ten11-10a2.pdf

ETA Advisory File Text

Page 1 of 9 Attachment B Analysis of Employment Training Administration ETA 581 Data for Calendar Year 2009 Subject Employers Chart 1 below graphs the number of active employers subject to state unemployment compensation coverage from the end of calendar year CY 2003 to the end of CY 2009. The counts include both contributory and reimbursing employers from all 50 states the District of Columbia the Virgin Islands and Puerto Rico. Chart 1 Total Employers QE 12 31 2003-12 31 2009 6 800 000 6 900 000 7 000 000 7 100 000 7 200 000 7 300 000 7 400 000 7 500 000 7 600 000 7 700 000 7 800 000 D- 03M- 04J- 04S- 04D- 04M- 05J- 05S- 05D- 05M- 06J- 06S- 06D- 06M- 07J- 07S- 07D- 07M- 08J- 08S- 08D- 08M- 09J- 09S- 09D- 09 Number of Employers Status Determinations New Employers The timely discovery of liable employers and the prompt establishment of new accounts are tax functions vital to the successful operation of a state UI tax program. For example the functions affect the timely processing of UI claims and payment of benefits to eligible recipients. Computed measures CMs 1-4 as shown on Attachment A concern the timeliness in which states determine liability and establish accounts for new and successor employers. These measures indicate successful state UI tax program management. For a complete listing of CY 2009 CMs for new and successor determinations see CM Table 1 at http www.oui.doleta.gov unemploy nat sum tables 2009.asp . States report new status determinations in item 14 on the ETA 581 report. The count includes all determinations of liability made within the ETA 581 report quarter of employers who have actually met a state threshold of liability plus determinations that reactivated inactive accounts. Analysis of ETA 581 Contribution Operations Data for Calendar Year 2009 Page 2 of 9 Chart 2 below displays graphically the typical surge in the number of new status determinations that occurs during the January March quarters contrasted with the lower count of determinations during the quarters ending in December. C hart 2 Volume of N ew Status D eterminations by Quarter 170 000 180 000 190 000 200 000 210 000 220 000 230 000 240 000 250 000 260 000 270 000 M- 04J- 04S- 04D- 04M- 05J- 05S- 05D- 05M- 06J- 06S- 06D- 06M- 07J- 07S- 07D- 07M- 08J- 08S- 08D- 08M- 09J- 09S- 09D- 09 Number of Determinations Due to the importance placed on New Status Determinations UI Performs includes a core measure that sets a minimum level of performance for timely discovery and establishment of new employers. The minimum level of performance for this measure for CY 2009 was to establish 70 of new accounts within 90 days from the last day of the quarter in which the new entities first became liable. For CY 2009 52 of the 53 reporting State Workforce Agencies achieved the 70 or greater acceptable level of performance. Arizona 67.9 did not meet the timely determinations measure for CY 2009. Nationally 84.7 of new status determinations were made within 90 days for CY 2009. Table 1 which appears at the end of the next section Status Determinations Successor Employers provides a summary of the performance over the last six CYs for both new employer determinations and successor employer determinations. The U.S. Department of Labor USDOL also established a Government Performance and Results Act GPRA goal for new determinations on a fiscal year basis October 1 to September 30 of the next CY . The GPRA goal in contrast to the 70 UI Performs minimum acceptable level of performance was set higher at 88.7 for fiscal year FY 2009 10 1 2008 9 30 2009 . Nationally the goal was not met for FY 2009 as the actual new employer timely status determination percentage for FY 2009 was 84.1 . The national GPRA goal for FY 2010 10 1 2009 9 30 2010 is 90.0 . Chart 3 below graphs the percentages for new employer determinations completed within 90 and 180 days. The quarterly fluctuations show why it is more meaningful to analyze computed measures for status determinations on a CY or FY basis. For the GPRA goal of 90 to be met the quarterly fluctuations for the 90 day performance measurement need to fluctuate nearer the 90 line. Page 3 of 9 Chart 3 New Employer Determinations Completed Within 90 180 Days 78 80 82 84 86 88 90 92 94 96 M- 04J- 04S- 04D- 04M- 05J- 05S- 05D- 05M- 06J- 06S- 06D- 06M- 07J- 07S- 07D- 07M- 08J- 08S- 08D- 08M- 09J- 09S- 09D- 09 90 Day 180 Day Status Determinations Successor Employers Similar to status determinations for new employers the largest volume of status determinations for successor employers occurred in the first and second quarters of each calendar year. Chart 4 below shows graphically the quarterly fluctuations of status determinations for successor employers. Chart 4 Number of Successor Determinations by Quarter 16 000 18 000 20 000 22 000 24 000 26 000 28 000 30 000 32 000 34 000 36 000 38 000 M- 04J- 04S- 04D- 04M- 05J- 05S- 05D- 05M- 06J- 06S- 06D- 06M- 07J- 07S- 07D- 07M- 08J- 08S- 08D- 08M- 09J- 09S- 09D- 09 Number of Determinations Page 4 of 9 Chart 5 below summarizes the trend of successor determinations made by states since 1998. Chart 5 Numbe r of Succe ssor De te