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Secretary of Labor Thomas E. Perez
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DOL Annual Report, Fiscal Year 2006
Performance and Accountability Report

Required Supplementary Information

DEFERRED MAINTENANCE

The U.S. Department of Labor maintains one hundred twenty-three (123) Job Corps centers located throughout the United States. While Job Corps does fund safety, health, and environmental projects in the year those deficiencies are identified, funding constraints limit the extent of maintenance that the Job Corps can undertake each fiscal year. Consequently, maintenance projects are not always performed as scheduled and, therefore, must be deferred to a future period.

Information on deferred maintenance is based on condition assessment surveys that are conducted every year for one-third of the inventory. Each center survey determines the current condition of facilities and the estimated cost to correct deficiencies. Surveys are based on methods and standards that are applied on a consistent basis, including:

  • condition descriptions of facilities,
  • recommended maintenance schedules,
  • estimated costs for maintenance actions, and
  • standardized condition codes.

These surveys evaluate the facilities at each Job Corps center to identify:

  • rehabilitation projects that are required to provide for health and safety, or upgrade to an acceptable state of repair,
  • present utilization,
  • mission dependency,
  • health and safety programs,
  • barrier-free access,
  • maintenance, operations, and security programs,
  • energy usage,
  • natural hazards,
  • long-range planning, and
  • conformance to U.S. Environmental Protection Agency and applicable air and water quality standards.

The estimated cost of deferred maintenance for fiscal years 2002 to 2006 is presented below:

Chart: Summary of deferred maintenance

Text only

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 State's 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 unemployment 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 necessary 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 were last authorized in 2002 under the Temporary Extended Unemployment Compensation Act. Payments in excess of $23 billion were paid under the program which ended in January, 2005. Prior to that, emergency benefits were authorized in 1991 under the Emergency Unemployment Compensation Act. Emergency benefit payments in excess of $28 billion were paid over the three year period ended in 1994.

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, 2006, total assets within the UTF exceeded liabilities by $66.4 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, 2006 was $66.2 billion. These investments accrue interest, which is distributed to eligible State and Federal accounts within the UTF. Interest income from these investments during FY 2006 was $2.8 billion. Federal and State UI tax and reimbursable revenues of $43.3 billion and regular, extended and emergency benefit payment expense of $31.0 billion were recognized for the year ended September 30, 2006.

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, 2006 were $1.1 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.

Expected Economic Conditions

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 4.80% during FY 2007, increasing to 4.90% in FY 2009 and thereafter. Total cash inflows exceed total cash outflows for all years projected. The net inflow decreases from $10.2 billion in FY 2007 to $4.3 billion in FY 2011, indicating that many States have replenished their funds to desired levels.

These projections, excluding interest earnings, indicate decreasing net cash inflows from FY 2007 to FY 2010, crossing over to net cash outflow for FY 2011, then back to increasing net cash inflows through 2016.

Chart I

Chart: Employment trust fund, cash inflow and outflow

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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, 2016. 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 inflows exceed cash outflows for all years projected, with this excess peaking in FY 2016. Starting at $76.3 billion in FY 2007, net UTF assets increase by 80% over the next nine years to $137.4 billion by the end of FY 2016.

Chart II

Chart: Unemployment trust fund

Text only

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, 2016, 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 2009, net cash outflows are projected in FY 2008 through FY 2010. Net cash inflows are reestablished in FY 2011 and peak in FY 2015 with a drop in the unemployment rate to 4.90%. Net assets never fall below $36.8 billion and are within $33.3 billion of the balance under expected economic conditions by 2016. The crossover pattern remains the same when interest earnings are excluded.

Chart III

Chart: Chart: Unemployment trust fund

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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 10.14% in FY 2010. Under this scenario, net cash outflows are projected in FY 2008 through FY 2011, with the fund in a deficit situation from 2010 to 2014. The net assets of the UTF decrease from $73.0 billion in FY 2007 to negative $31.3 billion in 2011, a decline of $104.3 billion. 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 2012, with a drop in the unemployment rate to 7.26%. By the end of FY 2016, this positive cash flow has replenished UTF account balances to $40.0 billion. 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. However, at the end of the projection period, net assets are still $97.4 billion less than under expected economic conditions.

