Title 19 | Chapter 5 | Subchapter 7
SUBCHAPTER 7 - REIMBURSEMENT OF UNEMPLOYMENT COMPENSATION BENEFITS
It is the purpose of this subchapter that all programs, regardless of their funding source, contribute equally to the cost of unemployment compensation benefits charged to the state agencies operating such programs. It is not the intent of this subchapter that the State of
Arkansas relinquish its status as a nontaxable reimbursable employer under the Department of Workforce Services Law, § 11-10-101 et seq.
History. Acts 1977, No. 608, § 1; A.S.A. 1947, § 13-554.
PLEASE NOTE: The Unemployment Compensation regulations are a compilation of ACA§ 19-5-701 et seq. and may be reviewed in their entirety in the Arkansas Code.
Purpose, Authority, History and Administration
Applicable Arkansas Code
Rate Calculation Procedure
Contribution Accounting Procedure (Attachment P1-19-5-701)
Fiscal Year-End Accrual Procedure
All programs of state government shall contribute their fair share to the cost of unemployment benefits charged to the state agencies operating such programs. To do this, each state agency receiving an appropriation of Regular Salaries, Extra Help, or Authorized Overtime from Treasury or Cash Funds shall contribute from their Personal Services Matching Funds a percentage of their gross payroll.
Refer to Unemployment Compensation Revolving Fund Law and Reimbursement of Unemployment Compensation Benefits – ACA §19-5-939 and 19-5-701 through 19-5-710.
Unemployment Compensation requirements for Arkansas State Government were established under the authority of Acts 608 of 1977 and 697 of 1979, and incorporated into ACA § 19-5-701 through 19-5-710 and 19-5-939.
The Department of Finance and Administration, Office of Administrative Services (DFA-OAS), administers this program for the Chief Fiscal Officer of the State of Arkansas.
Applicable Arkansas Code
ACA § 19-5-701 Purpose
"It is the purpose of this subchapter that all programs, regardless of their funding source, contribute equally to the cost of unemployment compensation benefits charged to the state agencies operating such programs. It is not the intent of this subchapter that the State of Arkansas relinquish its status as a nontaxable reimbursable employer under the Department of Workforce Services Law, ACA § 11-10-101 et seq."
ACA § 19-5-702 Definitions
1. "Payroll" means the gross total amount expended for a payroll period for regular salaries, extra help, and authorized overtime payments;
2. "Contributions" means a percentage of payroll expenditures paid to the Unemployment Compensation Revolving Fund by a state agency in order to provide current and timely reimbursements of benefits paid by the Department of Workforce Services Law for unemployment benefits charged to the agency;
3. "Experience rate" means the process of adjustment in a future period of the contribution rate of an agency based on the difference of the amounts paid to the revolving fund for a fiscal year compared to the amounts of unemployment benefits charged to the agency for a fiscal year in order to recover deficits and refund surpluses; and
4. "State agency" means any state agency, board, commission, department, institution, college, university, and community junior college receiving an appropriation for regular salaries, extra help, and authorized overtime payable from funds deposited in the State Treasury or depositories other than the State Treasury by the General Assembly.
ACA § 19-5-704 Administration
"This subchapter shall be administered by the Chief Fiscal Officer of the State. Upon certification to the Chief Fiscal Officer of the State by the Department of Workforce Services of unemployment compensation benefits paid during a benefit period and charged to a state agency, the Chief Fiscal Officer of the State shall direct that reimbursement be made to the Department of Workforce Services from the Unemployment Compensation Revolving Fund for such amounts as are properly certified. The Chief Fiscal Officer of the State shall have the authority to make such rules and regulations as are necessary to enforce the provisions of this subchapter."
ACA § 19-5-705 Benefits Claims Investigation
"The Department of Workforce Services shall investigate all claims for benefits filed by state employees whether or not the employing state agency lodges a protest to the payment of such benefits. Such investigation shall result in a determination of the eligibility of the employee for benefits payments."
ACA § 19-5-707 Contributions Generally
"Each state agency shall make contributions to the Unemployment Compensation Revolving Fund, using the experience rate determined in accordance with ACA § 11-10-704, from personal services matching costs funds within fourteen (14) calendar days following the end of each calendar quarter. The experience rate for each even-numbered fiscal year will be used to fix the rate for the next even-numbered fiscal year. Each odd-numbered fiscal year’s experience rate will be used to fix the next odd-numbered fiscal year rate. If during any fiscal year the Chief Fiscal Officer of the State determines that the contributions rate for any agency will result in a significant surplus or deficit for that fiscal year, he shall have the authority to adjust the agency contribution rate to reduce such surplus or recover any such deficit, subject to the provision of ACA § 19-5-708."
ACA § 19-5-708 Maximum Contributions
"In no event shall any experience rate result in a state agency making contributions of more than three percent (3%) of its gross payroll expenditures. In the event that an agency builds a deficit which would require a contribution rate greater than three percent (3%), then that agency shall continue to make contributions at the rate of three (3%), even though eligible for an experience rate reduction, until any deficit owed the fund is repaid. Only then shall the actual experience rate be used to compute such agency contributions."
