Nevada’s unemployment fund well over solvency level

Friday, Sept. 30, 2005 | 11:26 a.m.

CARSON CITY -- Nevada's strong economy has filled the fund used to pay unemployment benefits to a high of $568.1 million, or $121.6 million over the solvency level, Birgit Baker, director of the state Department of Employment, Training and Rehabilitation, said today.

The fund is measured every Sept. 30 to make sure it has enough money to meet the projected unemployment payments for the coming year.

The state Employment Security Council meets Monday to set the rates that more than 50,000 businesses will pay next year to keep the fund solvent. The average rate this year is 1.38 percent for each worker, based on an average wage of $22,900.

That rate is increased by 0.05 percent to finance an employment training program so the total tax paid by employers is 1.43 percent.

The council decided last year to raise the average rate from 1.29 percent, a level that had existed for four years.

Baker declined to say what rate the department would recommend for next year. But she said the objective is to build the fund in good economic times to be ready for a recession.

The rates range from 0.25 percent for businesses with the least turnover to 5.4 percent for those employers with the most.

New businesses must pay a 2.9 percent rate for the first three-and-a-half to four years before they gain an experience rating and qualify for a lower tax.

Asked if the increase in taxes last year was justified in view of the big surplus this year, Baker said there are more employers and workers in Nevada that need to be covered.

She said in 2002 the potential number of workers covered by unemployment insurance was 902,000. But in the year ending today, the potential number covered was 1,022,000. The fund must adjust for the increased potential liability, she said.

Because of the good economy, the fund paid out $220 million in the year ending today to unemployed workers. That compares with 2002 when $362.9 million was paid out.

The maximum monthly unemployment benefit was raised last July from $328 to $346.