Chart IV

Chart: Chart: Unemployment trust fund

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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, 2016
(1) EXPECTED ECONOMIC CONDITIONS

(Dollars in thousands)

 

2007

 

2008

 

2009

 

2010

 

2011

 

2012

 

2013

 

2014

 

2015

 

2016

Balance, start of year

 

$66,107,956

 

$76,270,596

 

$83,831,397

 

$89,740,058

 

$94,507,346

 

$98,818,464

 

$104,247,168

 

$110,124,752

 

$117,471,273

 

$126,862,149

Cash inflow

 

State unemployment taxes

 

36,695,000

 

37,108,000

 

37,571,000

 

38,378,000

 

39,981,000

 

42,396,000

 

44,043,000

 

46,287,000

 

48,900,000

 

50,561,000

 

Federal unemployment taxes

 

7,250,000

 

6,110,000

 

5,714,000

 

5,854,000

 

6,002,000

 

6,527,000

 

7,073,000

 

7,989,000

 

9,077,000

 

10,214,000

 

Interest on loans

 

-

 

-

 

2,000

 

23,000

 

92,000

 

157,000

 

207,000

 

244,000

 

232,000

 

159,000

 

Deposits by the Railroad Retirement Board

89,900

 

104,300

 

118,700

 

122,000

 

122,100

 

124,300

 

125,900

 

129,900

 

133,000

 

132,500

 

 

 

Total cash inflow excluding interest

44,034,900

 

43,322,300

 

43,405,700

 

44,377,000

 

46,197,100

 

49,204,300

 

51,448,900

 

54,649,900

 

58,342,000

 

61,066,500

 

Interest on Federal securities

 

3,242,501

 

3,738,632

 

4,220,867

 

4,603,546

 

4,926,501

 

5,217,250

 

5,537,229

 

5,903,781

 

6,369,751

 

6,982,726

 

 

 

Total cash inflow

 

47,277,401

 

47,060,932

 

47,626,567

 

48,980,546

 

51,123,601

 

54,421,550

 

56,986,129

 

60,553,681

 

64,711,751

 

68,049,226

Cash outflow

 

State unemployment benefits

 

33,202,000

 

35,677,000

 

37,934,000

 

40,463,000

 

43,038,000

 

45,136,000

 

47,157,000

 

49,161,000

 

51,178,000

 

53,297,000

 

State administrative costs

 

3,597,114

 

3,504,657

 

3,457,815

 

3,416,669

 

3,433,764

 

3,507,240

 

3,593,404

 

3,679,908

 

3,767,743

 

3,856,991

 

Federal administrative costs

 

210,142

 

207,885

 

209,723

 

210,530

 

214,672

 

220,653

 

226,634

 

232,744

 

237,749

 

242,823

 

Interest on tax refunds

 

2,511

 

2,161

 

2,106

 

2,218

 

2,328

 

2,555

 

2,785

 

3,163

 

3,614

 

4,067

 

Railroad Retirement Board withdrawals

102,994

 

108,428

 

114,262

 

120,841

 

123,719

 

126,398

 

128,722

 

130,345

 

133,769

 

136,437

 

 

 

Total cash outflow

 

37,114,761

 

39,500,131

 

41,717,906

 

44,213,258

 

46,812,483

 

48,992,846

 

51,108,545

 

53,207,160

 

55,320,875

 

57,537,318

 

 

 

Excess of total cash inflow excluding interest over total cash outflow

 

6,920,139

 

3,822,169

 

1,687,794

 

163,742

 

(615,383)

 

211,454

 

340,355

 

1,442,740

 

3,021,125

 

3,529,182

 

 

 

Excess of total cash inflow over total cash outflow

 

10,162,640

 

7,560,801

 

5,908,661

 

4,767,288

 

4,311,118

 

5,428,704

 

5,877,584

 

7,346,521

 

9,390,876

 

10,511,908

Balance, end of year

 

$76,270,596

 

$83,831,397

 

