Unemployment Insurance:

Administrative Funding Likely a Growing Problem

T-HRD-89-21: Published: May 24, 1989. Publicly Released: May 24, 1989.

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GAO discussed federal allocations to states for unemployment insurance program administration. GAO noted that: (1) although employer-paid federal taxes initially completely funded states' administration of unemployment insurance, budgetary and appropriation cutbacks have decreased federal funding of states' administrative costs; (2) states have increasingly used their own funds to help cover administrative costs and have made managerial adjustments involving increased automation and reduced staffing to contain costs and maintain service; (3) most state unemployment insurance trust funds have inadequate reserves; (4) the Department of Labor's allocation system used outdated information that did not accurately reflect states' administrative costs; and (5) serious disruptions in services and increases in claims processing errors could occur if unemployment rates rise suddenly.

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