rminations by CY 1998-2009 90 000 100 000 110 000 120 000 130 000 140 000 150 000 160 000 170 000 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Number of Determinations Data points reflect the total count of successor determin- ations for eac h y ear shown. There was no change to the tendency for successor determinations to take longer than new liability determinations in CY 2009. This is illustrated in Table 1 below by comparing the percentages in the New within 90 Days column with the Successor within 90 Days column. The percentage of timely successor determinations is lower than new liability determinations for all six of the calendar years shown below. Table 1 New and Successor Status Determinations Year New Determinations New within 90 Days New within 180 Days Successor Determinations Successor within 90 Days Successor within 180 Days 2004 904 784 83.8 91.3 124 819 71.2 83.1 2005 938 927 82.3 90.6 125 276 69.1 81.6 2006 933 982 84.2 91.4 124 122 68.8 81.5 2007 924 378 85.7 91.7 124 211 66.6 79.6 2008 873 202 84.6 90.8 119 638 62.7 76.2 2009 796 725 84.7 90.4 100 116 62.8 75.8 Timely Secured and Resolved Filing of Contribution Reports Six CMs show the promptness with which employers file quarterly contribution and wage reports with the states. Three CMs measure contributory employers and three similar CMs measure reimbursing employers. The measures for report filing follow 1 The percentage of timely contribution reports received by the state - This CM measures reports for the quarter immediately preceding the ETA 581 report quarter that were filed prior to the delinquency date during the ETA 581 report quarter. Page 5 of 9 2 The percentage of secured delinquent contribution reports obtained by the state during the ETA 581 report quarter - This CM measures reports from the quarter immediately preceding the ETA 581 report quarter that are either secured by state staff or voluntarily filed between the date on which the reports first became delinquent and the end of the ETA 581 report quarter. Since the secured report count items 7 and 10 on the ETA 581 report includes all of the timely reports the number of secured reports must always be equal to or greater than the number of timely reports reported in items 6 and 9 on the ETA 581 report. 3 The percentage of delinquent reports that are resolved by the end of the report quarter - This CM measures delinquent reports from the second quarter preceding the ETA 581 report quarter that are resolved by the end of the report quarter. States may count a delinquent report as resolved by a determining that the report is no longer due inactivating the account or closing the account b establishing a judgment or assessment that is legally due and collectable for the estimated amount of tax due or c receiving the report through some other means such as voluntarily filing field auditor contacts subpoenaing records etc. Because resolved reports items 8 and 11 on the ETA 581 report include all of the secured reports reported for the second tax report quarter prior to the ETA 581 report quarter the number of resolved reports reported in items 8 and 11 on the ETA 581 report must be equal to or greater than the number of secured reports reported in items 7 and 10 on the previous ETA 581 report. Additional information about the computed measures for report filing data can be found at http www.oui.doleta.gov unemploy tps.asp . Filing Reports Contributing Employers Table 2 below provides a comparison of the national computed measures for contributory employers for the last six years. Table 2 Filing Contribution and Wage Reports Contributory Employers Calendar Year Timely Secured Resolved 2004 88.2 93.1 97.1 2005 88.3 93.1 97.4 2006 88.5 92.8 97.8 2007 88.3 92.3 97.0 2008 88.8 92.5 96.6 2009 88.8 92.6 96.4 Filing Reports Reimbursing Employers All State Workforce Agencies are now reporting their counts of timely secured and resolved reimbursing employer contribution reports that are received and processed during the ETA 581 report quarters. Massachusetts began reporting the data in the fourth quarter of 2009. Since Massachusetts did not report data for the entire CY 2009 Massachusetts is excluded from CY 2009 data as shown in Table 3 below. Massachusetts is also excluded from the performance percentages for calendar years 2007 and 2008. However the performance percentages shown in Table 3 for calendar years 2003 through 2006 include approximately 2 850 Massachusetts Page 6 of 9 reimbursing employers but exclude data on the filing of reports by those reimbursing employers. This explains why the national aggregate percentages for those years are lower than the percentages for each of the years 2007 through 2009. Receivables Contributory and Reimbursing Combined Chart 6 below tracks the amount of receivables past due as of the end of each quarter for calendar years 2004 to 2009. The amounts were reported by states on quarterly ETA 581 reports. Chart 6 includes receivables past due from contributory and reimbursing employers. Chart 6 Ending Balances Receivables - All States All Employers - March 2004 - December 2009 600 650 700 750 800 850 900 950 1 000 1 050 1 100 M- 