$89,740,058

 

$94,507,346

 

$98,818,464

 

$104,247,168

 

$110,124,752

 

$117,471,273

 

$126,862,149

 

$137,374,057

 

 

 

Total unemployment rate

 

4.80%

 

4.83%

 

4.90%

 

4.90%

 

4.90%

 

4.90%

 

4.90%

 

4.90%

 

4.90%

 

4.90%


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, 2016
(2) MILD RECESSIONARY UNEMPLOYMENT RATE

(Dollars in thousands)

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Balance, start of year

$66,107,956

$72,902,648

$64,164,613

$47,769,276

$36,774,380

$37,899,526

$47,099,368

$59,064,490

$73,902,742

$89,827,598

Cash inflow

State unemployment taxes

36,727,000

38,003,000

42,455,000

47,005,000

51,099,000

54,284,000

55,445,000

55,293,000

54,301,000

54,561,000

Federal unemployment taxes

7,213,000

6,009,000

5,557,000

5,698,000

6,712,000

8,204,000

9,610,000

10,539,000

11,863,000

10,936,000

General revenue appropriation

-

44,000

81,000

55,000

-

-

-

-

-

-

Interest on loans

-

20,000

329,000

910,000

1,299,000

1,335,000

1,208,000

1,037,000

805,000

614,000

Deposits by the Railroad Retirement Board

89,900

104,300

118,700

122,000

122,100

124,300

125,900

129,900

133,000

132,500

Total cash inflow excluding interest

44,029,900

44,180,300

48,540,700

53,790,000

59,232,100

63,947,300

66,388,900

66,998,900

67,102,000

66,243,500

Interest on Federal securities

3,204,939

3,215,958

2,633,097

2,116,118

2,191,083

2,462,001

2,859,393

3,373,332

4,240,166

5,139,219

Total cash inflow

47,234,839

47,396,258

51,173,797

55,906,118

61,423,183

66,409,301

69,248,293

70,372,232

71,342,166

71,382,719

Cash outflow

State unemployment benefits

36,471,000

52,072,000

63,413,000

62,793,000

56,258,000

53,181,000

53,204,000

51,420,000

51,247,000

52,871,000

State administrative costs

3,653,513

3,743,854

3,830,101

3,774,484

3,699,043

3,678,196

3,720,031

3,746,718

3,794,069

3,870,819

Federal administrative costs

210,142

207,885

209,723

210,530

214,672

220,653

226,634

232,744

237,749

242,823

Interest on tax refunds

2,498

2,126

2,048

2,159

2,603

3,212

3,784

4,173

4,723

4,354

Railroad Retirement Board withdrawals

102,994

108,428

114,262

120,841

123,719

126,398

128,722

130,345

133,769

136,437

Total cash outflow

40,440,147

56,134,293

67,569,134

66,901,014

60,298,037

57,209,459

57,283,171

55,533,980

55,417,310

57,125,433

Excess of total cash inflow excluding interest over total cash outflow

3,589,753

(11,953,993)

(19,028,434)

(13,111,014)

(1,065,937)

6,737,841

9,105,729

11,464,920

11,684,690

9,118,067

Excess of total cash inflow over total cash outflow

6,794,692

(8,738,035)

(16,395,337)

(10,994,896)

1,125,146

9,199,842

11,965,122

14,838,252

15,924,856

14,257,286

Balance, end of year

$72,902,648

$64,164,613

$47,769,276

$36,774,380

$37,899,526

$47,099,368

$59,064,490

$73,902,742

$89,827,598

$104,084,884

Total unemployment rate

5.10%

6.61%

7.43%

7.09%

6.35%

5.61%

5.47%

5.12%

4.90%

4.90%


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, 2016
(3) DEEP RECESSIONARY UNEMPLOYMENT RATE


(Dollars in thousands)

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Balance, start of year

$66,107,956

$72,902,648

$60,090,657

$22,889,946

$(20,289,347)

$(31,262,372)

$(28,809,038)

$(21,547,455)

$(6,655,959)

$15,976,516

Cash inflow

 

 

 

 

 

 

 

 

 

