Unemployment Compensation (UC) and the Unemployment Trust Fund (UTF): Funding UC Benefits

Publication Date: March 2005

Publisher: Library of Congress. Congressional Research Service

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Research Area: Banking and finance

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Abstract:

This report provides a summary of how the unemployment compensation (UC)/ unemployment insurance (UI) system funds UC benefits through the Unemployment Trust Fund (UTF). The federal UTF in the U.S. Treasury includes among its 59 accounts: the Employment Security Administration Account (ESAA), the Extended Unemployment Compensation Account (EUCA), and the Federal Unemployment Account (FUA), 53 state accounts, the Federal Employees Compensation Account (FECA), and two accounts related to the Railroad Retirement Board. Federal unemployment taxes are placed in the ESAA; each state's unemployment taxes are placed in the state's unemployment account. Federal taxes pay for administration grants to the states and half of extended UC benefits. State unemployment taxes pay for regular UC benefits and half of extended UC benefits. This report will be updated as legislative activities warrant.