NMDWS News Release-June 29, 2021: New Mexico Unemployment Insurance Trust Fund to be fully restored
For Immediate Release
June 29, 2021
Contact: Stacy Johnston
Acting Public Information Officer
New Mexico Unemployment Insurance Trust Fund to be fully restored with federal funding
(Albuquerque, NM) – The New Mexico Department of Workforce Solutions will be receiving more than $600 million in American Rescue Plan Act (ARPA) funding from the New Mexico Department of Finance and Administration to replenish the Unemployment Insurance (UI) Trust Fund as well as pay back a federal loan issued by the U.S. Department of Labor to support the overwhelming surge of UI claimants during the COVID-19 pandemic.
The state's UI Trust Fund balance on Jan. 27, 2020, was $460.1 million. Shortly thereafter, after the onset of the pandemic in March, the state's number of unemployment claimants increased by more than 1,300 percent in a matter of weeks. The economic impact of the pandemic pushed almost 200,000 individuals, at the peak, into the state's unemployment insurance system -- and the state was able to disburse almost $4 billion to displaced workers and New Mexicans all across the state amid the crisis. The number of claimants qualifying for state and federal unemployment benefits, however, contributed to the depletion of the trust fund by mid-September of 2020.
The funds transferred from DFA to DWS will be used to both complete the repayment of the federal loan and re-establish the trust fund to its pre-pandemic levels. The trust fund balance, after payments and transfers are completed, will be $460 million.
The total loan received by NMDWS from the U.S. Department of Labor to continue getting benefits to New Mexicans in need was $284 million.
On June 24, 2021, NMDWS made a $100 million loan payment to the Department of Labor, a sum appropriated to the department from the state general fund in the 2021 Legislative Session. The remainder of the loan balance will be repaid with ARPA funding.
In the interim since analogous legislative appropriations were deferred earlier this year for having been made prior to federal guidance having been issued, U.S. Treasury Department has clarified that federal stimulus funds provided to states through ARPA may indeed be used for this purpose.
"We said we would replenish this fund -- protecting those who are entitled to unemployment benefits now and in the future as well as protecting businesses across the state from any further pandemic-related harm -- and we've done that," said Gov. Michelle Lujan Grisham. "We should never forget how terribly hard the pandemic has been for workers and families. State and federal systems were strained all across the U.S. At the end of the day, we got help to people who needed it, and our state financial outlook continues to improve."
“Restoring the Trust Fund is essential to minimizing the impact that the pandemic will have on New Mexico businesses,” said Ricky Serna, acting Secretary for the Department of Workforce Solutions. “When combined with other provisions already approved by the NM Legislature, this measure will further advance an economic recovery for the State.”
The restoration of the UI Trust Fund is scheduled to be completed by June 30, 2021, to meet the deadline in calculating employer tax rates for the coming year. UI tax rates for experienced employers are based on the employers’ benefit ratio multiplied by the reserve factor. The reserve factor is determined by the Unemployment Trust Fund balance on June 30 of each year.
The reserve factor can be as low as 0.5 or as high as 4.0. For calendar year 2021, the reserve factor is 1.6528.
More information on how UI tax rates are calculated is available at https://www.dws.state.nm.us/Unemployment/Unemployment-for-a-Business/Unemployment-Insurance-Tax-Information/How-UI-Tax-Rates-Are-Calculated.