 

State unemployment taxes

36,727,000

38,062,000

43,373,000

50,592,000

58,245,000

62,858,000

65,216,000

66,234,000

65,652,000

63,783,000

Federal unemployment taxes

7,213,000

5,982,000

5,447,000

5,530,000

6,816,000

8,970,000

11,368,000

13,124,000

15,258,000

15,541,000

General revenue appropriation

-

49,000

141,000

181,000

61,000

2,000

-

-

-

-

Interest on loans

-

28,000

661,000

2,270,000

3,616,000

4,002,000

4,053,000

3,905,000

3,454,000

2,795,000

Deposits by the Railroad Retirement Board

89,900

104,300

118,700

122,000

122,100

124,300

125,900

129,900

133,000

132,500

Total cash inflow excluding interest

44,029,900

44,225,300

49,740,700

58,695,000

68,860,100

75,956,300

80,762,900

83,392,900

84,497,000

82,251,500

Interest on Federal securities

3,204,939

3,120,877

1,999,490

1,391,549

1,145,929

1,234,038

1,462,838

1,758,255

2,208,327

2,807,654

Total cash inflow

47,234,839

47,346,177

51,740,190

60,086,549

70,006,029

77,190,338

82,225,738

85,151,155

86,705,327

85,059,154

Cash outflow

 

 

 

 

 

 

 

 

 

 

State unemployment benefits

36,471,000

56,039,000

84,520,000

98,023,000

74,847,000

68,435,000

68,706,000

64,403,000

58,940,000

56,508,000

State administrative costs

3,653,513

3,800,739

4,094,909

4,209,376

3,991,020

3,951,441

3,998,323

3,988,374

3,955,259

3,963,054

Federal administrative costs

210,142

207,885

209,723

210,530

214,672

220,653

226,634

232,744

237,749

242,823

Interest on tax refunds

2,498

2,116

2,007

2,095

2,643

3,512

4,476

5,196

6,075

6,188

Interest on General Fund advances

-

-

-

700,000

1,800,000

2,000,000

1,900,000

1,500,000

800,000

200,000

Railroad Retirement Board withdrawals

102,994

108,428

114,262

120,841

123,719

126,398

128,722

130,345

133,769

136,437

Total cash outflow

40,440,147

60,158,168

88,940,901

103,265,842

80,979,054

74,737,004

74,964,155

70,259,659

64,072,852

61,056,502

Excess of total cash inflow excluding interest over total cash outflow

3,589,753

(15,932,868)

(39,200,201)

(44,570,842)

(12,118,954)

1,219,296

5,798,745

13,133,241

20,424,148

21,194,998

Excess of total cash inflow over total cash outflow

6,794,692

(12,811,991)

(37,200,711)

(43,179,293)

(10,973,025)

2,453,334

7,261,583

14,891,496

22,632,475

24,002,652

Balance, end of year

$72,902,648

$60,090,657

$22,889,946

$(20,289,347)

$(31,262,372)

$(28,809,038)

$(21,547,455)

$(6,655,959)

$15,976,516

$39,979,168

Total unemployment rate

5.10%

6.93%

9.10%

10.14%

7.82%

7.26%

7.05%

6.43%

5.62%

5.25%


States Minimally Solvent

Each State's 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 levels of benefit payments experienced by the State over the last twenty years. A ratio of 1.0 or greater prior to a recession 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 Missouri state account had loans payable to FUA, and Texas had outstanding debts to other sources at the end of FY 2006. 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, 2006 in descending order by ratio. As the table below illustrates, 27 state funds were below minimal solvency ratio at September 30, 2006.

