UIA Update: Trust Fund remains healthy, Michigan unlikely to borrow in 2021

February 18, 2021

Media Contact: Lynda Robinson, 313-348-8220

Based on current unemployment claims activity and economic conditions, the Unemployment Insurance Agency today announced that it is highly unlikely the Agency will need to borrow from the federal government to cover unemployment benefits in 2021.

Currently, Michigan has one of the healthiest trust funds in the nation, with over $500M available for unemployment benefits and is one of few states that has yet to borrow from the fund. States such as California, Ohio and Texas started borrowing in spring 2020.

Each state maintains its own Unemployment Insurance Trust Fund (UITF) reserve to pay for state UI benefits. The fund is built from state taxes paid by employers. States can take on a title XII loan from the federal government if their own reserves are insufficient.

The solvency of the UITF is dependent on the benefit claims load and employer tax collections. While the UIA has paid over $29B in benefits since March 15, 2020, only $5.1B has been paid in state UI benefits. The remaining benefit payments have come from federal programs, including Pandemic Unemployment Compensation ($16.1B) and Pandemic Unemployment Assistance ($4.5B). Payments from these and other federal programs have no effect on the state’s trust fund.

“A key reason for the continued health of the trust fund is our successful Work Share Program,” said Acting UIA Director Liza Estlund Olson. “Work Share saved the UITF over $80M and helped inject over $500M into the economy when you include the federal benefits paid to these workers.”

The federally funded Work Share program allows job providers to retain their skilled workforce, avoid layoffs, or bring back workers at reduced hours while employees collect partial unemployment benefits to make up for their lost wages.

“We are encouraged to hear the UIA projects the UITF will not need to borrow funds in 2021, which means employers will avoid increased employment costs due to borrowing,” said Mike Johnston, Michigan Manufacturing Association vice president for government affairs. “One of the best solutions to solvency is getting people back to work, through Work Share, and filling open positions in manufacturing through work search.”

Work Share has helped 2,700 Michigan businesses and almost 97,000 employees at the peak of enrollment, far outpacing even the combined totals of larger states like New York, Ohio and Texas. 

“Financial stewardship has always been a top priority for the Agency,” added Estlund Olson. “We’ll continue to encourage employers to participate in Work Share and do everything we can to protect the integrity of the UITF.”