DIRECTIVE	:	UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 24-98, Change 1
TO	:	ALL STATE EMPLOYMENT SECURITY AGENCIES
FROM	:	GRACE A. KILBANE Director Unemployment Insurance Service
SUBJECT	:	Comparative Data on FUTA Receipts and Amounts Returned to States

1. Purpose.  To provide tables for Fiscal Years (FY) 1995-97 showing estimated Federal Unemployment Tax Act (FUTA) payments made by employers of each State and the amounts returned to the States for program administration and benefit payments. Totals for FY 1981-97 are also included.

2. References.  UIPL 24-98

3. Background.  There has been considerable interest among State Employment Security Agencies (SESAs) in seeing FUTA payments made by employers of each State compared with amounts returned to the States in past years. UIPL 24-98 provided these data for fiscal years 1981 through 1996. This UIPL provides data for FY 1997 and a cumulative table for FY 1981-1997. Tables for FY 1995 and FY 1996 are also provided in order to correct a data error for Wyoming.

   When comparing FUTA receipts and amounts returned, it is important to note that postage costs and National Activities expenditures (approximately $ 2.4 billion for the FY 1981-97 period) are not reflected in the State data, which effectively reduces the apparent proportion of FUTA receipts returned to States.

4. Action Required. Please distribute to appropriate staff.

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

6. Attachment. 

   FUTA RECEIPTS VS. AMOUNTS RETURNED

   * Column Definitions

   * Explanatory Notes

   * Annual Charts

FUTA RECEIPTS VS. AMOUNTS RETURNED

Column Definitions

Estimated FUTA

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

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

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

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

Implied Net EUCA -- This column displays the amount effectively remaining in the EUCA , after the General Fund Repayment has been deducted, and applies only to FY 1981-1987.

FUA -- Share of receipts transferred to the Federal Unemployment Account (FUA). This applies to FY 1988-91 only.

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

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

Administrative Costs

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

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

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

Benefits Paid

Fed Share EB -- Federal share of Federal-State Extended Benefits (EB). Also includes shareable regular benefits (paid in states where more than 26 weeks of regular benefits are available).

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

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

FUTA RECEIPTS VS. AMOUNTS RETURNED

Explanatory Notes

Administrative Grants

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

• Several items that are appropriated as State administration are not included in the State data. These include postage costs, ES National Activities, and a portion of UI National Activities. Annual totals for postage and ES National Activities are shown below. Comparable data for UI National Activities are not available, but the total amount for FY 1981-97 that is not reflected in the State data is approximately $60 million.

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

FUTA Estimates

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

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