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UI Data Summary FY 2010 Budget Mid-session Review

OVERVIEW

Twice each year, when the Office of Management and Budget issues economic assumptions for the federal budget, the Division of Fiscal and Actuarial Services (DFAS) of the Office of Workforce Security (OWS) uses those assumptions to develop financial projections for the Unemployment Insurance system.

Using the economic assumptions, the paths of key program variables are projected for the following five years. It is important to keep in mind that the economic assumptions beyond the first two years are not intended to be forecasts but rather are based on long-term trends. Deviations from the assumed economic path could have a significant effect on the accuracy of the estimates shown in the UI Outlook.

Highlights of the analysis for the FY 2010 Budget Midsession Review are detailed below. The total unemployment rate (TUR) is assumed to average 8.6% in FY 2009 and 9.9% in FY 2010. These rates are significantly higher than the 7.8% and 7.9% assumed for the FY 2010 President’s Budget.

Under these assumptions:

• The insured unemployment rate (IUR) is projected to average 4.2% in FY 2009 and 5.3% in FY 2010.



• State UI regular benefit outlays are estimated at $74.9 billion in FY 2009 and $93.3 billion in FY 2010, up significantly from President’s Budget estimates of $66.9 billion and $65.0 billion, respectively.



• Outlays from state trust fund accounts are projected to exceed revenues and interest income by $41.0 billion in FY 2009 and $55.8 billion in FY 2010.



• State trust fund account balances, net of loans, are projected to fall from $36.8 billion at the end of FY 2008 to -$88.4 billion at the end of FY 2012 before starting to grow again. Net balances are not projected to become positive again until well beyond FY 2014.



• Very large amounts of borrowing from the Federal Unemployment Account (FUA) are projected over the next few years. The balance of outstanding loans is expected to increase from the current $14 billion to a peak end-of-year balance of $90 billion in FY 2012.



• Due to the high volume of state loans and increased EB payments, FUA and EUCA are projected to borrow $57 billion from the general fund in FY 2010 and an additional $33 billion in FY 2011. The general fund advances must be repaid with interest.

Questions and/or comments regarding this document are welcomed. Please contact Mike Miller at miller.michael@dol.gov or (202) 693-2930, or write to:

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