Building Resilience Action Area 6: Rebuilding and Stabilizing the Funding of State UI Benefits
This section of the Building Resilience plan outlines strategies to improve the long-term solvency and sustainability of state unemployment insurance (UI) trust funds through better funding practices and legislative reform.
Action Area 6 examines how declining use of “forward funding” and outdated payroll tax structures have weakened state UI trust funds, forcing many states to borrow during economic downturns and limiting benefit adequacy.
It explains how low federal wage bases, experience-rated taxes, and solvency shortfalls contributed to benefit cuts in past recessions. The Department of Labor proposes continuing public solvency reporting and pursuing legislative reforms to strengthen UI trust fund reserves, improve equitable financing, and reduce employer incentives to contest legitimate claims.
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