Notification of the next fiscal year’s contribution rate for each state agency shall be distributed by March 1 of each year. These rate assignments shall be forwarded to the DFA-Office of Budget as well.
A newly established agency shall be assigned a contribution rate equal to the experience rate of state government agencies as a whole (the total claims divided by the total salaries). Contribution rates for second and subsequent years’ shall be established through experience rating. The rate calculation method is outlined herein.
To each agency’s current balance:
Add each agency’s pro-rata share of accrued interest,
Add the projected interest through the next fiscal year,
Add the contributions yet due from current year rates,
Subtract projected claims through the next fiscal year,
Subtract the desired fund level (75% of the last 2-year average of claims).
These steps will have established the amount of contributions due for the next fiscal year. Each agency’s contribution rate is determined by dividing the contributions due amount by the projected salaries for the fiscal year.
Unemployment contribution rates may not exceed 3% of agency’s total gross salaries.
Rate Calculation Procedure
A. At the time a new agency is appropriated salaries, it shall be assigned a contribution rate equal to the experience rate of state government agencies as a whole.
(The total claims divided by the total salaries). Second and subsequent years contribution rate shall be established in accordance with the rate calculation process below.
B. Contribution rates for the upcoming fiscal year shall be calculated, and these rates shall be sent to the agencies by March 1 of each fiscal year. These rate assignments shall also be sent to the Office of Budget.
C. The following is a general outline of the rate calculation process:
1. Compute the last 2 year average of expenditures. 75% of this total is the desired funding level.
2. Distribute interest to each account using the agencies’ pro-rata share of the fund balance.
3. Project expenditures for the next fiscal year using the agencies’ pro-rata share of the last 2 years of expenditures.
4. Project the contributions yet due based on the current fiscal year rates.
5. To the current balance (after interest has been distributed):
a. Add the projected interest through the next fiscal year,
b. Add the contributions yet due from current year rates,
c. Subtract projected expenditures,
d. Subtract the desired fund level.
6. These steps will have established the amount of contributions to be collected the next fiscal year.
7. Divide the agencies contributions requirement by the salary projections for the next fiscal year to determine the contribution rates.
Contribution Accounting Procedure
Quarterly contributions are due within 14 calendar days following the end of each calendar quarter.
At the end of each quarter, agencies with unemployment compensation rates other than zero shall receive an invoice from the DFA-OAS for the amount of the contribution due made payable to:
1515 WEST 7th, ROOM 700
PO BOX 2485
LITTLE ROCK, AR 72203
The vendor code is 9996101 for unemployment contributions. The general ledger code is 5010008000 for unemployment contributions. Unemployment and Workers’ compensation contributions may not be combined on a single state warrant or check.
The State of Arkansas’ Accounting System provides the Gross amount expended for a payroll period for all state agencies. Gross amount expended for a payroll period for Unemployment Compensation purposes is downloaded from State of Arkansas’ Accounting System into an invoice. These invoices are generated by the DFA-OAS and are distributed to the agency each quarter through messenger service, e-mail or regular mail. Copies of invoices shall be sent only with checks. The agency number and the quarter ending date shall be provided on the state warrant stub by keying this information in the text box on the basic tab when processing the payment in the State of Arkansas’ Accounting System. See Attachment P1-19-5-701.
The DFA-OAS deposits these warrants and checks to the Unemployment Compensation Trust Fund (TUC). The TUC Trust Fund shall be used by the DFA-OAS to reimburse the Department of Workforce Services (DWS) for Unemployment Claims paid to former state employees, charged to the applicable agency.
Call the DFA-OAS Fiscal Accounting Section at (501) 324-9060 with any questions about unemployment compensation contributions.
Call the DWS Unemployment Insurance Section at (501) 628-3257 with any questions about Employer Accounts.
Fiscal Year-End Accrual Procedure
Each state agency shall record a journal entry utilizing the State of Arkansas’ Accounting System’s transaction "ENTER GL ACCOUNT DOCUMENT", for the amount of the accrued but unpaid quarterly unemployment contribution to be provided by DFA-OAS. Conversely, the Unemployment Compensation Trust Fund will record a reciprocal amount due from all the agencies for the unpaid accrual.
The Department of Finance and Administration-Office of Administrative Services-Fiscal Accounting (DFA-OAS-FA) shall distribute the 4th fiscal quarter invoices to the agencies after the fiscal quarter’s close. Agency contributions are due 14 days after the fiscal quarter closes. A memo shall be attached to each agency invoice reminding the agencies to book the fiscal year-end liability in the State of Arkansas’ Accounting System and to reverse the prior fiscal year’s liability accrual entry. An advance payment memo shall be attached to the invoices applicable to those agencies which prepay the 4th fiscal quarter invoice prior to the quarter’s close in order to avoid erroneously booking a year-end accrual entry.
DFA-OAS-FA shall record a receivable for agency unemployment contributions due reduced for amounts received as advance payments.