Contents

• Introduction
• The Unemployment Trust Fund
• Sources of Unemployment Trust Fund Revenue
• FUTA
• SUTA
• UTF Accounts
• ESAA
• EUCA
• FUA
• State Unemployment Accounts
• UTF Statutory Transfers
• End-of-Fiscal-Year Transfer Above Ceiling from ESAA to EUCA
• Monthly 20% ESAA to EUCA Transfer
• End-of-Fiscal-Year Transfer Above Ceiling from EUCA to FUA
• Reed Act Distributions
• Federal Loans to States
• UC Appropriations out of ESAA
• State UI Administration Grants
• Federal Administration
• Other Appropriations out of ESAA
• UC, UCFE, UCX, and EB Benefits

Summary

The joint federal-state Unemployment Insurance (UI) system provides temporary and partial wage replacement to involuntarily unemployed workers and stabilizes the economy during recessions. Two permanent law unemployment benefits—Unemployment Compensation (UC) and Extended Benefits (EB)—are countercyclical, with spending and weekly benefit payments that increase automatically during a recession. States administer unemployment benefits under their state laws, with U.S. Department of Labor (DOL) oversight, resulting in 53 different UC programs operated in the states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.

The Unemployment Trust Fund (UTF) in the U.S. Treasury accounts for transactions related to UC and EB. The UTF is a single trust fund with 59 accounts: the Employment Security Administration Account (ESAA); the Extended Unemployment Compensation Account (EUCA); the Federal Unemployment Account (FUA); 53 state accounts (including the District of Columbia, Puerto Rico, and the U.S. Virgin Islands); the Federal Employees Compensation Account (FECA); and two accounts related to the Railroad Retirement Board (RRB).

Congress has shown interest in the operations of the UTF as part of its oversight of the UI system. For example, at a June 2024 hearing on "Reforming Unemployment Insurance to Support American Workers and Businesses," the Subcommittee on Work and Welfare of the House Committee on Ways and Means discussed several reform issues, including the reconsideration of the method through which funding for state administration is collected and distributed via the UTF.

This report provides a figure that displays FY2026 flows of funding through the UTF. Specifically, this figure includes projections from DOL related to the income, outlays, and end-of-year balances of the UTF as well as relevant FY2026 annual appropriations data, which are enacted amounts under P.L. 119-75, the Consolidated Appropriations Act, 2026. This report also describes, including relevant statutory authorities, UTF sources of revenue, accounts, statutory transfers, federal loans to states, UC appropriations out of ESAA, and outlays on unemployment benefits.

For a broad overview of the UC program, see CRS In Focus IF10336, The Fundamentals of Unemployment Compensation. For additional information on how UC benefits are funded through the UTF, see CRS Report RS22077, Unemployment Compensation (UC) and the Unemployment Trust Fund (UTF): Funding UC Benefits.

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Introduction

The Unemployment Insurance (UI) system is constructed as a joint federal-state partnership of which the Unemployment Compensation (UC) program is the foundation. Created under the Social Security Act of 1935 (SSA; P.L. 74-271), the UC program provides income support through weekly benefit payments to involuntarily unemployed workers. Although there are broad requirements under federal law regarding UC benefits and financing, the specific parameters are set out under each state's laws. States administer UC benefits with U.S. Department of Labor (DOL) oversight, resulting in 53 different UC programs operated in the states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.¹

The Federal-State Extended Unemployment Compensation Act of 1970 (P.L. 91-373)² established the Extended Benefits (EB) program to provide additional weeks of unemployment benefits if high unemployment exists within a state. After UC benefits are exhausted, the EB program, also administered by states, may provide up to an additional 13 or 20 weeks of benefits, depending on worker eligibility, state law, and economic conditions in the state. Under permanent law, the EB program is funded 50% by the federal government and 50% by the states.³

Designated as a trust fund for federal accounting purposes, the Unemployment Trust Fund (UTF) in the U.S. Treasury accounts for UC and EB financial transactions. The UTF's structure, which involves 59 separate accounts, and complexity, which includes four types of statutory transfers between key UTF accounts, present challenges in tracking the annual flow of UI income and outlays. Congress may be interested in understanding how federal unemployment tax revenue moves through UTF accounts. In particular, there may be interest in which UTF flows are based on statute and statutory thresholds and which flows require annual appropriations. Additionally, Congress has expressed interest in reconsidering the method through which funding for state UI administration is collected and distributed via the UTF.⁴

This report illustrates the operations of the UTF using FY2026 projections from DOL on UI income, outlays, and end-of-year balances as well as relevant FY2026 annual appropriations data, which are enacted amounts under the Consolidated Appropriations Act, 2026 (P.L. 119-75). Included is a description of sources of revenue, UTF accounts, statutory transfers, federal loans to states, UC appropriations out of the relevant UTF account, and outlays on UI benefits. Relevant statutory authorities are also provided throughout. The Appendix provides a glossary of acronyms used in this report.

