As a result of state reforms, employers across
New York will realize an average savings of $1,200
on their unemployment insurance costs this year,
according to the governor’s office.
State officials said the combination of an
improved statewide economy and unemployment
insurance reform measures signed by
Gov. Andrew Cuomo in 2013 enabled the loan
to be repaid early, saving New York employers
an estimated $200 million in interest costs. The
average employer will see an estimated reduction
of nearly $1,200, or $84 per employee.
“In 2013, we put into place sweeping reforms
to fix New York’s broken unemployment insurance
system in a way to help lower costs for
employers, offer greater benefits for workers,
and increase the integrity of the program,”
Cuomo said in November. A lower assessment
“is a direct result of these badly needed changes
and one more way we are helping to move New
York forward.”
For years, Cuomo said, New York state’s unemployment
insurance system was broken and
could not withstand fluctuations in the economy
without borrowing from the federal government,
exposing employers to significant and unpredictable
liabilities. The system has been either
insolvent or on the brink of insolvency for more
than a decade.
He said during the recession, the state’s
unemployment insurance trust fund did not
have enough funds to pay for claims filed by
unemployed workers. New York, along with many
other states, was forced to borrow funds from the
federal unemployment insurance trust fund to
cover the difference, and employers had to pay
back a $3.5 billion debt plus interest.
In 2013, Cuomo signed major reforms into law.
The law included a mechanism to pay back the
federal loan three years ahead of schedule, resulting
in the announced lower costs. In addition, the
risk of borrowing from the federal government
is now lower and payments for employers will be
more predictable than the old system of yearly
surcharges.
Reform has also brought new fraud detection
and prevention measures to ensure that employers
are not charged for a former employee’s claim
when the loss of employment was the employee’s
fault.
Cuomo said the other factor contributing to
paying off the federal loan early is the improved
economic conditions of the past several years.
In 2011, the state unemployment rate was 8.3
percent. In September, the unemployment rate
was reported at 5.1 percent.
According to the governor’s office, New York’s
economy has added 711,400 private sector jobs
and experienced employment growth in 49 of
the past 57 months.
At the height of the recession in 2009, the state
paid out of the trust fund $5.1 billion in unemployment
insurance benefits, Cuomo said. Benefit
payments in 2015 are estimated to be $2.4 billion.