Around 30,000 employers in South Dakota are expected to see a combined total savings of approximately $18 million when they receive their 2024 reemployment assistance tax rate notices at the end of last month (Oct. 31, 2023).
The savings in what was previously called “unemployment insurance” is thanks to a bill (HB 1011) passed during the 2023 legislative session that cut contribution rates by 0.5%.
State Labor and Regulation Secretary Marcia Hultman says the reemployment assistance program provides temporary financial help to workers who have lost their jobs through no fault of their own until they find other employment. Payments last for a maximum of 26 weeks. She says this program is financed by employers through payroll taxes. Workers do not contribute to this plan.
Hultman says the legislation made adjustments to maintain a healthy Trust Fund balance while not overburdening employers by collecting more contributions than is needed. She says the new tax schedule is responsive to the ups and downs of the economy to prevent it from being overfunded or from going broke.
The bill also adjusted the trigger point for a surcharge–- an additional tax imposed when the balance of the fund drops below $11 million. The surcharge trigger will no longer be tied to a dollar amount but rather to an average high-cost multiplier ratio.
Hultman says additionally, employers will receive credit for any surcharge tax payments they are required to make. She says previously, when the surcharge kicked in, employers were paying more but received no credit to their accounts.
The Department of Labor and Regulation and the Reemployment Assistance Advisory Council drafted legislation in 2016 using an average high-cost multiplier (AHCM) to assess the solvency of the Unemployment Insurance Trust Fund.
An AHCM of 1.0 means enough funds exist to cover a full year of benefits during a recession. Since then, employer tax rates have been based on the AHCM of the fund at the end of each fiscal year. HB 1011 created a new tax schedule to reduce employer contribution rates by 0.5% when the balance in the Trust Fund at the end of the fiscal year is at or above an AHCM of 1.5.
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