024

 

301,946

 

284,742

 

3,288,213

 

4,877,046

  Administrative costs

 

56,099

 

57,396

 

58,731

 

60,103

 

61,526

 

884,113

 

1,178,968

                           

    Cash outflows before interest payments

 

406,115

 

391,501

 

376,755

 

362,049

 

346,268

 

4,173,326

 

6,056,014

                           

    Cash inflow over cash outflow
      before interest payments

 

150,885

 

168,499

 

196,245

 

226,951

 

260,732

 

8,054,843

 

9,058,155

                           

  Interest on advances

 

639,055

 

658,533

 

680,291

 

703,427

 

727,346

 

51,172,734

 

54,581,386

                           

    Total cash outflow

 

1,045,170

 

1,050,034

 

1,057,046

 

1,065,476

 

1,073,614

 

55,346,060

 

60,637,400

                           

  Total cash outflow over total cash inflow

 

(488,170)

 

(490,034)

 

(484,046)

 

(476,476)

 

(466,614)

 

(43,117,891)

 

(45,523,231)

                           

Balance, start of year

 

(8,227,010)

 

(8,715,180)

 

(9,205,214)

 

(9,689,260)

 

(10,165,736)

 

(10,632,350)

 

(8,227,010)

                           

Balance, end of year

$

(8,715,180)

$

(9,205,214)

$

(9,689,260)

$

(10,165,736)

$

(10,632,350)

$

(53,750,241)

$

(53,750,241)

                            

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