The Unemployment Trust Fund

The UTF's authority and structure are set out under Title IX of SSA.⁵ The UTF is a single trust fund with 59 accounts: the Employment Security Administration Account (ESAA); the Extended Unemployment Compensation Account (EUCA); the Federal Unemployment Account (FUA); 53 state accounts (including the District of Columbia, Puerto Rico, and the U.S. Virgin Islands); the Federal Employees Compensation Account (FECA); and two accounts related to the Railroad Retirement Board (RRB).

The UI system is financed by federal payroll taxes under the Federal Unemployment Tax Act (FUTA)⁶ and by state payroll taxes commonly referred to as the State Unemployment Tax Acts (SUTA). All federal and state UI tax receipts and outlays for benefits and administration flow through the U.S. Treasury and thus affect federal revenue, outlays, and the overall financial position (deficit or surplus) of the federal government. The trust fund designation is used to accumulate legal spending authority that is available automatically when needed. The revenue and the outlays of the UI system are counted in the federal budget.⁷

For additional information on the UTF, see CRS Report RS22077, Unemployment Compensation (UC) and the Unemployment Trust Fund (UTF): Funding UC Benefits.

Figure 1 displays FY2026 flows of funding through the UTF, which are explained in detail below.

Figure 1. The Unemployment Trust Fund Projected FY2026 Income, Outlays, and End-of-Year Balances

Source: Figure created by CRS using FY2026 program data from U.S. Department of Labor, UI Outlook: President's Budget 2027, except for FY2026 appropriations data, which are enacted amounts under the Consolidated Appropriations Act, 2026 (P.L. 119-75). Notes: FUTA is Federal Unemployment Tax Act. SUTA is State Unemployment Tax Acts. ESAA is Employment Security Administration Account. EUCA is Extended Unemployment Compensation Account. FUA is Federal Unemployment Account. UI is Unemployment Insurance. EB is Extended Benefits. UC is Unemployment Compensation. UCFE is Unemployment Compensation for Federal Employees. OIG is Office of Inspector General. UCX is Unemployment Compensation for Former (ex-) Servicemembers. FY is fiscal year. EOY is end-of-year. Included in the benefit outlays is a $0.30 billion reimbursement to the states from federal agencies for UCX and UCFE. Not presented in this figure are repayments from Unemployment Trust Fund accounts to the General Fund of the U.S. Treasury.

Sources of Unemployment Trust Fund Revenue⁸

Sources of UTF revenue are depicted in Figure 1 as gray ovals.

The federal-state UI program is financed by federal payroll taxes under FUTA and by state payroll taxes under SUTA.⁹

FUTA

FUTA is set out under Title 26, Sections 3301-3311, of the U.S. Code and establishes a federal payroll tax that employers pay to fund both federal and state administrative costs as well as the federal share of the EB program (50%), loans to insolvent state UC accounts, and state employment services. If a state UC program complies with all federal requirements, the net FUTA tax rate for employers is 0.6% on the first $7,000 of each worker's annual earnings. Federal law defines which jobs a state UC program must cover for the state's employers to avoid paying the maximum FUTA tax rate (6.0%) on the first $7,000 of each employee's annual pay.¹⁰

FUTA revenues are deposited in the U.S. Treasury and credited to ESAA within the UTF (see "ESAA" section).

In FY2026, income from FUTA was projected to be $7.30 billion.¹¹

For additional information on FUTA, see CRS Report R44527, Unemployment Compensation: The Fundamentals of the Federal Unemployment Tax (FUTA).

SUTA

States levy their own payroll taxes on employers to fund regular UC benefits and the state share of the EB program (50%). The SUTA tax rate on an employer is, in most states, based on the amount of UC benefits paid to former employees. Generally, the more UC benefits paid to its former employees, the higher the tax rate of the employer, up to a maximum established by state law.¹²

SUTA revenues are deposited into the relevant state account (see "State Unemployment Accounts" section) in the UTF and, under Title 26, Section 3304(a)(4), of the U.S. Code, may be used only to pay for the state's UC benefits and the state's portion of EB payments.

In FY2026, income from SUTA was projected to be $44.59 billion.

UTF Accounts

UTF accounts are depicted in Figure 1 as light blue boxes.

Although the UTF is a single trust fund, it has 59 accounts: ESAA; EUCA; FUA; 53 state accounts (including the District of Columbia, Puerto Rico, and the U.S. Virgin Islands); FECA; and two accounts related to the RRB. The FECA and the two RRB accounts are not depicted in Figure 1 to simplify the graphical presentation of UTF flows.¹³

ESAA

ESAA is authorized under SSA, Section 901.¹⁴

All FUTA revenue is credited to ESAA. Under SSA, Section 901(c),¹⁵ funds from ESAA are made available through the annual federal appropriations process,¹⁶ which designates these funds to be used by DOL for the costs of administering the state UC programs as well as other expenditures, including the federal share of EB (50%), loans to insolvent states, and some other purposes described in the "UC Appropriations out of ESAA" section.

