Due to continued elevated levels of unemployment nationwide and the need to replenish funds in the state unemployment pools, many nonprofit employers are experiencing high UI tax rates. Chances are, the UI tax rate for a nonprofit like yours is inflated, since the funds are needed to help subsidize the claims of other employers with bad experience that have reached the maximum UI rate allowed by the state.

Several factors contribute to your state's unemployment insurance costs. Benefits paid to former employees, the overall condition of the unemployment insurance fund, and the employer's reporting history all affect tax rates, according to the New York State Department of Labor.

But, what you may not realize is that there are two options for non-profit organizations with regards to unemployment. "In all states, 501(c)(3) organizations are required to pay for unemployment claims in one of two ways: through state unemployment insurance tax (SUI) or as a reimbursing employer paying the state only for claims paid out to former employees."1

A Shared Services Partner, Unemployment Services Trust (UST) continually works on the behalf of AAHSA members to control and reduce the cost of Unemployment Insurance.

Saving money is the key benefit of belonging to the Trust. UST's track record of holding down claims and providing risk-management to all participants has made the Trust a bargain for nonprofits across the country. One such risk-management service is that of the Trust's claims monitor, TALX Employer Services.

TALX audits all unemployment claims brought against member agencies and vigorously protests frivolous and fraudulent claims, while also offering free seminars for member agencies' HR staff. UST's claims monitoring services has saved AAHSA communities more than $3.5 million since 1999. In 2004 alone, the Trust's Claims Monitor saved AAHSA participants $1.5 million in deferrals, disqualifications and credits resulting from audits. In addition, TALX offers an International Award winning on-line training solution to Trusts participants.

How does it work? UST is a grantor trust, which means it is owned and managed by its member nonprofits, not an insurance company or corporation. UST's sole mission is to save nonprofits money, and is led by a Board of Trustees who are CEO's and CFO's of member nonprofits themselves. Eligible organizations opt-out of their state's unemployment tax system and instead make quarterly contributions into their Trust account. UST handles claim reimbursements on their behalf, while also providing risk-management services.

The job of the Trust is to enable participants to tap into the savings that come from directly reimbursing the state for unemployment claims -- without exposing their organization to the inherent volatility of that process. The Trust allows its member agencies to establish their own accounts within the Trust and share proportionately in the Trust's investment results while taking advantage of the option available only to nonprofits to become reimbursable. The Trust's retention rate is 98%.

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AAHSA recommends its members contact UST and find out about its benefits a cost-saving program. For additional information about UST, please email
Bill Downey or call at (888) 249-4788. Also visit the UST website.

References
1- www.guidestar.org/news/features/unemployment_ins.jsp