Chart V


Minimally Solvent

Not Minimally Solvent

State

Ratio

State

Ratio

Mississippi

2.80

Alaska

0.97

New Mexico

2.75

Tennessee

0.97

Montana

2.02

Alabama

0.95

Utah

1.91

West Virginia

0.94

Hawaii

1.85

Virginia

0.89

Maine

1.77

Indiana

0.82

Oklahoma

1.76

Wisconsin

0.76

New Hampshire

1.65

Colorado

0.69

Vermont

1.64

Idaho

0.64

Washington

1.64

Connecticut

0.60

Oregon

1.62

South Carolina

0.60

Wyoming

1.60

Kentucky

0.56

Arizona

1.57

Arkansas

0.54

Iowa

1.56

Rhode Island

0.51

District of Columbia

1.49

Illinois

0.50

Kansas

1.48

Pennsylvania

0.50

Nebraska

1.47

South Dakota

0.46

Louisiana

1.40

Massachusetts

0.42

Georgia

1.36

Minnesota

0.38

Nevada

1.36

Texas

0.37

Puerto Rico

1.25

California

0.36

Virgin Islands

1.25

Ohio

0.36

Delaware

1.20

New Jersey

0.29

Florida

1.19

North Carolina

0.18

Maryland

1.09

Michigan

0.16

North Dakota

1.03

New York

0.10

 

 

Missouri

0.00

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 Lung 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, 2006, total liabilities of the Black Lung Disability Trust Fund exceeded assets by $9.6 billion. This deficit fund balance represented the accumulated shortfall of excise taxes 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, 2006 were $9.6 billion, bearing interest rates ranging from 4.500 to 13.875 percent. Excise tax revenues of $607.4 million, benefit payment expense of $299.5 million and interest expense of $695.0 million were recognized for the year ended September 30, 2006.

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, 2006 were $21.2 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 excise tax revenue estimates, number of beneficiaries, life expectancy, medical cost inflation, Federal civilian pay raises, 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-four 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 $15.6 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-four periods included in the projections. Net cash outflows after interest payments are projected to reach $60.1 billion by the end of the year 2040, increasing the BLDTF's deficit to $54.1 billion at September 30, 2040. (See Chart I on following page)

The net present value of future projected benefit payments and other cash inflow and outflow activities together with the fund's deficit positions as of September 30, 2006, 2005, 2004, 2003, and 2002 are presented in the Statement of Social Insurance.

Chart: Chart: Black lung disability trust fund, cash inflow and outflow

Text 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-two 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 $12.2 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-FOUR YEAR PERIOD ENDING SEPTEMBER 30, 2040

(Dollars in thousands)

2007

2008

2009

2010

2011

2012 - 2040

Total

Cash inflow

 

Excise taxes

$630,000

$649,000

$668,000

$680,000

$686,000

$12,316,860

$15,629,860

 

 

Total cash inflow

630,000

649,000

668,000

680,000

686,000

12,316,860

15,629,860

Cash outflow

 

Disabled coal miners benefits

292,613

279,975

267,092

254,080

241,026

3,218,069

4,552,855

 

Administrative costs

60,103

62,418

64,809

67,302

69,903

1,097,108

1,421,643

 

 

Cash outflows before interest payments

352,716

342,393

331,901

321,382

310,929

4,315,177

5,974,498

 

 

Cash inflow over cash outflow

 

 

before interest payments

277,284

306,607

336,099

358,618

375,071

8,001,683

9,655,362

 

Interest on advances

717,072

740,733

765,001

789,791

814,799

50,336,856

54,164,252

 

 

Total cash outflow

1,069,788

1,083,126

1,096,902

1,111,173

1,125,728

54,652,033

60,138,750

 

 

Total cash outflow over total cash inflow

(439,788)

(434,126)

(428,902)

(431,173)

(439,728)

(42,335,173)

(44,508,890)

Balance, start of year

(9,604,742)

(10,044,530)

(10,478,656)

(10,907,558)

(11,338,731)

(11,778,459)

(9,604,742)

Balance, end of year

$(10,044,530)

$(10,478,656)

$(10,907,558)

$(11,338,731)

$(11,778,459)

$(54,113,632)

$(54,113,632)


The principal Statement of Budgetary Resources combines the availability, status and outlay of DOLís budgetary resources during FY 2006 and 2005. Presented on the following pages is the disaggregation of this combined information for each of the Departmentís major budget accounts.