Under SSA, Section 901(d)(1),¹⁷ any additional FUTA revenue paid by employers because the state has an outstanding, unpaid loan from FUA (see "FUA" section) is transferred from ESAA to FUA and reduces the state's outstanding loan balance (not shown in Figure 1; for more information, see CRS Report RS22954, The Unemployment Trust Fund (UTF): State Insolvency and Federal Loans to States). Additionally, under SSA, Section 905(b)(1),¹⁸ each month 20% of the FUTA deposits into ESAA are transferred to EUCA, which funds the federal share of EB (see "Monthly 20% ESAA to EUCA Transfer" section). Under SSA, Section 901(f),¹⁹ at the close of the fiscal year, the ESAA balance is limited to 40% of the amount of the total appropriation for the fiscal year (for FY2026, DOL estimated the ESAA balance to be $1.46 billion), with the excess to be deposited into EUCA at the beginning of the next fiscal year (see "End-of-Fiscal-Year Transfer Above Ceiling from ESAA to EUCA" section).

For additional information on the role of ESAA in funding state administration of UC benefits, see CRS In Focus IF10838, Funding the State Administration of Unemployment Compensation (UC) Benefits.

EUCA

EUCA is authorized under SSA, Section 905.²⁰

If a state has an active EB program,²¹ EUCA distributions are made for the federal portion (50%) of EB payments. There was no EB projected to be payable in states in FY2026 due to low rates of projected unemployment; therefore, there was no transfer from EUCA to any state unemployment account.

Under SSA, Section 905(b)(2),²² the EUCA balance is limited to 0.5% of covered wages. For FY2026, the limit was $48.84 billion.²³ If the EUCA balance exceeds the limitation, the excess is distributed to FUA (see "End-of-Fiscal-Year Transfer Above Ceiling from EUCA to FUA" section).

Although EUCA was projected to have $1.61 billion in cash at the end of FY2026, the net end-of-year balance for EUCA was projected to be negative (-$4.88 billion). EUCA's negative balance was due to borrowing attributable to (1) the Great Recession (December 2007-June 2009) and (2) the COVID-19 recession (February-April 2020). Under SSA, Section 905(d),²⁴ EUCA has the authority to borrow funds from the General Fund of the U.S. Treasury without fiscal year limitations.

In FY2026, EUCA was projected to have two large outstanding debts. First, EUCA was projected to have approximately $4.00 billion in debt to the General Fund because of debt incurred from paying the statutorily obligated EB during the COVID-19 recession. Second, EUCA was projected to owe an additional $2.49 billion via an inter-account transfer loan from FUA, which was incurred paying for statutorily obligated EB during the Great Recession.²⁵

FUA

FUA is authorized under SSA, Section 902.²⁶

Under SSA, Section 901(d)(1),²⁷ FUA is credited with the additional taxes paid by employers when the state has an outstanding unpaid loan from FUA.²⁸

FUA funds are distributed as loans to states through the state unemployment accounts (see "Federal Loans to States" section). Under SSA, Section 902(a),²⁹ the FUA balance is limited to 0.5% of covered wages.³⁰ For FY2026, the limit was $48.84 billion. When this FUA balance ceiling is met and the same ceiling is met for EUCA, then Reed Act distributions are made (see "Reed Act Distributions" section).

In FY2026, the end-of-year balance for FUA was projected to be $13.94 billion.

State Unemployment Accounts

Under SSA, Section 904,³¹ SUTA revenues are deposited into the relevant state accounts in the UTF.

In FY2026, the end-of-year balance for the state unemployment accounts was projected to be $84.69 billion. In addition to this balance, the state unemployment accounts were projected to owe $19.77 billion in federal loans in FY2026 (see "Federal Loans to States" section).

UTF Statutory Transfers

Statutory transfers are depicted in Figure 1 as lines with arrows. These lines are either solid (see "Monthly 20% ESAA to EUCA Transfer" section) or dotted (see "End-of-Fiscal-Year Transfer Above Ceiling from ESAA to EUCA," "End-of-Fiscal-Year Transfer Above Ceiling from EUCA to FUA," and "Reed Act Distributions" sections), depending on whether the transfer is automatic (solid) or certain conditions must be met for the transfer to occur (dotted).

The following statutory transfers among accounts in the UTF are presented in Figure 1.³²

• end-of-fiscal-year transfer from ESAA to EUCA,
• monthly 20% transfer from ESAA to EUCA,
• end-of-fiscal-year transfer from EUCA to FUA, and
• Reed Act distributions (from FUA to states).

