Unemployment Insurance:

Issues Relating to Reserve Adequacy and Trust Fund Solvency

T-HRD-88-23: Published: Jul 7, 1988. Publicly Released: Jul 7, 1988.

Additional Materials:


Office of Public Affairs
(202) 512-4800

GAO discussed its analysis of issues facing the federal-state unemployment insurance (UI) system, focusing on states': (1) UI trust funds' financial health; and (2) actions during the 1980's in response to recessionary conditions and to new federal loan policies. GAO found that: (1) the system's ability to pay benefits from available reserves declined significantly after 1970; (2) as of December 1987, only four states had funds with adequate reserves; (3) over the last 15 years, state trust funds borrowed about $30 billion from the federal government; (4) most of the states with severe trust fund difficulties were in the most economically depressed areas; and (5) although sustained economic growth increased aggregate reserves to a historic high of $23.2 billion in 1987, many states remain vulnerable to an economic decline. GAO also found that the decline in: (1) reserve adequacy was due to high unemployment during the last 15 years, states' inability to fund extended benefits programs, and some states' indexing of benefits to inflation but not taxes; and (2) the proportion of unemployed receiving benefits was due to changes in work-force demographics and national industrial composition, as well as federal policy to cut benefits and improve solvency. In addition, GAO found that federal loan policy changes: (1) caused many states to increase UI taxes while reducing the proportion of the unemployed receiving benefits; and (2) resulted in increases in voluntary loan repayments, but did not encourage states to accumulate sufficient reserves to avoid future borrowing. GAO believes that Congress may wish to: (1) require states to build adequate trust fund reserves during low unemployment periods; and (2) consider program changes to help offset states' fiscal burdens during high unemployment periods.

Jul 18, 2018

Jul 17, 2018

Jul 16, 2018

Jun 28, 2018

May 31, 2018

May 24, 2018

May 10, 2018

Apr 17, 2018

Apr 5, 2018

Looking for more? Browse all our products here