PIERRE, S.D. (KELO) — South Dakota’s reemployment trust fund has seen plenty of ups and down in recent years. Lately, the balance has been running at an all-time high.
But state Department of Labor and Regulation officials expect the situation to change in 2024, through a combination of somewhat bigger benefit payments to the jobless and a sweeping tax reduction that will affect thousands of employers.
Department officials presented their forecast Thursday to the South Dakota Reemployment Council. The fund finished 2022 with a record balance of $195.6 million. The latest official estimates show the fund finishing calendar 2023 with an even larger balance of $217 million, but then holding steady at $216.1 million come the end of 2024.
The biggest reason for that adjustment is that a new tax schedule for employers goes into effect for 2024. It will put a lot of employers into the zero category for tax rate, said Pauline Heier, the department’s reemployment assistance director.
“That’s such great news,” responded one of the council’s members, former state Labor Secretary Pam Roberts of Pierre.
Her successor, Secretary Marcia Hultman, told the council that the effect would be “significant.”
Last year, the department paid $21.9 million in benefits, the lowest in at least a decade, and took in $46 million from employers and interest earnings.
The projections for this year are $24.7 million will be paid in benefits while another $46 million comes in. Looking ahead to 2024, the forecast calls for $26.5 million in benefits and $25.6 million from employer contributions and interest.
The Legislature in January approved the new tax schedule for 2024 and Governor Kristi Noem signed the change into law on February 1.
“You’re probably going to see about a $20 million tax cut,” Hultman said.
She acknowledged the balance likely would still be “considerably more” than what the department had previously estimated, but she said there are thousands more employers now in the system. Employer numbers grew by about 4,500 from 2010 to 2020; they’ve grown by roughly the same number from 2020 to 2023. (See chart)
“This tells us a couple of stories about our economy,” Hultman said.
Almost half of the 30,040 employers who were in South Dakota’s reemployment system as of June 30 of this year will be at the zero rate when the new schedule takes effect for 2024, according to Hultman. “That’s another big perspective to share with council members,” she said.
On July 3, the maximum benefit amount rose to $514 per week, from $487. “That is tied to the annual weekly wage in the state,” Heier said. “We’re just consistent with what wages have done,” Hultman said.
Employers covered by South Dakota reemployment system have been on the rise
|Year||Number of Employers as of June 30|