End-of-Fiscal-Year Transfer Above Ceiling from ESAA to EUCA

Under SSA, Section 901(f),³³ any funds in excess of the amount equal to 40% of the total appropriation from ESAA are taken out of ESAA at the end of the fiscal year. The excess funds are deposited into EUCA at the beginning of the next fiscal year. The net FY2025 end-of-year balance for ESAA was $1.78 billion, which was above the 40% ESAA balance limit for FY2025 ($1.73 billion). This resulted in $.05 billion being deposited into EUCA at the beginning of FY2026. The FY2026 projected net ESAA end-of-year balance was $3.61 billion, which was above the ESAA FY2026 balance limit of $1.51 billion. The projected $2.10 billion from ESAA would be deposited into EUCA in FY2027.

Monthly 20% ESAA to EUCA Transfer

Under SSA, Section 901(f),³⁴ each month, ESAA distributes 20% of the net monthly activity to EUCA.³⁵

In FY2026, the sum of monthly transfers from ESAA to EUCA was projected to be $1.46 billion.

End-of-Fiscal-Year Transfer Above Ceiling from EUCA to FUA

Under SSA, Section 905(b),³⁶ the EUCA balance was limited to $48.84 billion for FY2026. If the EUCA balance exceeds the limitation, the excess is distributed to FUA.

In FY2026, there was no projected statutory transfer from EUCA to FUA, as the account balance (-$4.88 billion) was projected to be under the applicable ceiling for FY2026 of $48.84 billion.

Reed Act Distributions

As explained above, at the end of the fiscal year, there is a limitation on the balance in ESAA—the account balance cannot exceed 40% of the prior fiscal year's congressional appropriation (SSA, §901(f)). ³⁷ If the balance in ESAA exceeds this limitation, the excess is distributed to EUCA. After the distribution, if the balance in EUCA exceeds the applicable EUCA limitation,³⁸ the excess is distributed to FUA. If after the distribution from EUCA, the FUA balance exceeds the limitation,³⁹ the excess is distributed as a Reed Act distribution to the states under SSA, Section 903.⁴⁰

In FY2026, there were no projected Reed Act distributions, as the account balances for EUCA
(-$4.88 billion) and FUA ($13.94 billion) were both under the FY2026 ceilings of $48.84 billion.

For additional information on Reed Act distributions, see CRS Report RS22006, The Unemployment Trust Fund and Reed Act Distributions.

Federal Loans to States

Federal loans to states are depicted in Figure 1 as a solid line with an arrow between FUA and the state unemployment accounts.

If states do not have enough funding in their state accounts, Title XII of SSA⁴¹ allows the states to borrow funds from FUA within the UTF. States may borrow from other sources, although some states are prohibited from doing so under state laws.⁴² The issuing of a loan to the state would require that FUA redeem securities. This redemption would decrease the federal debt. If FUA is insolvent and the other federal accounts within the UTF do not have sufficient balances to lend the funds that states need (as occurred in FY2010-FY2015 and began again in May 2020), Title XII of SSA allows FUA to borrow funds from the U.S. Treasury. If Treasury were to issue new securities in order to lend funds to FUA, this would increase the federal debt. When a state pays back the loan from FUA, FUA then uses those funds to repay its debt to Treasury, and the federal debt decreases.

In FY2026, there was a projected $5.38 billion in income to FUA, which included interest earnings ($0.17 billion), state repayments and reduced credits ($2.69 billion and $1.84 billion, respectively), and state interest payments ($0.67 billion).⁴³ States were projected to have a cumulative $19.77 billion in outstanding loans at the end of FY2026.

For additional information on federal loans to states, including timelines on repayment, see CRS Report RS22954, The Unemployment Trust Fund (UTF): State Insolvency and Federal Loans to States.

UC Appropriations out of ESAA

UC appropriations out of ESAA are depicted in Figure 1 as green lines with arrows ending with large "$" symbols. Appropriated amounts, along with their descriptions, are displayed as green boxes with rounded corners.⁴⁴

Each fiscal year, funds are made available through the appropriations process to make distributions of FUTA revenue for state administration, the federal costs of administration, and other purposes—for example, the Employment Service (ES), Bureau of Labor Statistics (BLS), and Veterans' Employment and Training Service (VETS).⁴⁵ Most of these UC appropriations are accounted for through DOL's Employment and Training Administration's State Unemployment Insurance and Employment Service Operations (SUIESO) funding.⁴⁶

State UI Administration Grants

SSA, Section 901(c)(1)(A)(I),⁴⁷ authorizes administrative grants to the states (subject to appropriations limits) from ESAA. The discretionary annual appropriations to DOL for administrative expenses are not based on the size of FUTA collections. Instead, each year, DOL assesses state budgetary requirements,⁴⁸ which are provided within budget justification documents for considerations by appropriators. The subsequent appropriations customarily include a base level of funding as well as an additional contingent appropriation. The appropriations language also customarily provides a baseline estimate of national unemployment as measured by the volume of UC claims expected to be filed per week—the average weekly insured unemployment (AWIU). Additionally, the contingent funding includes a trigger based on the average volume of weekly UC claims exceeding the AWIU baseline. For example, under P.L. 119-75, for every 100,000 increase in the total AWIU above the 3,075,000 baseline, an additional $28.6 million in state administrative funding would have been available.