04J- 04S- 04D- 04M- 05J- 05S- 05D- 05M- 06J- 06S- 06D- 06M- 07J- 07S- 07D- 07M- 08J- 08S- 08D- 08M- 09J- 09S- 09D- 09 Millions Table 3 Filing Contribution and Wage Reports Reimbursing Employers Calendar Year Timely Secured Resolved 2004 81.7 86.8 88.1 2005 83.7 88.2 88.8 2006 86.3 92.0 93.7 2007 90.2 95.7 97.0 2008 92.2 97.4 98.9 2009 93.1 97.9 100.2 Page 7 of 9 Table 4 below shows the actual amount of past due receivables as of the end of each calendar year and the changes between years. Table 4 Receivable Balances - All Employers - All States Year CY Ending Balance for Contributory Employers CY Ending Balance for Reimbursing Employers Total Past Due Receivables at End of CY Change in Dollars from Previous CY Percentage Change from Previous CY 2004 699 471 080 87 540 250 787 011 330 91 645 685 13.2 2005 820 906 453 75 708 553 896 615 006 109 603 676 13.9 2006 852 437 577 76 673 915 929 111 492 32 496 486 3.6 2007 812 466 285 72 304 638 884 770 923 44 340 569 -4.8 2008 772 806 609 70 511 546 843 318 155 41 452 768 -4.7 2009 803 876 690 164 464 793 968 341 483 125 023 328 14.8 Audit Activity The data allow for measurement of three state audit functions 1 the percent of total wage changes resulting from audit adjustments 2 the percent of contributory employers audited and 3 the percent of total wages audited annualized . Although not a computed measure the number of employees misclassified as independent contractors were counted and reported by the states when discovered in audits beginning in the first quarter of 2000. As set out in the Employment Security Manual ESM states are expected to audit 2 of their contributory employers each year. The ESM also requires that 1 of the 2 requirement qualify as large employers. The ESM defines large employer as an employer with at least 100 employees during the current or preceding CY or with at least one million dollars in taxable wages for the CY preceding the first quarter being audited. To compute the number of audits required per year states should multiply 2.0 times the number of contributory employers counted at the end of the third quarter of the preceding CY. Table 5 below shows national totals for each of the three audit computed measures plus additional audit information. Table 5 Information on Audit Activity Year Audits Complete Change Audits of Contributory Employers Audited of Audits Qualified as Large Audits of Pre-audit Total Wages Changed of Total Wages Audited annualized Employees Misclassified as Independent Contractors 2004 120 243 50 998 1.7 2.3 5.1 1.3 139 554 2005 116 124 50 088 1.6 2.3 5.2 1.3 132 965 2006 116 463 50 437 1.6 2.5 5.3 1.2 160 000 2007 117 487 50 033 1.6 2.3 12.2 1.7 151 039 2008 108 693 50 915 1.4 2.2 6.4 1.1 209 067 2009 108 147 49 023 1.4 2.3 6.8 1.2 191 765 Page 8 of 9 For CY 2009 states completed 108 147 audits which result in a national penetration rate of 1.4 of the contributory employers reported by states as of September 30 2008. Discrepancies were found in 49 023 45 of the audits and auditors discovered 191 765 employees that employers had misclassified as independent contractors. The USDOL web site provides detailed information on state audit performance in CM Table 13. It shows that 25 states were successful in meeting the 2 penetration objective for CY 2009. The table may be viewed at http www.oui.doleta.gov unemploy nat sum tables 2009.asp . As shown in Table 5 above the percentage of Pre-audit Total Wages Changed was 12.2 in CY 2007. The percentage of 12.2 for 2007 is larger than normal because the State of New York discovered a large amount of underreported wages as a result of auditing a high number of large employers. This is also reflected in Table 6 below for CY 2007. Table 6 Summary of Total Wages Discovered Through Audits - CY 2004- 2009 Year Underreported Total Wages Overreported Total Wages 2004 2 242 798 141 604 335 021 2005 2 235 658 270 387 940 990 2006 2 570 351 349 494 602 132 2007 9 290 360 049 412 040 928 2008 3 006 424 911 550 434 537 2009 3 279 120 322 856 774 910 Chart 7 below provides a quarterly comparison of audits to the number of misclassified employees that were discovered and reported on the quarterly ETA 581. Table 7 below computes the average number of misclassified employees discovered per audit. The chart and table indicate that the number of misclassified employees discovered by states during audits had increased in calendar years 2008 and 2009 from the previous years levels. Page 9 of 9 Chart 7 Audits Completed Misclassifications Discovered 1 1 2004 - 12 31 2009 20 000 23 000 26 000 29 000 32 000 35 000 38 000 41 000 44 000 47 000 50 000 53 000 56 000 59 000 62 000 65 000 M- 04J- 04S- 04D- 04M- 05J- 05S- 05D- 05M- 06J- 06S- 06D- 06M- 07J- 07S- 07D- 07M- 08J- 08S- 08D- 08M- 09J- 09S- 09D- 09 Audits Completed Employees Found Misclassified Table 7 Average Number of Misclassified Employees Discovered per Audit CY 2004- 2009 Year Total Misclassified Employees Discovered Total Audits Completed Average Misclassified Employees per Audit 2004 139 554 120 243 1.2 2005 132 965 116 124 1.1 2006 160 000 116 463 1.4 2007 151 039 117 487 1.3 2008 209 067 108 693 1.9 2009 191 765 108 147 1.8