Relating to unemployment insurance taxes on employers

1A(36). The calculation of the unemployment contribution rate each year is a dynamic calculation dependent upon the calculation of the current reserve ratio, the benefit ratio rank, and the contribution rate table in effect for the rate year. The bill changes the current reserve ratio calculation, the number of benefit ratio ranks, the contribution rates, and the contribution rate table. The current reserve ratio (calculation of available benefit amount in fund) determines the contribution rate table in effect for the rate year following the computation date.7(2)(d)(1) by basing the calculation of the ratio on the preceding year rather than the previous five calendar quarters, and strikes the requirement that $150 million be added on the reserve ratio computation date to the total funds available for benefits. The bill also strikes the computation of the highest cost-benefit ratio and removes the ratio from the computation of the current reserve ratio. The bill modifies the contribution rate table by reducing the number of possible rate tables that could be in effect for the rate year from eight contribution rate tables to four contribution rate tables. Under the bill and current law, only one contribution rate table may be in effect per rate year. In reducing the number of possible contribution rate tables from eight to four, the bill also changes the numbered contribution rate designations to lettered contribution rate designations. Under current law, there are benefit ratio ranks in the contribution rate tables. The benefit ratio is a calculation based upon the average number of unemployment benefits charged to an employer over previous calendar quarters. The higher the benefits charged to an employer, the higher the benefit ratio rank the employer receives. The bill reduces the number of benefit ratio ranks from to 9.76 percent of total taxable wages.76 percent of total taxable wages.0 percent.40 percent. As a result of the bill, each employer will be assigned one of the nine new benefit ratio ranks that corresponds with one of the four new lettered contribution rate designations in effect for the rate year to determine the contribution rate for the year. The bill provides that any savings an employer receives as a result of the bill should be used for at least one of the purposes specified in the bill. The specified purposes are to pay for employee salaries or benefits or to use as an alternative to unemployment benefits during periods of seasonal unemployment.