Once the AWIU is above the contingent appropriation threshold, DOL notifies the Office of Management and Budget, which then releases funds from the contingent appropriation. If the need for contingency funds exceeds the base appropriation, but the national AWIU is less than the contingent appropriation threshold, then either Congress must enact a supplemental appropriation or states must reduce administrative expenses or provide additional state funding from different revenue streams or state general funds (as SUTA funds may pay only for UC and EB).⁴⁹

As shown in Figure 1, in FY2026, P.L. 119-75 provided $3.23 billion to be appropriated for state administrative grants.

For additional information on funding state UI administration, see CRS In Focus IF10838, Funding the State Administration of Unemployment Compensation (UC) Benefits.

Federal Administration

SSA, Section 901(c)(1)(B),⁵⁰ authorizes expenditures out of ESAA (subject to appropriations) to support the necessary expenses of DOL for the performance of its functions as required by UC law (i.e., under SSA and FUTA), VETS, and any federal UC law. In FY2026, P.L. 119-75 appropriated $18 million for federal UI administration from ESAA.

Other Appropriations out of ESAA⁵¹

SSA, Section 901(c)(1)(A)(ii),⁵² authorizes expenditures out of ESAA (subject to appropriations) for the establishment and maintenance of public employment offices (ES)⁵³ on the basis of the share of the workforce that is in covered employment (see SSA, §901(c)(4)).⁵⁴ The proportion of ES funding provided from ESAA ranged from 85% in 1973 to 97% in 1980 (as UC program coverage increased) and has remained at 97% through the present.⁵⁵

Similarly, SSA, Section 901(c)(1)(A)(iii),⁵⁶ authorizes expenditures for carrying out the activities of VETS.⁵⁷

While there is no similar authorizing language for expenditures out of ESAA to BLS within Title IX of SSA, DOL's FY2027 budget justification provides information on how BLS activities support the ES and UC programs. For example,

[p]rograms in this area help fulfill many requirements of the Wagner-Peyser Act as amended by the Workforce Innovation and Opportunity Act (WIOA) of 2014, including requirements that the Secretary of Labor "develop and maintain the elements of the workforce and labor market information system" as well as develop and maintain national projections of employment opportunities by occupation and industry. This legislation requires the development of information on jobs in demand to support states' efforts to better train for the hiring needs of businesses.⁵⁸

Additionally,

[t]he BLS operates the CES [Current Employment Statistics], Quarterly Census of Employment and Wages (QCEW), Occupational Employment and Wage Statistics (OEWS), and LAUS [Local Area Unemployment Statistics] programs in cooperation with the states and territories. As noted within their respective descriptions, these programs compose the BLS Labor Market Information (LMI) Cooperative Statistical Program, which is conducted in accordance with the provisions of the Wagner-Peyser Act as amended by WIOA. The BLS uses cooperative agreements to fund the states for these programs. BLS regional staff, under the direction of the Office of Field Operations in the national office, negotiate and monitor LMI cooperative agreements.⁵⁹

In FY2026, P.L. 119-75 appropriated $17.5 million for ES using funds within ESAA. Similarly, the FY2026 appropriations funded by ESAA were $68.0 million for BLS and $269.8 million for VETS.

Finally, three additional appropriations out of ESAA fund the Employment and Training Program Administration,⁶⁰ DOL Management,⁶¹ and the DOL Office of Inspector General (OIG).⁶² Similar to BLS funding out of ESAA, although there is no specific authorizing language in SSA for expenditures out of ESAA for these purposes, all such expenditures support federal administration or oversight related to UI programs and activities. In FY2026, P.L. 119-75 appropriated $53.9 million for the Employment and Training Program Administration, $0.3 million for DOL Management, and $5.8 million for the DOL OIG, all using funds within ESAA.

UC, UCFE, UCX, and EB Benefits

Outlays for UC, UCFE, UCX, and EB benefits are depicted in Figure 1 with a dark blue box.

Titles III, IX, and XII of SSA authorize the joint federal-state UC program to provide unemployment benefits. Most states provide up to a maximum of 26 weeks of UC benefits. Former federal workers may be eligible for unemployment benefits through the UCFE program. Former U.S. military servicemembers may be eligible for unemployment benefits through the UCX program. The Emergency Unemployment Compensation Act of 1991 (P.L. 102-164) provides that ex-servicemembers be treated the same as other unemployed workers with respect to benefit levels, the waiting period for benefits, and benefit duration.