COMBINING STATEMENT OF BUDGETARY RESOURCES
For the Year Ended September 30, 2006

(Dollars in thousands)

Employment
and Training
Administration

Employment
Standards
Administration

Occupational
Safety and Health
Administration

Bureau of
Labor
Statistics

Mine Safety
and Health
Administration

Employee Benefits
Security
Administration

Veterans'
Employment
and Training

Other
Departmental
Programs

Total

BUDGETARY RESOURCES

 

 

 

 

 

 

 

 

 

 

Unobligated balance, brought forward, October 1

$2,337,790

$1,457,962

$26,227

$11,171

$3,762

$2,167

$3,938

$29,058

$3,872,075

 

Recoveries of prior year unpaid obligations

360,070

3,252

5,910

4,868

2,754

3,789

1,499

17,638

399,780

 

Budget authority

 

 

 

 

 

 

 

 

 

 

 

Appropriations received

54,309,862

2,848,124

477,199

464,678

306,090

134,900

29,499

400,650

58,971,002

 

 

Borrowing authority

-

445,000

-

-

-

-

-

-

445,000

 

 

Spending authority from offsetting collections

 

 

 

 

 

 

 

 

 

 

 

 

Earned

 

 

 

 

 

 

 

 

 

 

 

 

 

Collected

420,424

2,482,312

6,285

6,103

1,292

11,544

40

178,611

3,106,611

 

 

 

 

Change in receivables from Federal sources

(336)

(54,713)

8,261

-

(20)

-

-

(702)

(47,510)

 

 

 

Change in unfilled customer orders

 

 

 

 

 

 

 

 

 

 

 

 

 

Advance received

(7,500)

3,937

-

-

-

-

-

1,747

(1,816)

 

 

 

 

Without advance from Federal sources

-

-

-

-

-

-

-

(825)

(825)

 

 

 

Expenditure transfers from trust funds

3,348,647

35,078

-

76,533

-

-

192,886

30,443

3,683,587

 

Total budget authority

58,071,097

5,759,738

491,745

547,314

307,362

146,444

222,425

609,924

66,156,049

 

Nonexpenditure transfers, net

(550,309)

(399)

(684)

(598)

(355)

(121)

-

29,735

(522,731)

 

Temporarily not available pursuant to Public Law

(11,818,837)

(1,145)

-

-

-

-

-

-

(11,819,982)

 

Permanently not available

(404,686)

(6,399)

(11,029)

(8,629)

(4,369)

(2,353)

(1,228)

(10,711)

(449,404)

Total budgetary resources

$47,995,125

$7,213,009

$512,169

$554,126

$309,154

$149,926

$226,634

$675,644

$57,635,787

STATUS OF BUDGETARY RESOURCES

 

 

 

 

 

 

 

 

 

 

Obligations incurred

 

 

 

 

 

 

 

 

 

 

 

Direct

$45,195,012

$3,029,425

$476,928

$539,715

$285,352

$136,567

$223,786

$457,582

$50,344,367

 

 

Reimbursable

412,922

2,468,082

13,406

5,354

1,062

11,282

-

183,026

3,095,134

 

Total obligations incurred

45,607,934

5,497,507

490,334

545,069

286,414

147,849

223,786

640,608

53,439,501

 

Unobligated balances

 

 

 

 

 

 

 

 

 

 

 

Apportioned

1,200,743

1,301,054

27

414

3,851

31

196

21,752

2,528,068

 

 

Exempt from apportionment

-

212,482

-

-

-

-

-

147

212,629

 

Total unobligated balances

1,200,743

1,513,536

27

414

3,851

31

196

21,899

2,740,697

 

Unobligated balances not available

1,186,448

201,966

21,808

8,643

18,889

2,046

2,652

13,137

1,455,589

Total status of budgetary resources

$47,995,125

$7,213,009

$512,169

$554,126

$309,154

$149,926

$226,634

$675,644

$57,635,787

CHANGE IN OBLIGATED BALANCE

 

 

 

 

 

 

 

 

 

 

Obligated balance, net

 

 

 

 

 

 

 

 

 

 

 

Unpaid obligations, brought forward, October 1

$8,350,330

$358,151

$73,694

$67,729

$30,160

$48,663

$59,980

$494,125

$9,482,832

 

