April 11, 2021

Unemployment insurance rates on a historic rise

Tayeb MEZAHDIA from Pixabay

The Employment Development Department (EDD) recently released the Annual Report to the Fund Participants (Report) regarding the School Employees Fund (SEF) for the fiscal year that ended June 30, 2020. The Report includes a rate increase from 0.05% to 1.23% in the 2021–22 fiscal year—a historically large increase.

The SEF is a joint, pooled-risk fund administered by the EDD which allows school employers to deposit funds into the pool, and the pool reimburses the State’s Unemployment Insurance Fund for the cost of unemployment insurance benefits paid to former or furloughed employees of SEF participants. As of the 2019–20 fiscal year, the SEF included more than 1,400 local educational agencies (LEAs), and nearly one million employees, inclusive.

The Report highlights that payments into the fund have hovered around $40 million annually, while payments to beneficiaries skyrocketed to more than $237 million in 2019–20. The increase in payments is attributed to the COVID-19 pandemic. For comparison, payments to beneficiaries totaled $87.8 million in 2018–19, an amount in line with payments since 2015–16. Absent significant credits from the various federal stimulus, the SEF reserves would be nearly depleted. As of June 30, 2020, the SEF reserves were $211.5 million, down from $466.5 million in 2015–16.

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