The EB program was established by the Federal-State Extended Unemployment Compensation Act of 1970 (P.L. 91-373).⁶³ P.L. 91-373 extends the duration (i.e., number of weeks) of unemployment benefits (extended benefits) at the state level if certain economic conditions exist within the state.

In FY2026, outlays on UC, UCFE, and UCX benefits were projected to be $41.21 billion. No EB was projected to be payable in FY2026.

For more on UC, UCFE, UCX, and EB benefits, see CRS Report R46687, Unemployment Insurance (UI) Benefits: Permanent-Law Programs and the COVID-19 Pandemic Response.

Appendix. Glossary of Acronyms

Footnotes

1.	For an overview of the Unemployment Compensation (UC) program, see CRS In Focus IF10336, The Fundamentals of Unemployment Compensation. The District of Columbia, Puerto Rico, and the U.S. Virgin Islands are included in the definition of state under the Federal Unemployment Tax Act (FUTA; see 26 U.S.C. §3306(j)(1)).
2.	26 U.S.C. §3304 note (see https://www.govinfo.gov/content/pkg/COMPS-2966/pdf/COMPS-2966.pdf).
3.	For additional information on the UC program and Extended Benefits (EB) program, see CRS Report R46687, Unemployment Insurance (UI) Benefits: Permanent-Law Programs and the COVID-19 Pandemic Response.
4.	For example, U.S. Congress, House Committee on Ways and Means, Subcommittee on Work and Welfare, Reforming Unemployment Insurance to Support American Workers and Businesses, committee print, 118th Cong., 2nd sess., June 4, 2024, 118-WW08, https://www.congress.gov/118/chrg/CHRG-118hhrg57013/CHRG-118hhrg57013.pdf.
5.	42 U.S.C. §§1101-1111.
6.	26 U.S.C. §§3301-3311.
7.	For an overview of federal trust funds, see Congressional Budget Office, The Outlook for Major Federal Trust Funds: 2020 to 2030, September 2, 2020, https://www.cbo.gov/publication/56523.
8.	In addition to FUTA and State Unemployment Tax Acts (SUTA) revenue, there is additional income to the Unemployment Trust Fund (UTF) from federal agencies that reimburse states for payments of Unemployment Compensation for Federal Employees (UCFE) and Unemployment Compensation for Former (ex-) Servicemembers (UCX). See the discussion in "UC, UCFE, UCX, and EB Benefits." In FY2026, reimbursements from federal agencies for UCFE and UCX were estimated to be $0.30 billion.
9.	The atypical arrangement of state-funded benefits and federally funded administration has its roots within the development of the Social Security program. In its 1935 report, the President's Committee on Economic Security recommended that federal grants be provided to the states for the administration of UC benefits. The committee asserted that FUTA would be an adequate source of funds for federal and state administration and provide a level playing field for all states. By structuring the funding for administration to be paid from FUTA revenue, the federal government could require proper standards of administration at the state level. States today must comply with federal tax laws regarding the administration of their UC programs or face increased FUTA taxes. The full 1935 President's Committee report can be accessed at Social Security Administration, Report of the Committee on Economic Security: Need for Security, 1935, https://www.ssa.gov/history/reports/ces5.html. (See the "Unemployment Compensation: Outline of Federal Act" chapter.)
10.	From 1984 to July 1, 2011, the net FUTA tax was 0.8% on the first $7,000 of each employee's earnings. Beginning on July 1, 2011, the net FUTA rate decreased to 0.6%. Table A1 in CRS Report R44527, Unemployment Compensation: The Fundamentals of the Federal Unemployment Tax (FUTA), provides the history of FUTA tax rates and tax bases.
11.	Unless otherwise stated, all FY2026 income, outlays, and end-of-year balances cited in this report are from U.S. Department of Labor (DOL), Employment and Training Administration (ETA), Unemployment Insurance Program Outlook: President's Budget 2027, https://oui.doleta.gov/unemploy/pdf/prez_budget_27.pdf.
12.	For recent state-specific information on SUTA taxable wage bases and SUTA minimum, maximum, and new employer tax rates, see DOL, ETA, Office of Unemployment Insurance (OUI), "Significant Provisions of State Unemployment Insurance Laws, Effective January 2026," https://oui.doleta.gov/unemploy/content/sigpros/2020-2029/January2026.pdf.
13.	Federal Employees Compensation Account (FECA) reimbursements are mentioned in the notes to Figure 1. In FY2026, there was an additional reimbursement of $0.30 billion from federal agencies to states for UCFE and UCX. These UCFE and UCX reimbursements flow through FECA. Unlike other types of unemployment benefits, Railroad Retirement Board (RRB) unemployment benefits are administered by the RRB, not by states or with oversight provided by DOL. For more information, see RRB, Railroad Unemployment and Sickness Benefits, 2026, https://rrb.gov/sites/default/files/2026-07/2026_UB-9_web.pdf.