 

Less uncollected customer payments from Federal sources, brought forward, October 1

(1,407,365)

(58,780)

(865)

-

(35)

-

-

(6,635)

(1,473,680)

 

Total unpaid obligated balance, net

6,942,965

299,371

72,829

67,729

30,125

48,663

59,980

487,490

8,009,152

 

Obligations incurred, net

45,607,933

5,497,508

490,334

545,069

286,413

147,849

223,786

640,609

53,439,501

 

Less gross outlays

(45,594,065)

(5,556,973)

(473,003)

(533,830)

(289,752)

(148,904)

(222,156)

(683,426)

(53,502,109)

 

Less recoveries of prior year unpaid obligations, actual

(360,070)

(3,252)

(5,910)

(4,868)

(2,754)

(3,789)

(1,499)

(17,638)

(399,780)

 

Change in uncollected customer payments from Federal sources

199,041

53,162

(8,261)

-

20

-

-

(7,134)

236,828

 

Obligated balance, net, end of period

 

 

 

 

 

 

 

 

 

 

 

Unpaid obligations

8,004,128

295,434

85,115

74,100

24,067

43,819

60,111

433,670

9,020,444

 

 

Less uncollected customer payments from Federal sources

(1,208,324)

(5,618)

(9,126)

-

(15)

-

-

(13,769)

(1,236,852)

 

Total unpaid obligated balance, net, end of period

$6,795,804

$289,816

$75,989

$74,100

$24,052

$43,819

$60,111

$419,901

$7,783,592

NET OUTLAYS

 

 

 

 

 

 

 

 

 

 

 

Gross outlays

$45,594,065

$5,556,973

$473,003

$533,830

$289,752

$148,904

$222,156

$683,426

$53,502,109

 

 

Less offsetting collections

(3,960,279)

(2,519,775)

(6,285)

(82,637)

(1,292)

(11,544)

(192,925)

(210,799)

(6,985,536)

 

 

Less distributed offsetting receipts

(847,937)

(7,809)

-

-

-

-

-

-

(855,746)

 

 

Net outlays

$40,785,849

$3,029,389

$466,718

$451,193

$288,460

$137,360

$29,231

$472,627

$45,660,827


COMBINING STATEMENT OF BUDGETARY RESOURCES
For the Year Ended September 30, 2005

(Dollars in thousands)

Employment
and Training
Administration

Employment
Standards
Administration

Occupational
Safety and Health
Administration

Bureau of
Labor
Statistics

Mine Safety
and Health
Administration

Employee Benefits
Security
Administration

Veterans'
Employment
and Training

Other
Departmental
Programs

Total

BUDGETARY RESOURCES

 

Unobligated balance, brought forward, October 1

$2,079,330

$1,428,161

$22,094

$12,981

$9,132

$1,810

$6,231

$18,052

$3,577,791

 

Recoveries of prior year unpaid obligations

335,591

10,853

11,738

4,819

3,203

1,888

2,421

38,159

408,672

 

Budget authority

 

 

 

 

 

 

 

 

 

 

 

Appropriations received

52,951,638

2,485,951

468,109

455,045

281,535

132,345

29,550

444,692

57,248,865

 

 

Borrowing authority

-

446,000

-

-

-

-

-

-

446,000

 

 

Spending authority from offsetting collections

 

 

 

Earned

 

 

 

 

 

 

 

 

 

 

 

 

 

Collected

51,972

2,299,208

3,731

7,693

1,073

10,142

468

171,095

2,545,382

 

 

 

 

Change in receivables from Federal sources

330

57,196

390

-

-

-

-

(216)

57,700

 

 

 

Change in unfilled customer orders

 

 

 

 

Advance received

-

5,086

-

-

-

-

-

5,670

10,756

 

 

 

Anticipated for rest of year, without advances

-

-

-

-

-

-

-

-

-

 

 

 

Expenditure transfers from trust funds

3,538,339

34,637

-

77,346

-

-

193,519

29,875

3,873,716

 

Total budget authority

56,542,279

5,328,078

472,230

540,084

282,608

142,487

223,537

651,116

64,182,419

 

