PIERRE – South Dakota businesses will not be hit with another surcharge this year because the financial health of the state’s unemployment insurance system has improved substantially, state Labor Secretary Pam Roberts said Thursday.
Rising unemployment during the recession drained the trust fund that pays unemployment benefits in 2009, putting the fund in the red a year ago and triggering a surcharge on employers.
With the help of federal stimulus money, the surcharges and increased unemployment insurance tax payments by some employers, the system recovered to the point that the surcharge came off Sept. 30.
The trust fund held $26.1 million on Dec. 31 and is expected to end this year with a $30.2 million balance.
A surcharge is triggered if the fund balance falls below $11 million, but Roberts said that is unlikely to happen this year.
“This is big news. Businesses will be very tickled,” Roberts said.
The financial condition of the system was discussed Thursday at a meeting of the state Unemployment Insurance Advisory Council, a panel of business and labor officials. The panel agreed not to recommend any changes in law during this year’s legislative session.
Roberts said the South Dakota Legislature deserves credit for passing bills last year that helped the system recover financially.
One measure allowed the South Dakota unemployment insurance system to get $11.8 million in federal stimulus money by extending jobless benefits for some people who get state-approved training for high-demand occupations. Another reduced surcharge amounts, increased the wage base subject to taxes and imposed higher tax rates on employers with high rates of claims by former workers.
Bob Riter Jr. of Pierre, a member of the council, said the panel should eventually evaluate the effectiveness of the extended benefits for those getting training in high-demand occupations. Such a study can be done later, he said.
The Labor Department has projected that businesses will pay in about $47.2 million to the trust fund this year. After paying an estimated $44 million in benefits, it should end the year with a balance of $30.2 million, according to the department’s analysis.