14.	42 U.S.C. §1101.
15.	42 U.S.C. §1101(c).
16.	Not all amounts from the Employment Security Administration Account (ESAA) are made available through the annual federal appropriations process. See "End-of-Fiscal-Year Transfer Above Ceiling from ESAA to EUCA" and "Monthly 20% ESAA to EUCA Transfer" sections.
17.	42 U.S.C. §1101(d)(1).
18.	42 U.S.C. §1105(b)(1).
19.	42 U.S.C. §1101(f).
20.	42 U.S.C. §1105.
21.	For additional information on EB, including trigger requirements for states to have active EB programs, see CRS Report R46687, Unemployment Insurance (UI) Benefits: Permanent-Law Programs and the COVID-19 Pandemic Response.
22.	42 U.S.C. §1105(b)(2).
23.	There is an additional threshold of at least $750 million, which is now effectively superseded by the 0.5% requirement. Covered wages are wages subject to FUTA. P.L. 105-33 increased the statutory ceiling on the Federal Unemployment Account (FUA) from 0.25% to 0.5% of covered wages, effective October 1, 2001. P.L. 102-318 had lowered the FUA ceiling from 0.625% to 0.25% and increased the ceiling for EUCA from 0.375% to 0.5%. Prior to that, P.L. 100-203 had increased the FUA ceiling from 0.125% to 0.625% and raised the EUCA ceiling from 0.125% to 0.375%.
24.	42 U.S.C. §1105(d).
25.	The Social Security Act of 1935 (SSA; 42 U.S.C. §1110), §910, allows for inter-account borrowing among ESAA, EUCA, and FUA.
26.	42 U.S.C. §1102.
27.	42 U.S.C. §11101(d)(1).
28.	§901(d)(2) of SSA (42 U.S.C. §11101(d)(2)) requires that the additional tax deposited into FUA be credited against the debt owed by the state of the employer.
29.	42 U.S.C. §1102(a).
30.	There is an additional threshold of at least $750 million, which is now effectively superseded by the 0.5% requirement.
31.	42 U.S.C. §1104.
32.	UTF accounts may also have transfers for repayment of loans to the General Fund of the U.S. Treasury, as well as interest payments accrued on loans from the General Fund. Details on these transfers are found in DOL, Unemployment Insurance Outlook: President's Budget 2027, under the "Outgo" heading for each UTF account.
33.	42 U.S.C. §1101(f).
34.	42 U.S.C. §1101(f).
35.	Net monthly activity includes all revenues credited to ESAA less any FUTA refunds. It excludes any additional taxes collected to pay for outstanding state UTF loans. (For information on these additional taxes, see "Federal Tax Increases on Outstanding Loans Through Credit Reductions" section in CRS Report RS22954, The Unemployment Trust Fund (UTF): State Insolvency and Federal Loans to States.)
36.	42 U.S.C. §1105(b).
37.	42 U.S.C. §1101(f).
38.	See "EUCA" section.
39.	See "FUA" section.
40.	42 U.S.C. §1103. In addition, Congress has built on the existing authority for Reed Act distributions to provide special, one-time transfers to states, including, for example, the incentive payments for expanded UC eligibility under §2003 of the American Recovery and Reinvestment Act of 2009 (P.L. 111-5) and the emergency administrative grants under §4102(a) of the Families First Coronavirus Response Act (P.L. 116-127).
41.	42 U.S.C. §§1321-1324.
42.	"States are also able to use private sector borrowing instruments, such as revenue bonds, to repay the federal government for their outstanding loans…. [E]ight states used the private market to finance UI debt following the 2007 recession. Since the beginning of the 2020 recession no states have utilized private sector borrowing instruments to repay federal advances. Numerous states were able to minimize or repay federal advances through alternative funding sources including funding made available through the CARES Act in 2020 [P.L. 116-136] and the ARP [American Relief Plan] Act in 2021 [P.L. 117-2]." DOL, ETA, OUI, State Unemployment Insurance Trust Fund Solvency Report 2026, p. 3, https://oui.doleta.gov/unemploy/docs/trustFundSolvReport2026.pdf.
43.	The components of income to FUA do not sum to the total income because of rounding.
44.	FY2026 appropriations data are taken from enacted amounts under P.L. 119-75, the Consolidated Appropriations Act, 2026.
45.	These other appropriations are for Employment and Training Program, DOL Management, and the DOL Office of Inspector General.
46.	See, for example, DOL, FY 2027 Budget, State Unemployment Insurance and Employment Service Operations, https://www.dol.gov/sites/dolgov/files/general/budget/2027/CBJ-2027-V1-06.pdf.
