| 1988 LEGISLATION |
- Daily benefit rate increased
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- Experience rating phased in
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- 2-week waiting period established
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- Repayment of debt assured
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- Annual financial reports required
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Under the indexing provisions of the 1988 amendments, the taxable earnings base in calendar year 1989 increased from $600 to the first $710 of each employee's monthly earnings, and in 2017 is $1,545. For 1989 and 1990, the contribution rate for all employers except certain public commuter railroads was set at 8 percent. Experience-based tax rates were phased in during 1991, with rates ranging from 5.55 percent to 12 percent. In 2017, they range from 2.15 percent (the minimum basic rate of 0.65 percent plus a 1.5 percent surcharge as explained below) to 12 percent. The surcharge does not apply to new employers, who pay 1.62 percent in 2017.
The amendments exempted public commuter railroads covered by the Railroad Unemployment Insurance Act from paying the 8 percent tax in 1989 and 1990; instead they reimbursed the unemployment insurance system for the amount of benefits paid during the year to their employees, plus certain administrative costs. Since 1991, these railroads again pay taxes on the same basis as other railroads.
The 1988 amendments assured repayment of the unemployment system's debt to the retirement system by fixing the loan repayment tax at 4 percent in January 1989, with that rate remaining in force until the debt was fully repaid with interest. And the previous $7,000 annual base for this tax was changed to conform to the indexed monthly taxable compensation base. In June 1993 the $180 million loan balance was repaid in its entirety from cash reserves in the Railroad Unemployment Insurance Account and the loan repayment tax was terminated.
A contingency surtax of 3.5 percent, effective in the event of further borrowing by the Railroad Unemployment Insurance Account, was eliminated in 1991. Instead, a surcharge can be added to employers' unemployment insurance taxes for a calendar year if the balance in the unemployment insurance account on the previous June 30 goes below $100 million (as indexed). The surcharge rate would be 1.5, 2.5, or 3.5 percent depending on the balance in the account. If a 3.5 percent surcharge went into effect for a given year, the maximum rate for any employer would be 12.5 percent rather than 12 percent. A 1.5 percent surcharge is in effect during 2017
Credits would be provided to employers if a large balance accumulates in the account. If the account balance on the preceding June 30 were above $250 million (as indexed), the excess would be refunded to the employers in the form of a rate reduction for the year through a pooled credit.
The 1988 amendments also require the RRB to make annual financial reports to Congress on the status of the unemployment insurance system. The reports have been favorable.
The Omnibus Budget Reconciliation Act of 1989 revised Federal indexing procedures, which raised the maximum on monthly compensation subject to railroad unemployment insurance taxes and the qualifying earnings requirement. This legislation also revised fiscal year 1990 unemployment and sickness benefit sequestrations under the Gramm/Rudman Act.
1990s and later
Under 1991, 1992, and 1993 emergency unemployment compensation legislation providing temporary extended State unemployment benefits, unemployed railroad workers were made eligible for extended benefits, on a temporary basis, regardless of years of service. These temporary extended benefits were made available for specified periods in 1991, 1992, 1993 and 1994 if previous benefit rights were exhausted by certain dates. Temporary extended unemployment benefits were also provided under 2009, 2010, 2011 and 2012 legislation.
Under the Budget Control Act of 2011 and a subsequent sequestration order, railroad unemployment and sickness insurance benefits were reduced by 9.2 percent beginning in March 2013. Based on revised projections of benefit claims and payments, the reduction amount was adjusted to 7.2 percent in October 2013, to 7.3 percent in October 2014, to 6.8 percent October 1, 2015, and to 6.9 percent effective October 1, 2016. At the time this information was published online, the reduction was to remain in effect through September 30, 2017, the end of the fiscal year. Reductions in future fiscal years, should they occur, will be calculated based on applicable law.