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Wednesday, January 5, 2011

Unemployment Compensation (UC) and the Unemployment Trust Fund (UTF):Funding UC Benefits

Julie M. Whittaker
Specialist in Income Security

This report provides a summary of how Unemployment Compensation (UC) benefits are funded through the Unemployment Trust Fund (UTF). The UTF in the U.S. Treasury is designated as a trust fund for federal accounting purposes. Although the UTF is a single trust fund, it has 59 accounts: the Employment Security Administration Account (ESAA), the Extended Unemployment Compensation Account (EUCA), the Federal Unemployment Account (FUA), 53 state accounts, the Federal Employees Compensation Account (FECA), and two accounts related to the Railroad Retirement Board.

Federal unemployment taxes are credited to the ESAA; each state’s unemployment taxes are credited to the state’s unemployment account. Federal taxes pay for administration grants to the states. State unemployment taxes are dedicated to pay for regular UC benefits. The extended benefits (EB) program is typically funded 50% by the federal government and 50% by the states, but the 2009 stimulus package (The American Recovery and Reinvestment Act of 2009, P.L. 111- 5 §2005, as amended) temporarily provides for 100% federal funding of EB through January 4, 2012. The Emergency Unemployment Compensation (EUC08) benefit was funded from the EUCA until P.L. 111-5 changed the source to the general fund of the Treasury.

Date of Report: December 30, 2010
Number of Pages: 10
Order Number: RS22077
Price: $29.95

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