The Nevada Employment Security Council meets Thursday to hear Administrator Renee Olson formally set next year’s unemployment insurance rates.
The council recommended in October the Employment Security Division keep the state rate the same as this year. But since the division just finished paying off $592 million in bonds that paid the federal government back for loans the state took during the recession, employers will get a significant overall reduction in what they actually pay. Those bonds were paid for with a 63-hundredths of a percent add on to the state rate so paying them off decreases the insurance rate by that percentage.
While that may not sound like much, economist Alex Capello told the council it will save businesses an average of $192 per employee over the coming year.
Statewide, Gov. Brian Sandoval said that comes to $180 million less businesses will have to pay over the year.
Nevada had to borrow millions during the recession to pay unemployment benefits as the jobless rate soared into double digits, draining the $700 million UI Trust Fund. The state sold bonds to pay the federal government back because the interest rate on the bonds was a fraction of what the U.S. Treasury would have charged the state. That saved the state millions.
With the bonds paid off, the overall rate for unemployment insurance will drop from 2.63 percent of payroll to 2 percent. That consists of the 1.95 percent state unemployment insurance rate plus the 0.05 percent education assessment.
Not all businesses pay that percentage. What individual businesses must pay ranges from 5.4 percent of payroll to just a quarter of a percent. Those 18 different steps are calculated based on a business’s employee turnover rate.
With the recession behind the state, the jobless rate has fallen from double-digit numbers to just 5 percent as total state employment increased by more than 200,000 jobs.
That has enabled the Trust Fund to recover dramatically. As of October, there was just more than $1 billion in that fund and economists say it should reach $1.34 billion by the end of 2018. That is the amount they say should enable Nevada to pay unemployment benefits if there’s a new recession.
The council meeting is set for 10 a.m. Thursday.
