LEGISLATIVE FISCAL ESTIMATE
[First Reprint]
ASSEMBLY, No. 4043
STATE OF NEW JERSEY
221st LEGISLATURE
DATED: JUNE 25, 2024
SUMMARY
Synopsis: Redirects portion of worker’s unemployment compensation trust fund
contribution to unemployment compensation administration fund.
Type of Impact: No impact on State revenues or expenditures.
Agencies Affected: Department of Labor and Workforce Development.
Office of Legislative Services Estimate
Fiscal Impact Annual
Unemployment Compensation
Fund Decreases by $25.7 to $27.3 million
Unemployment Compensation
Administration Fund Increases by $25.7 to $27.3 million
 The Office of Legislative Services (OLS) notes that the bill will have no impact on State
revenues or expenditures, as the bill dedicates a portion of the employee unemployment
withholdings from the unemployment compensation fund into the unemployment
compensation administration fund.
 The OLS notes the estimated redirection of funds in the range of $25.7 million to $27.3 million
over the next three years is unlikely to have any significant impact on the solvency of the
unemployment compensation fund, which the Department of Labor and Workforce
Development projects to have a balance of $3.1 billion at the end of FY 2024.
BILL DESCRIPTION
This bill requires that a portion of what would have been the worker contribution to the
unemployment compensation trust fund instead be collected and deposited directly into the
unemployment compensation administration fund.
Office of Legislative Services Legislative Budget and Finance Office
State House Annex Phone (609) 847-3105
P.O. Box 068 Fax (609) 777-2442
Trenton, New Jersey 08625 www.njleg.state.nj.us
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Under current law, workers who are either employed by nongovernmental employers,
including non-profit employers, or who are employed by governmental employers that elect or
are required to pay contributions, contribute 0.3825 percent of their wages to the
unemployment compensation trust fund. The bill reduces this worker contribution to the
unemployment compensation trust fund to 0.3625 percent of wages and requires that 0.02
percent of wages be collected and deposited directly into the unemployment compensation
administration fund.
Under current law, workers who are employed by the State of New Jersey or any
governmental entity or instrumentality that elects to make payments in lieu of contributions,
contribute 0.0825 percent of their wages to the unemployment compensation trust fund. The
bill reduces this worker contribution to the unemployment compensation trust fund to 0.0625
percent of wages and requires that 0.02 percent of wages be collected and deposited directly
into the unemployment compensation administration fund.
The bill’s redirection of funds, which applies to contributions made after December 31,
2023, is less than the amount that is not committed to separate trust funds of self-insured
employers, so the amount that goes to the separate funds, and consequently employer
contributions, will not be affected by the bill’s provisions.
The unemployment compensation administration fund is funded by contributions from the
federal government, but these contributions may not provide sufficient resources to maintain
the State system. This redirection of contributions from the unemployment compensation trust
fund to the unemployment compensation administration fund will increase the resources
available for the unemployment compensation administration fund.
FISCAL ANALYSIS
EXECUTIVE BRANCH
None received.
OFFICE OF LEGISLATIVE SERVICES
The OLS used data provided by the department during the FY 2025 budget process to estimate
the impact of moving 0.02 percent of employee contributions to the unemployment compensation
administrative fund. The department forecasts employee contributions of $545.4 million in
calendar year 2024, $559.4 million in calendar year 2025, and $581.0 million in calendar year
2026. Applying the proportionate factors to each of these numbers will result in a redirection of
$25.7 million, $26.3 million, and $27.3 million in the respective calendar years.
The OLS notes that the annual diversion of $25.7 to $27.3 million only represents
approximately 0.7 percent of the total anticipated total annual assessments paid by employers and
employees. As such, it is not anticipated to have any material long-term effect on employee or
employer withholdings. It is possible that over a long horizon, these diversions to the
administration fund could lead to a requirement for increased withholdings to maintain the
adequate trust fund balances; however, there are multiple factors which have a more significant
impact on withholding requirements, such as unemployment rates, duration of claims, increases to
maximum benefits, and changes in federal requirements. In addition, this increase in the
administration allocation and spending does not account for the potential benefits that may be
derived over time from improved infrastructure, staffing, and processes. It is difficult to say with
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certainty what, if any, direct effect the increase in administrative spending will have on future
withholding requirements.
The projected balance in the unemployment compensation fund is $3.1 billion at the end of FY
2024, and $3.7 billion at the end of FY 2025. The health of the fund and withholding requirements
are not likely to be significantly impacted by the proposed diversion of employee withholdings to
the administration fund.
Section: Commerce, Labor and Industry
Analyst: John Gaudioso
Assistant Fiscal Analyst
Approved: Thomas Koenig
Legislative Budget and Finance Officer
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the
failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).