Nonexpenditure transfers, net

(390,219)

(418)

(952)

(724)

(125)

(88)

(150)

5,346

(387,330)

 

Temporarily not available pursuant to Public Law

(9,279,797)

(16,920)

-

-

-

-

-

-

(9,296,717)

 

Permanently not available

(462,774)

(6,247)

(7,906)

(7,521)

(2,973)

(1,791)

(236)

(6,749)

(496,197)

Total budgetary resources

$48,824,410

$6,743,507

$497,204

$549,639

$291,845

$144,306

$231,803

$705,924

$57,988,638

STATUS OF BUDGETARY RESOURCES

 

Obligations incurred

 

 

Direct

$46,419,130

$2,767,059

$468,716

$531,801

$287,288

$132,169

$227,865

$499,608

$51,333,636

 

 

Reimbursable

67,490

2,518,486

2,261

6,667

795

9,970

-

177,258

2,782,927

 

Total obligations incurred

46,486,620

5,285,545

470,977

538,468

288,083

142,139

227,865

676,866

54,116,563

 

Unobligated balances

 

 

Apportioned

1,333,107

1,201,949

25

438

773

16

1,138

10,859

2,548,305

 

 

Exempt from apportionment

-

175,158

-

-

-

-

-

152

175,310

 

Total unobligated balances

1,333,107

1,377,107

25

438

773

16

1,138

11,011

2,723,615

 

Unobligated balances not available

1,004,683

80,855

26,202

10,733

2,989

2,151

2,800

18,047

1,148,460

Total status of budgetary resources

$48,824,410

$6,743,507

$497,204

$549,639

$291,845

$144,306

$231,803

$705,924

$57,988,638

CHANGE IN OBLIGATED BALANCE

 

Obligated balance, net

 

 

Unpaid obligations, brought forward, October 1

$8,734,124

$330,390

$70,688

$65,190

$27,118

$39,803

$58,249

$530,890

$9,856,452

 

 

Less uncollected customer payments from Federal sources, brought forward, October 1

(1,336,364)

(1,107)

(475)

-

(35)

-

-

(6,645)

(1,344,626)

 

Total unpaid obligated balance, net

7,397,760

329,283

70,213

65,190

27,083

39,803

58,249

524,245

8,511,826

 

Obligations incurred, net

46,486,620

5,285,545

470,977

538,468

288,083

142,139

227,865

676,866

54,116,563

 

Less gross outlays

(46,534,824)

(5,246,930)

(456,233)

(531,111)

(281,837)

(131,392)

(223,714)

(675,470)

(54,081,511)

 

Less recoveries of prior year unpaid obligations, actual

(335,591)

(10,853)

(11,738)

(4,819)

(3,203)

(1,888)

(2,421)

(38,159)

(408,672)

 

Change in uncollected customer payments from Federal sources

(71,208)

(57,673)

(390)

-

-

-

-

217

(129,054)

 

Obligated balance, net, end of period

 

 

Unpaid obligations

8,350,330

358,151

73,694

67,728

30,160

48,663

59,981

494,125

9,482,832

 

 

Less uncollected customer payments from Federal sources

(1,407,571)

(58,780)

(865)

-

(35)

-

-

(6,429)

(1,473,680)

 

Total unpaid obligated balance, net, end of period

$6,942,759

$299,371

$72,829

$67,728

$30,125

$48,663

$59,981

$487,696

$8,009,152

NET OUTLAYS

 

 

Gross outlays

$46,534,824

$5,246,930

$456,233

$531,111

$281,837

$131,392

$223,714

$675,470

$54,081,511

 

 

Less offsetting collections

(3,519,640)

(2,338,455)

(3,731)

(85,039)

(1,073)

(10,142)

(193,987)

(206,639)

(6,358,706)

 

 

Less distributed offsetting receipts

(823,232)

(6,160)

-

-

-

-

-

-

(829,392)

 

 

Net outlays

$42,191,952

$2,902,315

$452,502

$446,072

$280,764

$121,250

$29,727

$468,831

$46,893,413

 

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