S.C. Code Regs. § § 47-501

Current through Register Vol. 48, No. 11, November 22, 2024

Section 47-501 - Unemployment Trust Fund Solvency

Pursuant to South Carolina Code Annotated Section 41-31-45(C) and Section 41-31-50(1)(b), the Department must annually calculate the income necessary to pay benefits and reach the fund adequacy target for the unemployment trust fund. The Department determines the total income needed as follows:

(1) Projected benefits will be determined for the next tax year in consultation with the United States Department of Labor and with annual data provided by the Congressional Budget Office, subject to subsection (2).

(2) The income needed to pay benefits and return the unemployment trust fund to the fund adequacy target may also include a solvency surcharge. A solvency surcharge shall be in effect for each tax year that the trust fund reserve is less than the fund adequacy target, as of June 30^th, subject to 47-501(2)(a). The aggregate amount of the solvency surcharge will be determined for each tax year to be the amount calculated to return the unemployment trust fund to the fund adequacy target within five years subject to the following:

(a) When actual benefits paid in the prior fiscal year are greater than the actual tax collections received in the prior fiscal year, then the cap, as defined in 47-500(7), is triggered. For the purpose of this section, tax collections shall exclude all penalties, interests, contingency surcharges, and recording fees. Once the cap is triggered then:

(i) If projected benefits for the next year are less than the cap, then the solvency surcharge shall be the difference between the cap and the projected benefits.

(ii) If projected benefits for the next tax year are equal to the cap, then no additional solvency surcharge will be added for the next tax year.

(3) The aggregate amount of the solvency surcharge for the trust fund rebuild that began with tax year 2016 will be determined for each tax year to be the amount calculated to return the unemployment trust fund to the fund adequacy target within five years. Once the fund adequacy target has been met pursuant to this item, future fund adequacy targets shall be met pursuant to item (4).

(4) After the fund adequacy target has been reached pursuant to item (3) or after the cap has been triggered, as described in 47-501(2), and in the prior fiscal year, actual benefits paid were less than actual tax collections, then tax rates for the next tax year will be set based on returning the unemployment trust fund to the fund adequacy target within the next four years.

(5) If the balance of the unemployment trust fund, as of the end of the most recently completed fiscal year, is greater than the fund adequacy target, then the Department may use the surplus amount to reduce taxes in the next tax year.

(6) Notwithstanding the provisions of 47-501(2), once the fund adequacy target has been met, in subsequent tax years, the solvency surcharge shall be set in the event the unemployment trust fund balance does not meet the fund adequacy target, as of the end of the most recently completed fiscal year, as shown in the following table:

Percentage the unemployment trust fund balance is below the fund adequacy target	Rebuilding period
More than 0.0000%, but less than 2.5000%	One year
2.5000% or more, but less than 5.0000%	Two years
5.0000% or more, but less than 7.5000%	Three years
7.5000% or more	Four years

(7) In a fiscal year in which the fund adequacy target is reached, the Department will determine tax rates for the following tax year without a solvency surcharge and pursuant to South Carolina Code Annotated Section 41-31-50.

S.C. Code Regs. § 47-501

Adopted by State Register Volume 39, Issue No. 06, eff. 6/26/2015; State Register Volume 40, Issue No. 06, eff. 6/24/2016.