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Vermont DOL explains unemployment‑insurance mechanics: trust fund, reimbursable employers and rate setting
Summary
Department officials told the Appropriations Committee how Vermont's UI trust fund and employer rate schedules work, described reimbursable employer arrangements and provided trust‑fund balance figures that fell from pre‑pandemic highs.
Department of Labor officials spent part of the House Appropriations Committee hearing explaining how Vermont’s unemployment‑insurance system works, including the distinction between taxable and reimbursable employers, how benefits are paid from the UI trust fund and how tax schedules and wage bases determine employer rates.
“All the funds that employers pay into the system go into the UI trust fund and benefits are paid out of the trust fund,” Commissioner Michael Harrington explained, adding that employers also report wages that determine a claimant’s eligibility and benefit amount. Harrington described the interaction between employer wage reporting and claimant eligibility as “a dance between the information that employers are putting into the system, and then that determines who is covered.”
Harrington and staff said most for‑profit employers are “taxable employers” who pay contributions up to the taxable wage base (discussed in the hearing at roughly $13,000–$14,000), while some nonprofits and the state may be “reimbursable employers” that do not pay tax rates but reimburse the trust fund dollar‑for‑dollar for benefits paid to their former employees.
The department outlined how taxes and schedules are set. Tax rates are assigned annually by ranking employers’ payroll and claims history and placing them in one of five statutory schedules; the department said Vermont was in the lowest schedule (schedule 1) at the time of the presentation. Harrington said the taxable wage base can be set by the Legislature or indexed and that movement between tax schedules can change the indexed wage base by about $2,000 per adjustment.
Officials provided general figures for the trust fund: Harrington said the UI trust fund held about $520 million pre‑pandemic, had dipped into the approximately $190 million range at worst during the pandemic, and was about $307 million at the time of the hearing. He said Vermont did not have to borrow during the pandemic because of federal program supports and that the fund’s health is a recurring policy discussion in House Commerce and appropriations hearings.
On administration of UI, the department said unemployment‑insurance administration is the program’s largest budget area and that some of the additional funds added to the department’s base after the pandemic—roughly $5 million—support modernized and enhanced UI administration, including fraud mitigation, call‑center staffing and additional adjudication resources.
No formal policy changes were announced; the discussion served to brief committee members on mechanics and fiscal status ahead of budget decisions.
