Nebraska’s unemployment trust fund is now above pre-pandemic levels
During the height of the pandemic and directed health measures that caused businesses across the state to close, Nebraska saw its unemployment rate jump to 8.3%, or 86,300 people actively looking for work. This was the most people filing unemployment claims ever in the history of recording unemployment data.
Nebraska paid a total of $1,423,551,932 in unemployment benefits, of which approximately 30% were state funds, with the rest being paid from federal sources. For context, nationwide, governments have paid more than $836 billion in unemployment benefits due to the pandemic between January 27, 2020, and September 11, 2021.
When that many people filed for unemployment benefits, it took a toll on the state’s unemployment trust fund. States are required by the Social Security Act of 1935 to maintain unemployment insurance trust funds. These are the funds used to pay out jobless benefits to qualifying unemployed workers. This area of state finance was one of the most severely impacted by the pandemic and the associated job losses.
The money that funds the unemployment insurance trust fund comes from payroll taxes on employers. When the fund is depleted due to many filing for unemployment benefits, the state is forced to increase payroll taxes to replenish the depleted funds.
While many states waited until the American Rescue Plan Act (the second pandemic relief package) to replenish these funds, Nebraska chose to use a large amount of funding from the CARES Act, the first relief package passed in 2020, to refill its unemployment trust fund.
As a result of policymakers prioritizing our state’s unemployment insurance trust fund, Nebraska is one of only 6 states that has fully replenished its unemployment trust fund. In fact, Nebraska now has more money in its unemployment trust fund than before the pandemic, putting the state in a solid fiscal condition, and avoiding increases in payroll taxes for Nebraska employers.
According to U.S. Treasury reports, Nebraska had $449,695,384 in its unemployment trust fund on February 1, 2020. Today, October 1, 2021, Nebraska is posting a balance of $503,061,937 , far exceeding the pre-pandemic level.
Many national fiscal analysts, along with the Platte Institute, have said that restoring the state’s unemployment compensation trust funds to pre-pandemic levels is one of the most responsible things a state can do with federal emergency funding.
It’s not a normal occurrence when you get to praise a state for making the right decision with federal dollars, but in this case, Nebraska policymakers deserve a round of applause – well done.