47.	42 U.S.C. §1101(c)(1)(A)(I).
48.	DOL currently uses the Resource Justification Model to collect information from states about administrative expenditures. See DOL, ETA, OUI, ET Handbook 410, 6th Edition, Resource Justification Model, https://www.dol.gov/sites/dolgov/files/ETA/advisories/UIPL/2019/UIPL_2-20_Attachment_1.pdf.
49.	For example, the Supplemental Appropriations Act of 2008 (P.L. 110-252) provided an additional $110 million in administrative funding to compensate the states for the administrative costs of processing the UC claims workload for the balance of FY2008. (For background on this issue, see Unemployment Insurance Program Letter 07-08, DOL, ETA, OUI, to State Workforce Agencies, January 17, 2008, https://oui.doleta.gov/dmstree/uipl/uipl2k8/uipl_0708.pdf.)
50.	42 U.S.C. §1101(c)(1)(B).
51.	While annual appropriations made for the purposes of the Employment Service (ES), Bureau of Labor Statistics (BLS), Veterans' Employment and Training Service (VETS), and others result in outlays outside of the UTF, there are some program interactions and related policy goals. For example, DOL's UI Outlook characterizes ES, BLS, and VETS under "State Administration"—see DOL, Unemployment Insurance Program Outlook: President's Budget 2027, p. 14.
52.	42 U.S.C. §1101(c)(1)(A)(ii).
53.	Building on prior experience with labor exchange services, the Wagner-Peyser Act (29 U.S.C. §§49 et seq.) was enacted in 1933 to establish a more uniform federal-state system of public employment service offices from the existing mix of state and local offices. The act created the ES within DOL to promote the establishment and maintenance of the federal-state public employment service. The ES is federally funded, primarily by appropriations from FUTA via ESAA. The ES is the central component of most states' workforce development systems, as services are universally accessible to all jobseekers and employers. Reflecting this central role, the Workforce Innovation and Opportunity Act (WIOA; 29 U.S.C. §§3101 et seq.), enacted in 2014, requires ES offices to be integrated by being physically located with One-Stop centers and prohibits stand-alone ES offices. In addition, because ES staff conduct the work test for the receipt of unemployment benefits, ES is also a critical component of the UC system. For additional information on WIOA, One-Stop Centers, ES, and UC work tests, see CRS Report R44252, The Workforce Innovation and Opportunity Act and the One-Stop Delivery System.
54.	42 U.S.C. §1101(c)(4).
55.	Carol R. Lubin, "The Employment Service Role in Unemployment Compensation," in National Commission on Unemployment Compensation, Unemployment Compensation: Studies and Research, vol. 3, 1980, p. 877, https://oui.doleta.gov/dmstree/misc_papers/advisory/ncuc/uc_studies_and_research/ncuc-vol3.pdf#page=256.
56.	42 U.S.C. §1101(c)(1)(A)(iii).
57.	For more information on VETS, see DOL, "Veterans' Employment and Training Service," https://www.dol.gov/agencies/vets.
58.	DOL, FY 2027 Congressional Budget Justification: Bureau of Labor Statistics, p. 15, https://www.dol.gov/sites/dolgov/files/general/budget/2027/CBJ-2027-V3-01.pdf.
59.	DOL, FY 2027 Congressional Budget Justification: Bureau of Labor Statistics, p. 16.
60.	"The Program Administration (PA) appropriation provides for federal oversight and administration of most ETA programs," DOL, FY 2027 Congressional Budget Justification: Program Administration, p. 11, https://www.dol.gov/sites/dolgov/files/general/budget/2027/CBJ-2027-V1-08.pdf. See also, the description of "Unemployment Insurance Oversight" (see "Program Administration" in DOL, President's FY 2027 Budget Appendix for ETA, p. 752, https://www.dol.gov/sites/dolgov/files/ETA/budget/pdfs/27ETA_Appx.pdf).
61.	"Agencies funded by the Departmental Management (DM) Salaries and Expenses (S&E) appropriation provide policy, regulatory, legal, and administrative services to every agency within the Department [of Labor]," DOL, FY 2027 Congressional Budget Justification: Departmental Management, p. 14, https://www.dol.gov/sites/dolgov/files/general/budget/2027/CBJ-2027-V3-02.pdf.
62.	"The Office of Inspector General (OIG) at the U.S. Department of Labor … serves the American workforce, DOL, and Congress by providing independent and objective oversight through audits and investigations of DOL programs and operations and by combatting the influence of labor racketeering in the workplace," DOL, FY 2027 Congressional Budget Justification: Office of Inspector General, p. 10, https://www.dol.gov/sites/dolgov/files/general/budget/2027/CBJ-2027-V3-04.pdf.
63.	26 U.S.C. §3304 note.