State to use COVID-19 relief money to replenish unemployment trust fund

KELOLAND.com Original

PIERRE, S.D. (KELO) — Gov. Kristi Noem announced June 25 that South Dakota is use Coronavirus Relief Fund (CRF) dollars to replenish the South Dakota Unemployment Compensation Trust Fund.

The state transferred $45.6 million to the trust fund. The CARES Act allows for states to utilize CRF dollars to replenish depleted unemployment trust funds, and doing so will allow South Dakota to avoid a tax increase on South Dakota employers.

The tax structure for the South Dakota Unemployment Compensation Trust Fund is designed to maintain an average high cost multiple (AHCM) of 1.6. This means the trust fund balance is 160% of the three highest cost years in the trust fund’s recent history, typically a period covering about 20 years. However, the high level of unemployment benefit payments issued since the start of the COVID-19 pandemic has decreased the balance of the fund to $90 million, which is an AHCM of 1.2.

Before the COVID-19 pandemic hit the state, South Dakota had a trust fund balance of $127.7 million in 2019, according to the Federal Reserve of Minneapolis. The federal reserve said that was 177% solvency which meant the state had more than 100% of funds it needed in case of 12 months of high unemployment.

A U.S. Department of Labor 2020 Unemployment Trust Fund Solvency report said South Dakota’s AHCM was 1.77 before the pandemic.

To learn more about the South Dakota Unemployment Compensation Trust Fund, visit dlr.sd.gov.

Copyright 2020 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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