Colorado Secures Bond to Address Unemployment Trust Fund Insolvency


The economic downturn has not only impacted private enterprise, but has taken a toll on Colorado’s Unemployment Insurance Trust Fund (UITF). State businesses have been paying a surcharge since 2004 to maintain the fund’s solvency, and in turn, paying higher unemployment rates. To continue paying benefits, the State has also borrowed nearly $600 million from the federal government, which carries a 3 percent interest rate. 

In a positive step at addressing the debt, the Colorado Department of Labor and Employment (CDLE) has secured a bond transaction totaling $630 million. The bond issuance will lower the interest rate from 3 percent to 1.4 percent, saving “most Colorado businesses between $20 – $120 per employee in 2013 -14.” Among the benefits to employers, there will not be a solvency surcharge for 2013.

To pay for the bond principal and interest, employers will receive two annual assessments from CDLE. An interest assessment was sent to businesses in September 2012, which shares the $9.7 million first annual interest payment among 33,000 employers at an average assessment of $277.14. An assessment for the bond principal repayment will be mailed along with the annual unemployment insurance premium rate notice in November 2012. Excluded from the bond interest repayment are: state government, political subdivisions, employers with benefits-charged accounts of zero, employers with an experience rating of greater than or equal to +7, and reimbursable employers. 

The overarching goal of this bond transaction is to lower overall costs to employers in the long run by making the UITF more stable. More information, including a fact sheet, can be found on CDLE’s website or by contacting an MSEC attorney.