Topics in Unemployment Insurance Financing Wayne Vroman First Chapter | Table of Contents 173 pp. 1998 $40.00 cloth 978-0-88099-194-0 $19.00 paper 978-0-88099-193-3 When recession hits, states often find that their unemployment insurance (UI) trust fund balances fall short of what's needed to pay for growing numbers of UI claims. The reason, says Wayne Vroman, is that the economic boom of the 1990s has given states the confidence to enact new financing schemes that allow a serious reduction in the size of UI trust fund balances. Vroman's study examines historical levels of states' UI trust fund balances between recessions, and the specific methods used to finance trust fund blanaces. These methods include traditional means of financing, tax-base indexing, state reserve funds, and "flexible" financing such as solvency taxes and legislative response mechanisms. In addition, he addresses the tradeoffs of financing UI debt by either borrowing from the U.S. Treasury or state bond issues. He approves of states using tax-base indexing and, for states with high trust fund balances, reserve funds. But he warns that using flexible financing does not counter the macro impact on the economy that is a traditional objective of the U.S. UI system. He also calls for Federal leadership in establishing methods that would reward states for carrying adequate UI trust fund reserves. |