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TWC CFO warns projected UI payouts could create shortfall; commissioners ask to explore mitigation options
Summary
TWC Chief Financial Officer Chris Nelson reported projections showing higher benefit payouts and a possible shortfall that could trigger statutory measures; commissioners asked staff to explore options to mitigate employer tax impacts.
Chris Nelson, chief financial officer for the Texas Workforce Commission, told commissioners Wednesday that projected unemployment insurance (UI) benefit payouts for the year have risen and that the trust fund could fall below the statutory floor by Sept. 30, 2025 if current assumptions hold.
Nelson said the commission projects “a little over $2,000,000,000 in revenue” and has increased estimated benefit payouts to $3,122,000,000. He said the projection assumes a transfer of about $456,000,000 from the Employment and Training Investment (ETI) account into the trust fund and that, under the current assumptions, the trust fund would be roughly $299,300,000 below the statutory floor of $1,350,000,000 on Sept. 30, 2025 — a level that, if realized, could make a possible deficit tax come into play under statute.
Nelson told the commission he included an estimated $68,000,000 that is currently in a supplemental appropriation bill in the projection and would remove it from the assumptions if the appropriation were not enacted.
Commissioners discussed mechanisms to mitigate impacts to employers, asking staff to research options including phased adjustments to tax rates, borrowing or bonding, possible federal grants or emergency funding, strategic transfers, and other measures. One commissioner asked staff to convene discussions on options “to ensure employer tax remains as low as possible while maintaining fund levels for 2026.”
Nelson said the principal driver of the projected shortfall is higher benefit payouts — in part because claimants are receiving benefits for longer periods and paid weeks compensated have increased. Nelson said the payout trends represent roughly a 9% increase from the prior projection and noted the statutory three‑year lookback used in tax-rate calculations will gradually incorporate higher payout years and change future employer rates.
Staff did not present immediate tax-rate changes at the meeting; commissioners asked for follow-up briefings and analysis of mitigation strategies prior to the October calculation period.
